How to Franchise a Sales Organization

How to Franchise a Sales Organization.
Franchising is a unique entity. It is regarded as an industry, but is defined as a method of distribution. Most of franchising is associated with food oriented businesses, you know, the ones that line every street corner and you probably bought lunch from the other day. But franchising as permeated all industries today, we now see franchise companies in all industries that are successfully duplicating themselves across the country and around the world. Franchising is a dynamic, aggressive way to grow a business, there is no question about that. But what is the process? How do you franchise a business that typically is not associated with franchising?
In this article I will discuss How to Franchise a Sales organization and the process involved. Francorp is the world’s largest and most experienced franchise development and consulting firm. The company has franchised over 2,000 different businesses in it’s 33 year history. So needless to say I hear from plenty of business owners, many of which have products or services that they wish to sell more of to a larger customer base. Franchising can be a way to do this effectively and control the quality and effectiveness of the sales team. When discussing How to Franchise a Sales Team it is important to understand that franchising is a controlled mode of growth. The franchisor can control the quality, consistency and overall brand image of the company if a franchise system is managed correctly.
So, How to Franchise a Sales Team begins with setting the system. As a sales oriented franchisor your most valued asset is the sales system. The process you use to sell the product or service. That needs to be clearly defined, documented and tested. Once that system is in place, the marketing process makes sense, scripts have been put together, sales call procedures have been mapped, technology has been identified and all of the above is on paper and ready to go, then the franchise is ready. A Franchise system is only as strong as the system that is replicated through it. So if you’ve ever heard of the saying, “Garbage in, Garbage out, or GIGO”, that would apply here when considering How to Franchise a sales territory.
An interesting misconception about franchising is that the success depends on the quality of the product or service more than the surrounding business model. In fact, most franchise systems don’t have overly astounding products to offer, but the good ones always have great business models and ways of doing business. The product obviously should be a good one, but what will make a Sales Oriented franchise successful is the process to market the offer and close the deal.
The key for How to Franchise a sales business to think about how to replicate the sale, the pitch, the marketing, the lead generation all the way to the payment. That is where the secret lies. Many great sales organizations have been built through franchise systems, it is worth investigating if you are looking to sell something across larger territories or areas.

How to Franchise - Training

Franchising a business is about the Art of Reproduction. Franchising teaches someone who doesn't know anything about the business how to run the operation. The keys to success lie with the system of operation, the structure and integrity of the business model and in the training system for replicating this business model.
What constitutes a great training system in a franchise model is the depth and breadth of what is being trained. When a franchisee comes on board with a particular franchise company, they do not accept a managerial role with the company, or a sales role, or a HR position with the firm.....they take on them ALL. The franchisee becomes the business and runs every element of the operation. Once a franchisee leaves the corporate office from their initial training sessions, they are essentially running the show. They have to not only grasp and understand all of the intricacies of running and operating a new business at that point, but they also must be able and willing to teach their employees how to do every job within the business itself.
The most effective training systems in the franchise world are like Boot Camp. They are flexible in nature and address the responsibilities of running the business by job duty. The franchisee is put through a step by step process that works with the new franchise buyer on each part of running the operation. Franchisees will get their hands dirty and their feelings hurt during this process. Franchisees in many instances are very wealthy individuals, but when they buy a franchise for a food operation, they have to know how to run the grill, the fryer and how to clean the restrooms. They need to understand the P.O.S. system and how to maximize the efficiencies and benefits that the required technology offers to them. The franchisee will need to understand the financial side of running the business and how to manage the finances. All of these responsibilities fall on the head of the franchisee once this training is completed.
The great franchise companies have really solid training models. McDonald's has Hamburger University, Dominoes Pizza requires its franchisees to be a manager in a location for two years before they can be considered for a franchise location, Jimmy Johns puts their franchisees through an extremely elaborate and exhausting training program. The one commonality, that when a franchisee is sent out into the field to operate their location, they get it. They understand how to operate and how to make money at the unit level. This relieves the franchisor of the responsibilities, costs and problems that come with franchisees who need excessive amounts of hand holding when they begin operating their locations.
Franchisors have many tools and different technologies at their fingertips now that can make the training process much simpler today. Things like franchise training videos should be put together, Webcasts and Podcasts can be utilized in today's market to help train franchisees without having a human teacher doing the talking. Intranets and web-based platforms can be utilized to quickly and efficiently get updates and new information out to franchisees in the field and in remote locations. The franchise training process should typically be at least a month in length. This could be a combination of time spent at the corporate headquarters of the franchisor and time spent with the franchisee in the field. It is a big mistake to assume that in almost ANY business model that a franchisee could realistically be trained effectively in two weeks how to run the business and manage it profitably.
Franchising is hard work, it is a big mistake to give a prospective franchisee in the sales process the idea that opening a franchise is easy. The franchisee should be given a realistic picture of what they are getting into when they buy a franchise. When they do sign on the bottom line it's up to the franchisor to have the system and tools to really provide value and guidance to a new buyer.
Christopher James Conner Vice President Francorp, Inc. http://www.francorp.com
Article Source: http://EzineArticles.com/?expert=Christopher_Conner

The Francorp Difference

The Francorp Difference
Our first step is always to determine your franchisability. Francorp differs from other companies that are focused on selling their services. It's important to us that we work only with companies that are franchisable . We want you to be educated about the franchising process, and about how long you should expect the successful franchise offering to take .
Do you own one of those companies? Is your company ready to succeed? We can fast track the process without interfering with your potential to succeed.
And if you don't yet have a company, but do have the necessary funds, Francorp can help you develop a franchisable idea from the ground up.
All Under One Roof
Successful systems create successful franchises, and our unique Proven Method maximizes your chances of success and minimizes costly mistakes. We also offer an array of resources that speak to our leadership in the industry.
In franchising as in so many other fields, there is no substitute for experience. Francorp's professional staff is the largest and most experienced in franchising, and you get the benefit of our collective credentials. It's no accident we're considered the industry leader.
As a result, your services and franchise help are performed "in-house," not delegated to outside contractors who may have no expertise in franchising. We employ a full-time staff of professionals to create franchise structure, franchise documents, marketing strategies and materials, operations manuals, sales training, video presentations, and general consulting.
Information about each client is shared among the professionals involved in order to keep the work product consistent from department to department.
A Comprehensive Franchise Program
It's normal to be nervous about what to expect when you've never done this before. Francorp has developed a step-by-step procedure to support you through the franchising process.
When you first contact Francorp, you won't get a sales pitch. You won't be pressured at all. But by time you leave your first meeting with one of our consultants, you'll walk out with an action plan to either become more franchisable, or to start the franchising process.
Franchise structure - As a first step in creating a franchise program, Francorp consultants prepare a written franchise analysis based upon your business, its competition, and the franchise industry at large.
Franchise agreement - Francorp's in-house attorneys, with input from Francorp's operations, marketing, and strategic consultants, will draft the principal agreement that binds you to your franchisees.
Franchise offering circular - Francorp's legal department will draft an offering circular which will meet both Federal Trade Commission requirements and those of the states in which you intend to sell franchises.
State registration materials - Requirements of the states differ, and Francorp personnel will gather the proper materials and prepare the necessary forms required by each state where you wish to sell franchises.
Operations manual - Everything from company philosophy to advertising, from franchisee reporting to employee recruitment, from inventory acquisition to day-to-day operating procedures is included in your operations manual.
Marketing plan - To aid your franchise sales lead generation, Francorp's marketing department provides the media strategy, media budget, and media schedule. We also develop advertising copy and layouts, and/or direct mail materials, to generate interest among your target franchise prospects.
Franchise brochure - Because the prospect's first impression of your franchise is often created by a brochure, Francorp will design a brochure with special emphasis on exciting graphic design, and will describe in detail the elements of your franchise which make it attractive to prospective franchises.
Franchise sales training - During a two-day seminar, Francorp will instruct your franchise sales staff on all elements of the process, from legal considerations to closing techniques.
Implementation consulting – you'll always have ready access to professional assistance in all of Francorp's specialties during the critical period of franchise development.
Whenever problems or questions arise during this period, you may consult at no charge with any member of our project team.
Plus, you'll also receive a copyrighted 400-page manual covering all topics introduced in the franchise sales seminar in even greater detail.
Francorp's Track Record Of Success
Francorp has the most success stories of any franchise consultant. See our proven track record of client references who've succeeded with Francorp, and how we made a difference in their success. Learn the story behind our success to understand how Francorp came to be the franchising leader, and why it matters to you.
Attend an upcoming event to spend some time with Francorp's consultants. Or, visit our Chicago headquarters to see where it all takes place.
Every company is different, so we give you options for getting the process started. If you think you are franchisable, and that we can make a difference for you, call us to speak directly with one of Francorp's senior consultants. Perhaps you'd prefer to ask a question or inquire about our services online. Contact us and see how Francorp can assist your franchising efforts.
Francorp's difference can also be seen in our pricing structure. We understand the financial concerns of owner-operated companies, and offer you pricing and payment options to fund the future.

Don Boroian

In November, Francorp's Chairman, Don Boroian, did a presentation on the economy and its effect on franchising. Here is the transcript from that presentation and what was said about how franchising would be affected by our current economic downturn.

Hi, I am Don Boroian, Chairman of Francorp. I’d like to talk to you today about a couple of things that are very important to us as we meet this challenging economy right now that is raising havoc with a lot of the financial markets. It will definitely have an effect on franchising as well. However, contrary to what you might think, it is going to have a positive effect. For example, the biggest growth of franchising has occurred during these downturns in the economy. And we are going to look at it in two ways. First of all, why it makes sense, for you as a franchisor to expand during this particular time. And secondly, why you need to change your message to prospective franchise buyers to meet the economic perceptions that people have about whether or not it is a good time for them to buy a franchise.

First of all, as a franchisor, there’s a lot of uncertainty in the market. Many companies, right now, as they hear all of the economic woes and credit issues and so on are pulling in their horns. They’re not expanding, particularly companies who are looking to expand with borrowed money or looking for investors to open operating units. First of all, we all know that investors don’t invest in companies to open ten stores. The return on investment to venture capitalists is not sufficient to justify that kind of investment. They don’t want to be in a situation where their money is tied up for three or four years before they begin to turn a profit. By the time you open operating units and put managers in them and the amount of return on invested capital at the unit level, which generally, is about fifteen percent, has to be split between the investor and you. It’s just not a sufficient amount of money. In addition, during times like this, investors are investing their money in distressed merchandise. Depleted value of stocks are a bargain for investors. And the money from the venture capital people is not going into start ups or development into relatively new companies. However, there’s a silver lining to all of this. And that is, that as a franchisor, your ability to move out into the marketplace is going to be enhanced by the availability of opportunity for you. For example, if you are in retailing or in restaurants or any business that needs to go into a shopping center or into inline stores, there are going to be more vacancies in areas now that you might not be able to get into when times are good and business is booming. Those stores were already filled. Right now, some of those stores will become available. Even though you may not have the capital to go into those stores personally, this is where franchisees come in. And while we hear all the talk about credit and difficulty in getting credit, remember, we’re dealing with a different buyer. For example, if you have a retail store or if you have a restaurant, you need hundreds of customers to come into your store, every day, every week.

But in franchising, we don’t have to sell hundreds of franchises every week or every day or every month. We only need to sell one or two, certainly, in a time like this, if you’re a new emerging franchisor. And the people that you’re going to be selling franchises to are more abundant now in quality. These are people that are being laid off, downsized, reengineered in companies that are laying off people or are going out of business. And these are the people that have been working in these companies for a number of years. They have good credit. They have a high credit score. They have equity in their homes; that can get refinanced at their local bank because they have longevity in their community and they are very good credit risks. In addition, these are people that have excellent job skills. Many of them are middle managers. These are people that always really would’ve liked to own their own business; were afraid to leave the job and risk their fortunes on starting a business. But now that, that decision has been made for them, they’re on the market. And many of these people have gone to job interviews only to find that companies in their same industry, that have just laid them off, are also laying off people. That’s when we get their interest in buying a franchise.

So that from your standpoint, as a franchisor, there are going to be a lot of opportunities because your competitors that are not franchising, are not going to be occupying more stores, borrowing money, opening more branches, opening more markets for their businesses. A good case in point right now is Starbucks. They’re closing 700 of their stores. Now for Starbucks, to put a manager in an outlet and to make the entire investment in the store and to be able to make a profit over and above the manager’s salary, is quite different than for a franchisee who is to buy a franchise and go into a business and work 60 hours a week. In many cases just making their salary, without even a profit over and above that, meets their needs. They just want to own their own business, be their own boss, be the captain of their own ship, master of their own destiny. And so many of these kinds of situations or companies that have corporate owned locations; those locations are going to be available. In retailing, in the food service industry, in anything that occupies a store, where someone has already done the leasehold improvements, in the restaurant business they have the walk in coolers, freezers, 3-compartment sinks, and grills and so on. And many of the landlords are bending over backwards giving free rents to get tenants in there to occupy these spaces. And in the service business as well, many of your competitors, those of you in service businesses; these companies are going to be cutting back on their expansion because it takes capital and not only just the start up capital but the burn rate. When we sell a franchise, a franchisee doesn’t expect to make money for the first two years. If they just barely take out a salary initially, to get the business going, that’s pretty much expected. They don’t expect to walk in on day one to be turning a salary and a profit.

But companies today can’t afford to do that if they’re borrowing a lot of money at their banks because, first of all, the bank financing isn’t available to that extent. And certainly, as the credit markets and standards tighten, it makes it more difficult for companies to expand with company owned units, where typically it takes two years to get to a breakeven point. And so those of us that are franchising our businesses have a great opportunity here because our competition is pulling in their horns.

You have three choices right now in this current challenging market. Number one, pulling your horns, hunker down, climb in a fox hole, wait until the storm blows over. If you do that, you’re going to miss a lot of opportunities. But companies that need capital in order to expand their own company owned units are going to have to do that because they don’t have the available capital.

A second strategy is to do what you’re doing right now. Just keep on going and keep on your current expansion strategy. But again, companies that are doing this with their own company units are inhibited by the inability to get capital and by their inability to move out into other markets and support these kinds of expansions.

A third option and this is an option great for franchisors, because this is an opportunity to look around and capture markets that are being abandoned or not expanded into by your competitors. And by franchising, you’re allowing yourself to go into these markets with the capital resources and the human resources of others. So from your standpoint, as a franchisor, this is the time to move out. And as we talk to prospective franchisors whether it’s through our regional director program, whether it’s through the people who contact us, whether it’s the seminars that we do, or the advertising that we do, and we talk to companies who are considering franchising. And looking at this as an optional strategy, we’re quick to point out to them that now is the time to expand your business into a market that’s weakened.

The time to attack the fort is when the walls are crumbling. And the walls in many of these companies today, which were well fortified, are crumbling because they are reliant totally upon bank financing that isn’t going to be there to the extent it has been in the past. And as franchising affords you the opportunity to expand, it does so by you finding those one or two or three people each month who do have good credit, high credit scores, who are looking to own their own business, who will make that investment, who will be the human resource solution for you as well as a capital solution, as they invest in buying the land, building the business or developing their markets. And it gives you the opportunity to move into a market that is weakened. This is the time. The lions in the Serengeti always attack the weakest of the prey. And this is the time for us to move into the marketplace by franchising into these markets while the companies that are reliant totally on expansion capital in either internally generated, borrowing money, bringing in investors or through other means. And we have an added opportunity here to raise funds through the investment of individuals. And we don’t have to get 300 of them a month or a hundred a day.

We only need to get 2 or 3 or 4 people to buy a franchise each month. These are people with good credit. These are people with equity. These are people with 401(k)s. These are people with savings. These are people with family and friends that will help them get started. So, take advantage of this opportunity now. And from the franchise buyer’s point of view, let’s take a look also at why we need to adjust our message. In the past our message was be your own boss, be master of your own destiny, captain of your own ship. Now is the time to get into this expanding world of whatever your concept is. But that message is changing now because now people have a perception that this may not be a good time to go into their own business. Because you know already how to run that business, they’re getting a jump start. And so this is an opportune time for you to look over the marketplace at a much better qualified group of people, who are desperately seeking either a job, which is very difficult to replace, similar to the one they’ve had or to start their own business. And because these are not people that are high risk, they’re not as likely to start their own business from scratch because they know the rate of business failures is about 95 percent of all new businesses that start. According to the Department of Commerce 95 businesses, 95 percent of all start ups from scratch fail within the first 5 years. And so with a franchise, the odds are in their favor and these are people who are more conservative, who are comfortable following the plan. And now that decision has been made for them, that they’re out in the marketplace without a job, they’re taking a look at you, as a franchisor, and what you offer. So what we can tell the prospective buyers today is that we have a system, we have it worked out. We have a complete business model. We have the opportunity for you to learn. We will teach you everything you need to learn. You don’t have to know anything about our business. We’ll teach you, we’ll help you. There are available stores now. There are landlords that are giving free rent and doing leasehold improvements and tenant improvement allowances.

There are competitors that are on the ropes, some of them going under. Now is the time to buy a franchise, to get yourself established, to get yourself started with our assistance as franchisors helping you. Now is the time. So don’t hunker down, don’t crawl in the fox hole. Now is the time to move out. Take advantage of the weakened economy, the weakened market, your weakened competitors. Sell these franchises and help people get started. And show the prospective buyer why now is a good time for them to capitalize on this opportunity that this challenging economy has presented.

Don Boroian
Chairman
Francorp, Inc.
www.francorp.com

Dunkin' Donuts sells out Mobile franchises

Dunkin’ Donuts announced Wednesday that it signed a development agreement to open 40 restaurants in Mobile and Pensacola, Fla.

In the deal with Gulf Coast Franchise Group LLC, six restaurants will open in Mobile and three in Pensacola in 2009, with the rest opening in the next six years.

Continue to read at:
http://www.bizjournals.com/birmingham/stories/2008/12/08/daily29.html

Franchise Brands buys HomeVestors

Franchise Brands LLC has bought majority ownership of HomeVestors of America Inc., the company behind the "We Buy Ugly Houses" billboards.
Terms of the deal were not disclosed.
Founded in 1989, Dallas-based HomeVestors sold its first franchise in 1996 and has grown to a national franchise that specializes in buying homes that need repair. HomeVestors' network includes more than 230 franchised offices in 35 states. The company said its franchisees sell most of the houses to other investors and first-time home buyers.

Continue to read at:
http://dallas.bizjournals.com/dallas/stories/2008/06/09/daily15.html

Carlson Restaurants announces management changes at TGI Friday's

18th November 2008

By Staff Writer

Carlson Restaurants Worldwide, the parent company of TGI Friday's restaurants, has named John Neitzel as president and COO of TGI Friday's USA, and Ricky Richardson as executive vice president and COO of TGI Friday's International.

Continue to read at:
http://www.food-business-review.com/article_news.asp?guid=31167B79-C4DC-4E02-B9D3-75D7AC13D53F

Don Boroian Leads Francorp into Continued Growth

Francorp's Chairman, Don Boroian held a meeting three weeks ago with the entire staff of 60 people at Francorp. The meeting was focused on the economy and the direction of our business, country and global economy. Mr. Boroian is extremely well read, he goes through 6 papers every day and reads numerous publications focusing on the economy and economic news.

He voiced some of the concerns that every American is going through right now. Where is the light at the end of the tunnel here? What is tomorrow going to look like? When could I possibly retire with all these swings in the market? Don Boroian has not acheived all of the successes and accolades he has compiled in his 55 years of business by being one of the "flock". Mr. Boroian expressed an extreme displeasure with the media and their focus on the negative aspects of our economy. Mr. Boroian spoke of the negative effects. "When an average consumer hears a news report that talks of doom and gloom, they don't go on that vacation or buy that car they were thinking about getting." It is a vicious cycle, the consumer's behavior is driven by the information they have, right now it is all negative information about the economy.
We see many companies downsizing and shrinking their businesses as a result. We then have less employment and therefore less spending. Mr. Boroian pointed out that of course there are some deep underlying economic issues at hand here, but the fact is that we create our own destiny. If we succomb to the media and the swirl of negative publicity, then we ourselves will fall into that trap.
Don Boroian is a bold person. He throughout his life has made decisions and moves with his business and clients that others would not have the gumption to do. As a result, he is Chairman of the world's largest franchise consulting firm, Francorp. Prior to Francorp Mr. Boroian created an industry in the music business by franchising a chain of music operations. He also did the same in the restaurant industry. It is this temperment for tumultuous times where most business owners are "pulling in their horns" that Don Boroian makes aggressive moves.
It was announced at the Francorp meeting that we would be bringing on some new staff. Could this really be true? That when all the news and publicity is saying that every company in America is faltering and Francorp is hiring new people?
Mr. Boroian mentioned, that now, more than ever, Francorp clients need the resources and attention of Francorp staff. Look at the world's most successful investors, they make their moves when the market is down...not when it's up! Having been in business for almost 33 years, Francorp has seen several recessions and market downturns, this is nothing new to Don Boroian.
Francorp has recently hired Gail Doonan on full time as Regional Director Administrator. Ms. Doonan brings over 30 years of business experience to Francorp and Francorp clients. She has owned her own businesses and successfully managed client projects for some time. Ms. Doonan will be working closely with the Francorp Regional Directors, who are a nationwide network of franchise brokers and franchise sales people.
Francorp also recently brought on Tiffany Franco as a full time person. Ms. Franco works closely with Mr. Christopher J. Conner, Vice President of Francorp Consulting. Ms. Franco brings over 10 years of business experience to the consulting firm.
Francorp will also be adding some additional staff to support and manage client development. Mr. Boroian closed the meeting with Francorp Staff with a final thought. "As long as we can continue to develop successful clients who sell franchises, Francorp will continue to sit at the top of it's industry. Everything we do is to be of the highest quality workmanship and nothing leaves this building without every bit of our effort and attention. At Francorp, the client is king."
http://www.francorp.com/
http://www.francorpconnect.com/

1-800-DRYCLEAN Franchise Launches Contest To GO GREEN and Win FREE GAS

http://www.franchising.com/pressreleases/9278/

Top prize $500 to winner drawn January 5, 2009
October 22, 2008 // Franchising.com // Ann Arbor, MI., - Shannon Toler, president of 1-800-DryClean Franchise Company, announced details for 15 environmentally responsible customers to win FREE GAS."Now until December 31, 2008, each time customers use our free pick up and delivery drycleaning service, we'll enter their names in a drawing to win free gas," said Toler. "The more entries the better the odds with the winner ringing up $500 at the pump."1-800-DryClean franchise customers save themselves time and money, and help save the environment by car-pooling their clothes--reducing carbon emissions and cutting our dependency on foreign oil."We want to reward our customers for going GREEN. And when they do, we all win," said Toler.
About 1-800-DryClean:
1-800-DryClean is a quality dry-cleaning and laundry pick-up and delivery service franchise, and a member of the Service Brands International family of brands. 1-800-DryClean is the world's largest drycleaning delivery service franchise. It's ranked number one in its category, and a "Top Home-Based Business" among Entrepreneur magazine's Franchise 500Ò. The company has franchised since 2000, and currently has more than 130 franchise units across the United States.

Francorp, Francorp, Francorp

There are three important things to remember when choosing a company to work with as a franchise consulting group.

One: Make sure that the company has it's resources in house. The internet and evasive marketing can cloud the fact that many franchise consultants do not have an in-house consulting team. Why is this important? Because you don't want to play general contractor on your franchise development project. The business owner and entrepreneur should not have to be tracking people down throughout the development of their program. Francorp has an all in-house team that does not outsource any part of the franchise development. Francorp is the only franchise consulting firm that has an in-house legal staff. This is important because the franchise attorneys should be involved in all aspects of the franchise development process, the business planning, the operations development, the marketing materials, the website design and throughout the planning of the project.

Two: Depth and Resources. What happens if you hire an individual consultant or "Group" of consultants when the consultant working on your project decides to retire, take a vacation or has other work to attend to? The fact is that you need a team of experienced people who have depth and the resources to provide a complete consulting service. Francorp has been in operation for 33 years and worked with thousands of franchisors, the company is not going anywhere and will be here tomorrow. This is important because a new franchise company needs the guidance for years after they are introduced to the market.

Three: Experience and Diversity of Work. When developing a new franchise organization every company is unique and different, it is important that there is no magic pill for creating a successful franchise company. Each business and company has it's own philosophies, culture and business model. The franchise consulting company should have a broad range of clients and work that they have done in order to draw from that experience and impliment the appropriate strategies and structure for their franchise organization. Why is this important? There are many franchise consultants out there who associate themselves with franchise systems they worked on while with other companies, they played a part in the development but did not run the projects or oversee the implimentation of the programs. Even other consultants claim work on franchise projects that in reality they played little or no part in the development of the critical aspects of the franchise program. Francorp brings more experience and a more extensive client list than any other franchise consulting organization. The depth and extent to which Francorp has worked with franchise systems of all kinds is unmatched by anyone in the market.

Go to the Francorp site for more information on the firm, Francorp clients, Francorp processes, Francorp testimonials and Francorp's executive team. www.francorp.com

Francorp also lists many of its clients for marketing and franchise sales purposes on its web portal. Here Francorp clients can generate leads and create a market presence.www.francorpconnect.com

Francorp also has a strong international presence in 13 countries representing over 40 different countries around the world. Francorp is the only franchise consulting firm that has franchised it's own operations internationally.www.francorpinternational.com

Francorp also provides financing for many of its clients franchisees. This is critical in most markets and from a marketing and franchise sales perspective it is very important that Francorp clients can offer this to their franchisees.www.francorpcapital.com

Francorp Client - American Prosperity Group

American Prosperity Group, the First Retirement and Estate Planning Franchisor, Exceeds First-Year Franchise Goal
Last update: 11:19 p.m. EDT Oct. 9, 2008
WAYNE, N.J., Oct 09, 2008 (BUSINESS WIRE) -- American Prosperity Group (APG), headquartered in Wayne, NJ, is the first and only retirement and estate planning organization to be franchised. Nine APG franchises are now operating in cities in the eastern United States, two more than the company's 18-month objective. More are planned.
APG is the creation of Mark E. Charnet, a Certified Annuity Specialist. For over 26 years, he has been helping people solve their individual problems of successful retirement and estate planning. APG does this by implementing those parts of a total retirement and estate planning system needed to meet each client's needs.
The APG system has been so successful for over a decade that Mr. Charnet has turned his precepts and product offerings into the first-ever retirement and estate planning franchise. The current franchises are operated by:
-- Bill Romeo, Matthews, NC
-- Dawn Sarnoski, Closter, NJ
-- Shane Couturie, Bryn Mawr, PA
-- Peter Murphy, Santa Fe, NM*
-- Mark Timmick, Ellicott City, MD
-- Mike Linker, Totowa, NJ*
-- Kevin Lynch, Belle Mead, NJ
-- Ari Cohen, Bergenfield, NJ*
-- Holly Sikora, Sicklerville, NJ*
"Now, we are offering additional franchises," Mr. Charnet said. "The franchisees we seek are ideally situated in metro or suburban areas with average or higher senior populations. APG is a relatively low-overhead franchise, with an investment under $100,000. Our present franchisees are well on the way to paying off their franchise investment--and some have already done so within their first few months of operation.
"What we look for in a franchisee is entrepreneurial spirit. Financial know-how is not as important as the ability to be a good presenter, speaking to small and medium-sized groups. Empathy--the talent for caring about peoples' needs--is a must, as is a good sense of organization. This is an excellent opportunity for those with sales experience, but that experience need not include finance."
For franchisees, Mr. Charnet has fine-tuned APG's systems, products and operating procedures developed over his years of experience. Now, others can present his proven system to good effect. "It's all worked-out, step-by-step," he said. "Also, every franchisee receives complete coaching, supervision and assistance from me and my staff. The APG precepts are teachable, portable and repeatable--the keys to any successful franchise."
As for success, Mr. Charnet is a sterling example. During and after college, he built one very successful career in insurance sales, only to lose everything due to the insurance company's dramatic management change. Beginning again with virtually nothing, he developed the proven retirement & estate planning methods taught exclusively by APG. In aiding others in building and retaining income, he has built lasting success for himself.
Those interested in an APG franchise should contact APG at 1-973-831-4424. On the Web: www.apgfranchise.com
*(offices scheduled to open within 90 days)
SOURCE: American Prosperity Group Serpente & Co. Inc.
Joe Serpente, 856-275-6931

Francorp 12 Criteria of Franchisability for a Business

Don Boroian founded Francorp on the premise of working only with companies in a position to take the next step of expansion and growth through franchising. Francorp closely evaluates every business it meets with to determine whether or not that particular business has the viability needed to be a successful franchise organization. Francorp has put together the 12 steps of franchise criteria that the company uses as a benchmark for determining whether franchising could be a successful growth vehicle.

Francorp 12 Criteria of Franchisability for a Business
While it is impossible to determine the franchisability of a business concept without a significant amount of analysis, Francorp has identified a series of 12 criteria that assess the readiness of a company for franchising and the likelihood that it will achieve success as a franchisor.

1. Credibility – To sell franchises, a company must first be credible in the eyes of its prospective franchisees. Credibility can be reflected in a number of ways: organization size, number of units, years in operation, look of the prototype unit, publicity, consumer awareness of the brand, and strength of management, to name some of the most prominent factors.

2. Differentiation – In addition to credibility, a franchise organization must be adequately differentiated from its franchised competitors. This can come in the form of a differentiated product or service, a reduced investment cost, a unique marketing strategy, or different target markets.

3. Transferability of knowledge – The next criteria of franchisability is the ability to teach a system to others. To franchise, a business must generally be able to thoroughly educate a prospective franchisee in a relatively short period of time. Generally speaking, if a business is so complex that it cannot be taught to a franchisee in three months, a company will have difficulty franchising. Some more complex franchisors offset this handicap by targeting only franchise prospects that are already "educated" in their field (e.g., a medical franchise targeting only doctors).

4. Adaptability – Next, measure how well a concept can be adapted from one market to the next. Some concepts do not adapt well over large geographic areas because of regional variations in consumer tastes or preferences. Others (e.g., dental practices) are constrained by law. Still other concepts work only because they are in a very unique location. And some work because of the unique abilities or talents of the individual behind the concept. Finally, some concepts are only successful based on years of perseverance and relationship building.

5. Refined and successful prototype operations – A refined prototype is necessary to demonstrate that the system is proven, and is generally instrumental in the training of franchisees. The prototype also acts as a testing ground for new products, new services, marketing techniques, merchandising, and operational efficiencies.

6. Documented systems – All successful businesses have systems. But in order to be franchisable, these systems must be documented in a manner that communicates them effectively to franchisees. Generally speaking, a franchisor will need to document its policies, procedures, systems, forms, and business practices in a comprehensive and user-friendly operations manual and/or computer-based training module.

7. Affordability – Affordability merely reflects a prospective franchisee’s ability to pay for the franchise in question. This criterion is as much a reflection of the prospective franchisee as it is of the actual cost of opening a franchise.

8. Return on Investment – A franchised business must, of course, be profitable. But more than that, a franchised business must allow enough profit after a royalty for the franchisees to earn an adequate return on their investment of time and money. Profitability is always relative. It must be measured against investment to provide a meaningful number. In this way, the franchise investment can be measured against other investments of comparable risk that compete for the franchisee’s dollar. Typically, Francorp would like for the franchisee to achieve a ROI of at least 20 percent by the second to third year of operations.

9. Market trends and conditions – While not an indicator of franchisability as much as a general indicator of the success of any business, these trends are key to long-term planning. Is the market growing or consolidating? How will that affect your business in the future? What impact will the Internet have? Will the franchisee’s products and services remain relevant in the years ahead? What are other franchised and non-franchised competitors doing? And how will the competitive environment affect your franchisee’s likelihood of long-term success.

10. Capital – While franchising is a low-cost means of expanding a business, it is not a "no cost" means of expansion. A franchisor needs the capital and resources to implement a franchise program. The resources required to initially implement a franchise program will vary depending on the scope of the expansion plan. If a company is looking to sell one or two franchised units, the necessary legal documentation may be completed at costs as low as $15,000. For franchisors targeting aggressive expansion, however, start-up costs can run $100,000 or more. And once the costs of printing, audits, marketing, and personnel are added to the mix, a franchisor may require a budget of $250,000 or more to reach its expansion goals.

11. Commitment to relationships – Successful franchisors focus on building long-term relationships with their franchisees that are mutually rewarding. Unfortunately, not all franchise organizations understand the link that exists between relationships and profits. Strong franchisee relationships enable the franchisor to sell franchises more effectively, introduce needed changes into the system more easily, and motivate franchisees and their managers to provide a consistent level of products and services to their customers.

12. Strength of management – Finally, the single most important aspect contributing to the success of any franchise program is the strength of its management. Franchise Connect has found that the single most common contributor to the failure of start-up franchisors is understaffing or a lack of experience at the management level. Many times, new franchisors will try to take everything on themselves. In addition to absorbing several new jobs for which the franchisor has little to no time, the franchisor needs to exhibit expertise in fields in which he or she may have little or no experience: franchise marketing, lead handling, franchise sales, ad fund management, training, and multi-unit operations management.

For more information please visit the Francorp corporate site, www.francorp.com

Soul De Cuba to Expand Through Franchising

PRESS RELEASE

(Company Letterhead)

FOR IMMEDIATE RELEASE FOR INFORMATION CONTACT:
Cuba de Soul
(808) 521-0888


Soul de Cuba Cafe to Expand Through Franchising

(Honolulu, HI) – Soul de Cuba Cafe has announced they will be launching an aggressive expansion program through franchising.

Soul de Cuba Cafe brings traditional, authentic Cuban cuisine by embracing Afro Cuban culture and history. “The Soul de Cuba dining experience goes far beyond enjoying a plate of rice, beans and plantains,” explains founder Jesus Puerto. For most, it’s a first time emersion into a dwelling infused with Afro Cuban ambiance. In every Soul de Cuba Cafe, patrons dine to the sounds of Afro Cuban music and Jazz and each restaurant displays Afro Cuban art and memorabilia.Soul de Cuba Cafe has approached Francorp, the world’s leader in franchise consulting, to assist them in the development of their franchise program. “We never planned on franchising, but we investigated,” says Jesus. “After gathering the facts and dispelling the myths we felt it was unquestionably the right thing to do. After all, being one of the first Cuban restaurant franchise programs in the world is a rare lifetime opportunity.”

For more information about Soul de Cuba Cafe, call (808) 521-0888 or visit

www.franchise.souldecuba.com

# # #

What's Up Dog! To Expand Through Franchising

What’s Up Dog to Expand Through Franchising
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San Francisco, CA, October 01, 2008 --(PR.com)--

What’s Up Dog has announced they will be launching an aggressive expansion program through franchising.For over five years, What’s Up Dog has offered the hot dog enthusiast a variety of gourmet hot dogs and sausages within the San Francisco area. Their tantalizing menu consists of old carnival favorites like the corn dog, chili cheese nachos and garlic fries. But the eclectic selection of frankfurters and sausages (“Lemon Chicken”, Veggie Tofurky”, “Kielbasa”) has reinvented an American favorite.Americans eat an estimated 20 billion hot dogs a year, with 150 million consumed on Independence Day alone. We love hot dogs so much that the U.S. Chamber of Commerce actually dubbed July as National Hot Dog Month over 50 years ago.It was this shared love for hot dogs that inspired What’s Up Dog owner King Lei to open his own hot dog shop. To ensure that he only offered the best, he visited hundreds of hot dog stores from Los Angeles to New York. And his research resulted in rave reviews. “People love our name and products,” remarks King.This response has led What’s Up Dog to Francorp, the world’s leader in franchise consulting, to assist them in the development of their franchise program.

For more information about What’s Up Dog, call (415) 864-3707

or visit www.whatsupdogs.com

###

Entrepreneurs in Today's Economy

Inside Entrepreneurship: Turmoil likely to make angels cautious
By SUSAN SCHRETERSPECIAL TO THE P-I
Q: Getting investors for my startup is essential to moving forward. In your opinion, will the recent roller-coastering of the stock market and the economy in general make finding independent investors more difficult? Or are potential investors looking for alternatives to the stock market?
-- M.P., Seattle
A: Entrepreneurs usually are a highly optimistic and confident breed. But judging from the letters I've received this week, their mood has become more cautious.
Prospective entrepreneurs are questioning the timing of their startups. They ask, "Should I bother to start up in this economy?" or, "If I work at my startup on weekends, can my employer make any claims on my technology?"
I like this wry commentary best: "Susan, since banks and investors have turned me down, can you give me the government bailout address to rescue my failing business?"
While it's clearly too early to make many useful forecasts, I do believe that recent financial market turmoil will affect the psyche of independent angel investors for some time to come.
Unlike venture capital fund managers, angel investors are not paid a salary to invest in entrepreneurial companies. It is a discretionary hobby to them. Further, they invest their own money rather than act on behalf of other institutional investors. This means that the amount of money they budget for new venture deal investments is directly related to the value of their retirement accounts, real estate and security portfolios. If their liquid net worth has plunged dramatically, then expect angels to write fewer checks to young companies.
This is not good news for most startup entrepreneurs, who usually are not far enough along in business development to qualify for venture capital or more traditional asset-based financing offered by commercial lenders.
During the past few days, I've spoken to angel investors from around the country. The most common sentiment expressed by them was a need to get a better handle on the stock market, the overall economy, the fiscal demands on the U.S. government and the value of their portfolios. More active angels suspected that they would have to allocate more money to existing investments that might struggle during a slow economy rather than invest in new opportunities.
Here are some likely responses from venture investors.
Expect angels and venture capitalists to use the current market conditions as an excuse to bring down company valuations. Investors will want to build in "more room" to make money by starting with the lowest valuation possible.
Expect investors to demand more onerous liquidation multiples and preferences like they did in the aftermath of the dot-com meltdown.
Expect investors to favor startup companies that can reasonably reach cash flow break-even sooner rather than later. First-round technology development investors will worry that entrepreneurs may never secure second-round investors needed to finance product introductions. Entrepreneurs will have to look further down the road in developing their financing strategies.
Expect investors to favor entrepreneurs who have a really practical answer about how investors will ultimately get their money back. IPOs will get tougher. Corporations will become more selective in their buyout activities.
To your last question, will angel investors eventually view privately held, high potential companies like yours as a better deal than the seemingly more volatile public markets? Certainly it's a good talking point.
You can strengthen your appeal by looking for every possible way to reduce the perceived risk associated with investing in your company. This means pursuing operating partners to speed progress. It also means lowering your cost structure and checking the credit-worthiness of customers. Like investors, you, too, have to protect every penny you have.
Susan Schreter writes about startup planning and small-business financing for the Seattle P-I. She has an investment banking and buyout background and serves as a coach to entrepreneurs and consultant to corporations. Find more Inside Entrepreneurship columns at seattlepi.com/venture. Send questions about small-business management or raising money for your business to susan@insideentrepreneurship.com or by mail to Inside Entrepreneurship, c/o Seattle P-I Business Section, 101 Elliott Ave. W., Seattle, WA 98119.

Francorp Regional Director Jack Kuykendall (Los Angeles, CA)

PRESS RELEASE

(Company Letterhead)

FOR IMMEDIATE RELEASE FOR INFORMATION CONTACT:
Francorp
(404) 403-6055

Francorp Welcomes New Regional Director


(Los Angeles, CA) - Francorp is proud to announce that Jack Kuykendall has been appointed Regional Director of the Greater Los Angeles area.

Jack Kuykendall is a consultant. His company, Franchise Guidepost Inc., helps people find profitable and rewarding opportunities that fit their business and lifestyle goals and then utilizes extensive industry contacts to introduce these qualified candidates to top-ranking companies. His motto is “Opportunities for your lifestyle and lifestyles with opportunity.”
As an initial point of contact, Franchise Guidepost acts to save both parties valuable time. There are no forms or contracts and the fee is always paid by the seller, not the client.Franchise Guidepost works with almost three-hundred companies in twenty-nine business categories, including food, coffee or other beverages, senior care, lodging, real estate, maid service, automotive, sports, tanning, business coaching, telecom consulting, staffing, education, window treatments, and pet care. The company is a member of the Rancho Cucamonga Chamber of Commerce, the U.S. Chamber of Commerce, and the Better Business Bureau.Before establishing Franchise Guidepost Inc, Jack worked as a business development and planning manager, specializing in supply chain management, global sourcing and procurement. His former employers include Hitachi, Sony, TOTO and THK America. A native of San Diego, Jack has worked in Tokyo, Atlanta, Cincinnati, and San Francisco. He earned an MBA from Thunderbird and a BA from Occidental College.

Francorp is acknowledged as the world's leader in franchising. Since 1976 Francorp has provided full development programs to help insure the franchise success of over 2,000 businesses. To continue helping businesses expand, Francorp has established a Regional Directors Program. This program allows representatives throughout the country to provide the necessary resources to new business interested in franchising. For more information, visit www.francorp.com or call 404-403-6055.


# # #

Francorp Client Fruyu

Francorp Client Fruyu featured in the North Store Online. Fruyu delivers an all natural fantastic product and stands out from the rest of the Yogurt competition.

Byproducts of the yogurt revolution
Jun. 5, 2008
By Erica Egenes, Nikki Hernandez, and Jimmy Vuong
Kissberry
Kissberry offers both smoothies and yogurt combinations. The yogurt comes in two flavors: original and green tea. Then there are various toppings that can be added. The original-flavored yogurt isn’t as tart as Pinkberry’s and some others’ which makes it bland and not as good. Just like at Pinkberry, there was an assortment of cereals, fruits and various other toppings. The berries at Kissberry were not terribly fresh or very juicy. Between the slightly bland yogurt and the mediocre fruit, it was just a bland overall experience.
Fruyu
www.fruyu.com
Fruyu is simply another baby of the yogurt boom but that does not make it less than its peers. Just like the others, Fruyu features plenty of flavors that may be accompanied by plenty of toppings. These toppings range from your everyday breakfast cereal to fruit that is cut in front of you. One thing that does set Fruyu apart from the other yogurt parlors is the fact that it features real yogurt. Real yogurt has active cultures which is what makes the yogurt really healthy for you without sacrificing the taste. Also, Fruyu’s yogurt dispensers have a swirl feature that allows you to swirl two of your favorite flavors together.The cafeteria style serving is good when you really need your yogurt fix or simply like to mix and match flavors with the bountiful toppings.
Pinkberry
www.pinkberry.com
Pinkberry is considered to be the originator of this yogurt craze. Pinkberry is a perfect choice to lead the yogurt frontier. As the original, it does not feature the cafeteria-style serving system, which actually is good for those of us who have problems with controlling portions. Where Pinkberry’s successors excel, Pinkberry fails. Pinkberry only features two flavors whereas the other yogurt parlors feature as many as eight. There are plenty of toppings to choose from including fresh cut fruit, well worth the price. As far as styling goes, Pinkberry is the essence of swank. The white interior is highlighted with vibrant colors which set the mood for a smooth and healthy snack.
Berrysweet
Berrysweet is just as modern and chic as any other yogurt shop around, with black and white tiles and a couple of computers to mess around on while you’re sitting there scarfing down some frozen yogurt. The yogurt choices available are just like those at every other place, with a few extras being watermelon and taro. The watermelon flavor is a must-try but the taro yogurt is a definite must-NOT-try. The topping bar was loaded with the usual tasty toppings: cereals, fruit, candy, etc. What's different about this yogurt place is that it's self-serve, so you get exactly what you want. One wonderful thing about Berrysweet is its business hours. It’s open until midnight seven days a week. So when you’re sitting at home studying for a billion hours, you can stop by Berrysweet when you’re done (if you’re done) to treat yourself, even if it’s the middle of the night.
Swirl
Swirl Frozen Yogurt is just like other frozen yogurt shops: filled with tasty flavored frozen yogurt choices and a wide array of yummy toppings. Unlike the other frozen-yogurt shops, Swirl attempts to gear its products toward simplicity and nutrition. In contrast to Swirl’s goal of being so nutritious, is the topping bar. It was full of the most fattening toppings around. There was everything from cereal to cake and cookies but of course they had their minuscule amount of fresh and delicious fruit on the side. Swirl is a typical yogurt shop and definitely not a stand out.
www.francorp.com

Francorp Regional Director - Peter Yang

PRESS RELEASE


FOR IMMEDIATE RELEASE FOR INFORMATION CONTACT:
Francorp
(714-293-7124)

Francorp Welcomes New Regional Director


(Diamond Bar, CA) - Francorp is proud to announce that Peter Yang has joined the Regional Directors Program.

Peter has had extensive experience in sales in business development, most notably with First Data, a giant in the credit card processing industry. He has been successful in acquiring sales both with large corporations as well as small businesses through a variety of sales methods including: telemarketing, business to business, cold calling, referrals, and networking. Peter also has a BS in Organizational Leadership from Biola University in La Mirada, CA with a special emphasis on Business Ethics. He currently resides in Diamond Bar, CA.

Francorp is acknowledged as the world's leader in franchising. Since 1976 Francorp has provided full development programs to help insure the franchise success of over 2,000 businesses. To continue helping businesses expand, Francorp has established a Regional Directors Program. This program allows representatives throughout the country to provide the necessary resources to new business interested in franchising. For more information, visit www.francorp.com or call 714-293-7124.


# # #

Don Boroian - How to Buy and Manage a Franchise

The American Dream with a Safety Net:
An Introduction to Franchising
Fred DeLuca needed cash. At seventeen, he was ready for college, but unless he raised some
money fast, he knew he couldn’t cover his first-year expenses at Connecticut’s University of
Bridgeport. As it would turn out, DeLuca’s solution for financing his college education would
lead to one of the biggest franchising success stories of the late eighties and early nineties. But
back in 1965, all he wanted was a financial fix.
DeLuca approached a wealthy family friend for the money. He recalls hoping that Peter
Buck, a nuclear physicist, would “reach into his pocket and pull out a big stack of hundred-dollar
bills.” Instead, Buck offered something more valuable – a business proposition. Instead of a gift
or loan, he would give the youngster $1,000 to open a submarine sandwich shop. And so Pete’s
Submarines of Bridgeport was born.
After a slow start (and a name change), the partners added fifteen more sandwich shops
in the following eight years. The chain had potential for further growth, but the traditional
method of building and operating company-owned stores was proving to be slow and costly.
The choice of an alternative wasn’t hard to make. McDonald’s and Kentucky Fried Chicken,
among others, had set an excellent example by franchising, and it was in that direction that
DeLuca turned to expand his business.
More than twenty-five years after it was started as a collegiate money-making venture,
this submarine sandwich idea has truly paid off. DeLuca and Buck’s business has become the
pacesetter among sandwich chains, setting a growth standard believed to be untouched by even
mega outlet food giants such as McDonald’s or Domino’s Pizza. In a single year – 1988 –
Subway, as the franchise is now called, opened more than one thousand outlets, a feat never
previously accomplished by a single chain.
Of course, opening a sandwich shop isn’t a rocket-scientist type of proposition. All one
needs is money (which, as has been demonstrated, can be someone else’s) and desire. Even
making that shop a success isn’t a superhuman task. Combine hard work, a good product, and a
reasonably decent location, and you can be the local roast beef and salami king. But to establish
and successfully duplicate such a store a few thousand times across the country and around the
world takes more than a profitable outlet (or even a few such outlets). It takes one of two things:
(1) Nearly unlimited capital (quite literally in the billions of dollars) to finance such growth; or
(2) the proven, synergistic power of franchising.
Chapter One
Compliments of Francorp Connect, Inc. 7 www.francorpconnect.com
So if you happen to have a couple of billion dollars lying around in a family trust, or a
friendly banker whose loan checks come preprinted with nine zeros, then what follows will
likely not be of much interest to you. But if you have a desire to become part of – or simply
learn more about – franchising, the successful and growing form of business the U.S.
Department of Commerce has called “the wave of the future”, this book is the source you’ve
been looking for.
As franchising has grown in prominence and performance, it has attracted wide coverage in the
media – some positive, some negative; some aimed at potential franchisees, some at franchisors;
some purely analytical, some philosophical and esoteric. But what was missing was a
comprehensive, easy to read (and perhaps fun to read) book that tied it all together – a book that
combined practical and useful information for both franchisees and franchisors with unbiased
reporting and interpretation of the development and influence of franchising. The challenge,
then, is to fill this information gap.
This book sets out to be the only book anyone (be they franchisees, franchisors, or even
just curious consumers) needs to read about franchising. And that’s not just a boast or some
lofty goal – it is our personal mission as authors.
Perhaps it sounds too simple: anyone with any interest in franchising. But it’s true. This book
was written with the widest possible variety of readers in mind. Whether you are interested in
purchasing a franchise (that is, becoming a franchisee), developing an existing business into a
franchise (becoming a franchisor), or simply learning more about the form of business
responsible for more than one-third of all retail sales in the United States, this book will inform,
educate, and perhaps even amaze you.
Do you dream of becoming your own boss but are wary of striking out on your own?
We’ll help you assess whether you’re ready (financially and emotionally) to become a
franchisee. Are you ready to buy a franchise, but not sure which one to choose? We’ll give you
some valuable advice to help narrow which franchises are best suited to you.
Perhaps you own a small (or even not so small) business and are considering expansion.
We’ll help you answer two questions of paramount importance when it comes to considering a
franchise program: (1) Is your business franchisable? and, (2) if so, what is the best way to go
about it? The fact is times have never been better to consider expansion through franchising, for
anyone who owns or operates a successful business. There is definitely an audience of qualified
potential franchisees available. Big corporations, including many Fortune 500 companies, are
stripping away layers of middle managers with layoffs and early retirements. Add to this pool of
Why This Book?
Who Should Read This Book?
Compliments of Francorp Connect, Inc. 8 www.francorpconnect.com
talent the growing number of executives whose jobs have been “leveraged” out of existence (due
to buy outs, mergers, and other corporate reshufflings), and you have an experienced and
professional class of people ready for a new challenge. For many of these people – and others
ready for a change – franchising is the best choice.
Joe’s brother, John Mancuso, is a good example of a new breed of franchisee. He owned
and operated a small machine shop in Hartford, Connecticut, for the past half dozen years. He
also was a customer of the local Physicians Weight Loss Center in Hartford, and trimmed down
from a hefty 270 pounds to close to 210 pounds. He was thrilled with his weight loss -- so much
so that he sold his machine shop and used the proceeds to acquire the franchise location where he
had lost weight. Rather than start a new business in an area that interested him (but in which he
had no practical experience), he bought the franchise and the national reputation and source of
knowledge that went with it – a franchise that he knew was effective, because it helped him lose
weight.
John had never anticipated being involved with franchising, but at the age of forty, he too
came to marvel at the power of the concept. (But, as you’ll learn later in this book, John lost
more than just weight. That was another motivation to write this book.)
Franchising is a broad term that described a relationship between two or more parties. In
general, the purpose of this relationship is to distribute goods and/or services. The two primary
types of franchise systems in the United States are product or tradename franchising and
business-format franchising. Product or tradename franchising is franchising in its most limited
form: A manufacturer grants another party a license to sell goods produced by the manufacturer.
Principal examples of this form of franchising include sales of cars through dealerships, gasoline
through service station, and soft drinks through local bottlers.
For the purposes of this book, we will almost always be discussing the other type –
business-format franchising. We will refer to it by the simpler term franchising. Under
business-format franchising, a business owner or manager (the franchisor) allows someone to
market products or services using her name, trademark, and most importantly, her prescribed
business format – thus the name business-format franchising. (Frequently – in fact, usually – the
products sold are not provided by the franchisor.) In return for use of the name and system, the
franchisee – as that person or organization is called – pays a fee and, usually, an ongoing royalty
(in the form of a percentage of sales). Moreover, the franchisee pays all the costs of going into
business. The effect of business-format franchising is to make it less a system of distribution
than a system of proliferation or expansion.

www.francorpconnect.com

Pizza Delivery In China

Pizza Delivery Gets Big Push In China

Restaurant giant Yum Brands Inc. is betting that, as China's expanding middle class continues to demand more of the typical Western middle-class lifestyle, consumers will develop a taste for one of America's favorite convenience foods -- pizza, delivered.

Pizza delivery, ubiquitous in the U.S., is a new concept in China, where dining out has long been seen as a form of conspicuous consumption. As a result, until recently Yum had focused on positioning its Pizza Hut locations as a "five-star experience, (with a) three-star price" that would attract Chinese consumers looking for a night on the town. But as China's wealth swells -- along with its legions of harried office workers who have less and less time to cook at home -- pizza delivery is beginning to look like a faster way to expand the Pizza Hut brand, and consumers have begun to respond.

During the past year, Yum has been ramping up delivery operations in the country -- building call centers, securing a nationwide telephone number and building out new locations at an expeditious rate.

"We think we could build thousands of these," said Yum Chief Financial Officer Rick Carucci. The company has 61 delivery-only locations, up 49% from a year ago, and plans to continue at that rate for the next year.

The reason for their appeal to Yum is simple economics: Delivery-only locations, unlike fine-dining establishments, don't have to occupy prime (read expensive) real estate and can still pull in 60% to 70% of the revenue of fine-dining locations, and they are already making money. Yum's China division aw its operating profit jump 38% in the second quarter, and Pizza Hut was the division's fastest-growing brand.

To be sure, Yum faces risks in its expansion. Domino's Pizza, the dominant delivery-only brand in the U.S., has been slow to move into the Chinese market, noting the lack of a convenience culture that would demand food delivery. But that is changing: Domino's has built central delivery commissaries in Shanghai and Beijing -- a sign they will build out in the near future.

"I think for a couple of years they were skeptical that there was going to be a delivery business there," Bank of America analyst Joseph Buckley said. "Now they think there is; it could be because of what Pizza Hut is doing."

Yum, whose China group's slogan is "Rooted in China, Part of China," says it is just following the market.

When lawyer Zhan Zhao moved to Beijing in 2002, after spending his teenage years and getting his education in the U.S., he was shocked to find no food-delivery service was available.

"I was a lawyer working long hours and new to China, so a service of convenience was something that I really needed to help adjust to the other realities of modern-day China," said Mr. Zhao, 32 years old, an associate at Skadden, Arps, Slate, Meagher & Flom LLP. To fill the gap, he started a delivery service, Beijing Goodies, to deliver food, at an additional price, from Beijing restaurants. After a rocky start in May 2002, the business has taken off in recent years. Today, the company has 7,000 registered users in Beijing -- and Mr. Zhao, who now lives in Shanghai, sees food delivery as a growth market.

"Food delivery will only become more and more popular, especially for the local white collars, as the Chinese consuming public continues to work longer and longer hours," Mr. Zhao said.

Yum's recent television advertising campaign in China makes a similar case. One ad, for example, shows a young mother rushing from work to the market, cooking dinner and doing dishes, contrasted with a serene woman stretching and enjoying her afternoon. The serene woman has already ordered pizza, and a moped-mounted delivery man is on the way with it.

Papa John's, which recently opened its 100th restaurant in China, has been noticing a pickup in delivery orders, too, according to David Flanery, the company's chief financial officer and head of its international operations.

"The delivery percentage has probably doubled over the past two to three years," Mr. Flanery said. "You go through those cities and see apartment building after apartment building and you go, 'you know, those people have to eat, and more of them have enough money to go to a restaurant and have something delivered.'"

Mr. Flanery said Papa John's is more than happy to follow Yum's lead in the country, where Yum already has a massive head start. Yum was the first Western fast-food company to gain entrance to China in the 1980s, and its KFC chain is one of the most recognized Western brands in the country, with 2,264 locations as of June 30.

Mr. Carucci said he expects Yum to ramp up the building of Pizza Hut delivery locations during the next year or so, moving into more second-tier cities, with the eventual goal of China being a bigger market than the U.S.

"We're off to the races on delivery," Mr. Carucci said.

Source: Dow Jones Newswire

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