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2010 – Some Important Changes In How We Do Business In the Franchise Industry

Guest post by: Anne Barr

Article Overview: This article gives an overview of the top 10 important changes in how we do business in the franchise industry.

2010 – Some Important Changes In How We Do Business In the Franchise Industry

1. Social Media

In using this tool to reach your customers, there are several things to remember:

a.) Decide WHY you want a Facebook Page

b.) There's value in connecting with customers and prospective customers online

c.) Give reason to "like" your page on a Welcome Tab

d.) Be sure to tell what you can do for them 2. Attorneys and Flat Fee Rates for Franchisors

Some large attorney firms are now offering a flat fee rate or alternative billing arrangements for Franchisors. Clients want to know "What do I get for my money?" Current economic conditions have caused clients to be even more sensitive to costs. Many clients have learned not to pay attorneys to research business, cultural or marketing information when expanding internationally for example. This can be done less expensively through other sources. For foreign expansion one definitely needs an attorney or attorneys to understand the tax law, competition law and labor laws in the country you are targeting for expansion.

3. Lunch Catering

Sandwich chains are finding catering office lunches is an efficient way to bring up their bottom lines.

4. NASCAR Sponsorships as a marketing tool

Many franchisors and businesses are spending a good amount of their marketing dollars in NASCAR sponsorships. Of course, sponsoring a car on the NASCAR circuit can be very expensive. Today, auto racing is second only to football as the most watched sport on TV. Races are televised in 150 countries around the world each week - in approximately 20 languages. Nearly half of NASCAR fans earn more than $50,000/yr and 40% are female. It's all about reaching the consumer with your message and getting the customer involved. According to a recent IPSOS research firm study, NASCAR is the #1 sport in fan brand loyalty. "Three out of four NASCAR fans will consciously choose products of NASCAR sponsors....even if the price is higher"*

*Jeff Cheatham - Director of Communications, Wave Energy Drink

5. Real Estate - Conversions

Franchisees are saving money by tackling conversion projects from restaurants to beauty salons. Many of these now empty spaces are already partially ready for new tenants. Typically, the electrical and plumbing is in place and often with much less cash outlay required for remodeling, the space becomes a new business at much less than the original build-out costs for a new space.

6. What Potential Franchisees Really Want To Know- When Exploring A Franchise Opportunity

• Easy to navigate Franchise website

• Most important factor is satisfaction by current franchisees

• Actual Pro Formas of existing Franchisees

• How long does it take to become profitable?

• Sales numbers by Region, not national numbers

• Most appealing incentive would be reduced royalties for first year

7. Non-Traditional Locations - the newest expansion strategy

Multi-unit franchisees are exploring the viability of sites such as airports, hotels, colleges, senior centers, highway rest stops, hospitals, military bases, and more. Costs are higher, staffing difficult, sometimes there are security issues, and other challenges, but you have a captive audience and can operate in a smaller space.

8. Previously Owned Equipment

Previously owned equipment saves costs and boosts profits, especially in the restaurant sector. Multi-unit owners are saving money.

9. Transfers or Franchise Re-sales

Transfers or Franchise Re-sales will become more the norm than new franchise sales in the next couple years. Many franchised business owners are looking to retirement and will be selling their businesses.

10. The Good, The Bad and The Ugly

The Good: Tax incentives can pay big returns. Several retroactive tax credit programs cover the open tax year and the three prior years. Both franchisors and franchisees stand to gain. Anyone employing people can benefit from these credits, whether for the corporate headquarters, company owned locations, or franchisees nationwide.

The Bad: Closings, bankruptcies, non-lending market. The tight credit market wreaks havoc with business closings, company bankruptcies and the unavailability of capital...money is tight and the requirements to get any kind of financing are unbelievably difficult and stringent.

The Ugly: New health care law affects almost all taxpayers and employers. Beginning after 2013, employers with at least 50 FT employees must offer certain minimum health coverage to its employees or pay a penalty if certain employees are required to purchase health insurance through an insurance exchange. We won't even list the tax law changes.

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Article Tags: franchise industry, franchise opportunity



Related Forum Posts
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
Re: What works for you? - Hi Yinka, I work better under pressure of deadlines when I am doing something for other people. However, I like to have the leisure to develop my own projects. The first case is what Stephen Covey calls a "Quadrant 1" activity ("Important and urgent") whereas the second case is a "Quadrant 2" activity ("Important, not urgent"). We should aim to make as much time as possible for Q2 activities so that we can develop our own projects. Easier said than done!
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Fed rate cuts . . . - So just what do the newest Fed rate cuts mean to Franchise and Business Opportunity investing? Is it immediately felt? What timeframe do you think, or rather, where are we in terms of new vs. existing business investment? A similar question can be composed for the economic stimulus checks - will they a have any effect if consumers spend a little $$


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