Don Boroian - Francorp

Francorp has worked with 112 of the most recent Franchise 500 companies. This is important from the perspective that Francorp as a consulting firm has done work with these franchise systems, many of which Francorp developed from the ground up. Francorp is renowned as the world leader in franchise development and new franchise launches. The firm continues to develop successful franchise systems today after 34 years of franchise consulting work. Look over the Francorp corporate site for more information on the firm and the clients Francorp has developed.

www.Francorp.com

LPCW Offerring Franchises!

A Franchise that Celebrates Children and the Arts!

Filling the Gap
Early exposure to dance and theatre can have lasting benefits, including acquiring social and physical skills that will help children throughout their lives. Yet, dance professional Daune Pitman noticed two disturbing trends in dance classes for young children: either the little ones were being taught strict ballet, which was beyond their physical capabilities, or the classes were treated as playtime.
Seeking to establish a meaningful program, Daune developed Little People’s Creative Workshop (LPCW). LPCW classes are age-appropriate and taught by trained professionals. They are largely held in daycare centers and preschools, which puts them within reach of children who may not otherwise be able to take them.
Established in 1991, Little People’s Creative Workshop is now the largest organization teaching dance to children in the U.S. We’re augmenting our steady growth with expansion, via franchising. Our turnkey franchise program provides all you need to establish and grow a home-based business with multiple growth avenues!

How to Franchise Your Business?

How to Franchise Your Business?
Tom DuFore, Executive Vice President at Francorp
Francorp – 1000 Words
10/22/2008
Revised/Edited on 3/6/2009
How to franchise? This is a question that is often asked by many small businesses of all kinds throughout the world. When looking into how to franchise a business there are a number of factors that need to be considered prior to franchising. First we need to further understand what a franchise is and then if our business has the ability to franchise. If after your franchise analysis you determine that your company is capable to franchise then the next steps are to decide whether or not to move forward with franchising and then how do you do it. Let’s take each of these one at a time.
What is a franchise
Franchising is governed by the Federal Trade Commission and according to the FTC Rule 436 a franchise is, “A method of doing business by which a franchisee is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor and which is substantially associated with the franchisor’s trademark, name, logo or advertising.”
Basically this means that if someone pays you a fee, upfront and/or ongoing for the use of your business name and your business system you most likely fall into the category of being a franchise. If that is the case you will need to comply with the federal franchise law which states you need to have a Uniform Franchise Disclosure Document in place. Please note that there are 23 states that require some form of additional franchise compliance beyond just the federal franchise regulations.
Are You Franchiseable?
To asses if your company can be franchised in the first place there are five criteria to use as general guidelines in assessing the feasibility of your business as a franchise. As always, these criteria are not perfect and may not always be accurate, but they are typically on point. As we always recommend you would do yourself a favor by speaking with a franchise consultant and other professionals regarding this issue. The five criteria are:
1. Do you provide a decent product or service to your customers?
2. Do you have a great system in place to run your operation by? This means the operations, marketing, management, etc.
3. Can you teach someone in a relatively short amount of time, say 1-4 months, how to run the business? Obviously the timeframes will vary based on the complexity of the business model, but the main focus is if you can teach someone.
4. Does your business have a market nationally? Even if you don’t go nationally or intend to do so today, you very well may change your mind five years from now.
5. Can you provide a 15% return on your franchisees initial cash investment and provide them the ability take a manager’s salary if they are an owner/operator?
Do You Want to Franchise?
One of the most important steps components to the entire process is to take a look at you in the mirror and ask, “What do I want to be when I grow up?” What is your is your dream, your aspiration, as a business person? Do you want to be an owner/operator running your one or two unit business for the rest of your life? Or, do you want to become the CEO of a regional, national, or international company? The decision isn’t always easy, nor is it to be taken lightly. This is why seeking proper guidance from a franchise consultant could prove to be useful.
Remember that getting into the franchise industry is a completely new business. You are no longer selling burgers, selling insurance, or competing with 10 other local companies for the same customer that is going to spend maybe $30 or $40. Your customer in the franchising business is going to quit their job, pay around $500,000 for a franchise (including a franchise fee, working capital, equipment, leasehold improvements, etc), and run a franchise. You no longer are in need of having hundreds of customers walk in your operation every day, week, or month. You now need to find just one, two, or three people to buy your franchise each month.
How to Franchise Your Business
So we are finally here, the point of no return. You have concluded from the previous topics that franchising is for your company and it is something that you want to do. Well, in order to franchise your company you are going to need to have a lot of pieces in place in order to make it work. These pieces include a well written franchise business plan, thorough research, legal documents to comply with the franchise laws, an operations manual, a thorough franchise marketing plan, a franchise brochure, and you will need to know how to market, sell, and grow a franchise company. Each and every one of these components is vital and important for you to have done by experts in the franchise field. Subcontracting this out to the lowest bidder or to other folks that outsource the project does not work well in setting up your franchise program the right way. You will want to work with experts that have a turn-key franchise program and that have a track record of success. Just like your franchisees will want to see that you have a good operation, you should look for the same from the franchise people you work with.
One of the most common mistakes business owners make when looking into how to franchise is contacting their local business attorney to have them draft the Uniform Franchise Disclosure Document. While your business lawyer has been good to you, chances are that they do not specialize in franchise law. The other problem this creates is that you will receive a questionnaire from your lawyer asking you what your franchise fee should be, your royalty, territory issues, demographics, initial training, ongoing support, which of franchise structures do you intend to offer, and so on. The point is that legal documents merely DEFINE your franchise program and do not DRIVE it. The business decisions that are made in the franchise business plan are the keys to your success. It is here that the future success of your franchise program can be made or broken. Having great advice at this stage of the game is critical to making your franchise work. This is an area that we at Francorp focus on intently and is one of the main reasons why an average client of ours will sell 33 franchises in their first 3 years of operation as a franchise company.
There are many ways to get the work done that is needed to get into the franchising business, however, this is something that has to be done right the first time! If you make a bad judgment call on your royalty or territory size, your franchise program could very quickly be in jeopardy. This is a brand new business you are looking into and you owe it to yourself to research and find out as much as you can prior to moving forward with franchising. Take the time to make a decision from an informed perspective and be sure to truthfully answer the question, “What do I want to be when I grow up?”
For more information on how to franchise your business you can download a free book called, “Franchising Your Business,” by Don Boroian and Patrick Callaway at www.francorp.com.


For 32 years, Francorp has been the industry leader in the franchise development and consulting industry. We have a unique approach that remains unmatched by any other firm in the world. We have assembled a team of experts whose talents are coordinated seamlessly to create customized materials that fit the specific needs of our clients. Successful systems create successful franchises, and our unique proven method maximizes your chances of success and minimizes costly mistakes. Francorp will handle your program development through your strategic planning, franchise agreement, franchise offering circular, state registrations and filing, marketing plan, internet marketing, operations manual, sales training and management training, all under one roof.

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 in the Middle East

Franchise demand in UAE to expand
Armina Ligaya

Last Updated: March 02. 2009 10:12PM UAE / March 2. 2009 6:12PM GMT
Customers line up at Popeye's, a fast food outlets. Experts say franchising is likely to expand this year as people seek alternative forms of income. Jaime Puebla / The National
DUBAI // The franchising industry in the UAE will continue to grow in the coming year as regional investors shift away from property and financial markets, and out-of-work executives seek new forms of employment, industry insiders say.

“The potential for growth is there,” said Matthew Shay, president and chief executive of the International Franchise Association, on the sidelines of the Franchise Middle East Exhibition in Dubai. “From what we’re hearing from our members, [the UAE] is still a positive climate.”

The US market, valued at US$1 trillion (Dh3.67tn), was forecasted to see declines of 1 to 2 per cent in 2009, according to a study conducted by the IFA and Pricewaterhouse Coopers, Mr Shay said.

However, he expects the UAE market to have a brighter outlook due to relatively easier access to credit and its role as the gateway to the region. Mr Shay estimates the UAE franchising industry, valued at about $30 billion, will grow between 5 and 8 per cent.

“This is one of those places that you can’t skip; you have to do business here,” he said.

Local investors are also looking to get into the franchising game as the traditional investment avenues such as property and the financial markets are less stable, said Imad Charafeddine, managing partner of the UAE branch of Francorp, a franchise consultant.

He said franchise inquiries have increased by 20 per cent in the past two months.

It is a similar pattern at the Kuwait-based Middle East Franchising consultancy, which has seen a 25 per cent jump in inquiries, according to its deputy chief executive, Barrak Al Homaisi.

“A lot of people who have lost their jobs and have a good amount of savings are looking to start their own business,” he said.

Mr Shay said typically in economic downturns, as unemployment rates go up, more people look to start their own business, and franchises are an easy option. However, he said recent studies in the US show access to financing will drop by 30 per cent in the next year.

“This [crisis] is an opportunity for franchises, but the rub is lack of access to credit.”

Mr Charafeddine said this is less of a problem in the UAE because Emiratis can secure funds from Government agencies and expatriates with a business background can still be granted start-up funds.

In the past five years, the UAE industry has grown by about 25 per cent to roughly 400 franchising systems, said Sary Hamway, the Dubai-based chief executive of FranExcel, a franchise consultancy that organised the World Franchise Forum alongside FME.

Franchise inquiries have gone up, he said, but investors were more hesitant to buy.

“It will continue to grow,” he said. “Retail franchises are good because it is medium-risk, and medium investment.”

Darren Smith, manager of retail and marketing support with Emarat’s coffee chain Bakeria, said the tightening credit markets have also helped to bring down the cost of rent. Outside of the major city centres, some rents have gone down from Dh350 a square foot to Dh150, he said.

“Now, suddenly, you’re hearing a word you haven’t heard before from landlords: negotiate.”

Global brands are now clamouring to enter the region to access the strong demand for international food brands, said Steve Rothenstein, the international operations manager for tasti D-lite, a US chain of low-fat yogurt stores.

“In the UAE, the people like their food brands from around the world,” he said. “It’s a great area to do business — friendly, ease of entry, and they know what they’re doing here in terms of infrastructure.”

Francorp to Present at the New York Restaurant Show on How to Franchise

Francorp International Consulting firm to present on franchising and how to franchise at the New York International Foodservice Show. Francorp works closely with the New York Foodservice show to educate and assist restaurant owners and business owners in the evaluation of franchising as an expansion option.

Several Francorp clients and former clients will also be taking part in the show including Uno Chicago Grill, Buffalo Wild Wings and McDonald's . Francorp Executive Vice President Thomas DuFore will be handling the workshops and presentations during the week in New York.

Francorp is headquartered in Chicago, IL but operates out of 22 offices globally and does work for franchise companies in over 40 countries around the world.

Below are the details and featured events during the show. For more information on Francorp and Francorp's development work visit the corporate site, www.francorp.com.

Intl. Foodservice Show of NY opens today
01 Mar 2009
The International Restaurant & Foodservice Show of New York starts today at the Jacob K. Javits Convention Center in New York City. The show runs March 1-3 and features National Restaurant Association chairman Michael Kaufman as the keynote speaker. Kaufman's address, America's Restaurants - Serving our Nation, will be held at 1 p.m.

Educational sessions for the day include:
"Menu Targeting Trends: See what Generation Y and the Millenials are Eating Before they Hit Your Market," presented by Rob Harison, a chef with Princeton University Dining Services - 11:30 a.m. - 12:30 p.m.
"Fast Casual - Changing the Way America Eats," a panel discussion hosted by Linda Duke, CEO of Duke Marketing. Panelists include Paul Barron, publisher of Fast Casual magazine; Ed Frechette, senior vice president of Au Bon Pain; Louis Basille, CEO of Wildflower Bread Company; and James Strobino, SVP, new concept development, Uno Chicago Grill - 2:30 p.m. - 4 p.m.
"6 Reasons Why You Should Franchise Your Restaurant," presented by Tom Dufore, executive vice president, Francorp - 3:30 p.m. - 4:30 p.m.
Co-located with this year's event is the New York Pizza Showcase. The showcase features performances by the U.S. Pizza Team and the Hall of Fame Award presentation. Dom DeMarco of Di Fara's Pizza and chef Santo Bruno of Marsal & Sons are recipients of this year's awards.

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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.

Francorp India

Franchising in most parts of the world is well established and part of everyday life. In the U.S. over $1 trillion is spent per year in franchised outlets, 1 out of every 12 retail locations is a franchised operation. Now franchising is moving into other parts of the world, most notably India.
India now presents and enormous opportunity for franchise organizations. The country has over 12 million retailers which surpasses even China. This makes India the country with the highest retail outlet density in the world.
Indians have taken to franchising like the U.S. Already in this young and undeveloped franchise environment there are over 600 franchisors franchising in the Indian marketplace today. Along with that comes over 40,000 franchisees spread out across the country and across different sectors, over 300,000 Indian employees are employed directly by Indian franchise companies there. The market is enormous with almost unlimited potential. Currently the education sector of franchised businesses is the leading franchise model, but retail is catching up. The size of the consuming class means big opportunities for more franchise development.
The potential downsides of the new Indian market are what comes along with any developing market. For one the lack of regulation can still be an issue, real estate can be tricky and skewed in some cases and financing can be difficult. But if you can deal with those, this market has loads of potential.
There are a lot of companies in the services sector that are actively looking at India to set up their franchise operations today and will continue to be in the future. The growing popularity of the franchise model among Indian business men is evident in and around the country of India. The same issues that are taking place in the U.S. are also happening in India today. More people are losing their jobs, the big companies are downsizing with the slowing the economy in many sectors. This puts more people in the franchise market who would otherwise be working in a management position at a salary.
A franchise is a way for someone to earn a living without the risk of starting their own business. The other side of the equation is that as is the case in the U.S., investors are becoming more and more wary of putting their money into the stock market today. Earning the kinds of returns that were possible 2-5 years ago are extremely difficult today. This prompts more and more Indian business people to invest in themselves through a franchise model. Overall, the Indian franchise market represents one of the largest franchise opportunities in the world today.
Franchise organizations with applicable concepts and good planning will absolutely take India into account when planning their franchise system expansion for the coming years.
Christopher J. Conner
Vice President
Francorp, Inc.
708-481-2900
http://www.francorp.com

Children's Orchard Franchise

Francorp developed the original franchise program for Children's Orchard franchising systems. The Franchise company is the industry leader in children's resale clothing. They currently have almost 100 locations and continue to define their industry. Here are the details on the company and background on the company.
Children's Orchard
900 Victor's Way, # 200
Ann Arbor, MI 48108 800 #:(800) 999-5437Tel:(734) 994-9199 + 222Fax:(734) 994-9323E-Mail:campaign364@mail.emaximation.comWebsite:www.childorch.comContact: Ms. Lisa Morgan, Franchise Development DirectorBusiness Description:
Upscale children's retail/resale stores, featuring clothing, toys, furniture, equipment, books and parenting products. We buy top-brand items from area families by appointment, and re-sell in boutique-style stores, along with top-quality new children's items from nearly 200 suppliers. These are large volume stores selling thousands of items per week.

Franchisor Background
Year Established: 1980
Franchising Since: 1985Operating Units:Franchised Units:84 98.8%Company-Owned Units:1 1.2% Total Operating Units:85 100.0% Geographic Distribution:U.S.: 85 100% North America:States/Provinces with the largest number of operating units:Density
Units1. Michigan 62. Massachusetts 143. California 18

Registered in Following Registration States: California, Florida, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, Oregon, Virginia, Washington, Wisconsin, District Of Columbia, Alberta Financial Requirements Investment:Minimum Net Worth:$200KCash Investment:$30-50KTotal Investment:$72.5-158KAverage Total Investment:$150K Fees:Initial Franchise Fee:$22.5KAverage Franchise Fee:$22KOn-Going Royalty:5%Average Royalty:5%Advertising Fee:1.0%
Average Number of Employees: 1 Full-time, 3 Part-time

Space Needs (in square footage): 1,200-2,000

Preferred Sites: Storefront, Strip CenterOther Sites: Encourage Conversions? YesEarnings Claims Provided?: NoFranchisee Qualifications Ranked from 1 (unimportant) to 5 (important):
Financial Net Worth:5General Business Experience:3Specific Industry Experience:2Formal Education:4Psychological Profile:2Personal Interview(s):5 Terms of Contract Term of Initial Contract:10 Year(s) Term of Renewal Period:Year(s)Passive Ownership:Allowed, But DiscouragedArea Development Agreements?Yes, for 1 Year(s)Sub-Franchising Contracts?NoFranchisees Allowed to Expand Within Territory?No Support and Training International Franchise Association:YesCanadian Franchise Association:NoFranchisee Association/Member:Yes, MemberSize of Corporate Staff: 15Site Selection Assistance?YesLease Negotiation Assistance?YesFinancial Assistance?Yes, Direct Projected New Units Over Next 12 months: 15U.S.: Yes, All US Except HI, AKCanada:NoOverseas:No

How to Franchise a Children's Business - Mad Science Group

Francorp worked with Mad Science Group in developing their original franchise program and assisting them in the development and implimentation of the franchise expansion. Mad Science is the industry leader in their segment and continues to set the bar for children's oriented franchise organizations.

Here is a wonderful interview with Francorp President, Patrick Callaway and Mad Science CEO Ariel Schlien. Mad Science was originally founded in Canada and has since become a global phenomenon with the help of Francorp.

http://www.youtube.com/watch?v=yVLNmlEr5gw

For more information on how to franchise, visit the Francorp corporate site:www.francorp.com

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

Franchising in 2009

What will the new year bring for franchise growth?
Talk about getting started on the wrong foot! Could everyone in the United States be in a more cautious and precarious situation then right now in the days soon after New Years 2009? Most people are still asking, "What just hit us?" as they try to collect themselves both financially and emotionally from a devastating 2008 where over 3 trillion dollars of wealth was lost throughout the year. My guess would be that my Holiday was similar to a lot of other professionals in the United States, less presents under the tree and much less extravagant all around.
Francorp works closely with virtually every major franchise system in the U.S. and around the world. The consulting firm continually analyzes the health and future of the franchise market to better serve and implement new franchise companies.
So what does 2009 bode for franchising? How will franchising respond to the inclimate financial times and what is sure to be an interesting road to recovery for the U.S. economy this coming year?
In my opinion, 2009 will be a good year for franchising and for many entrepreneurs getting started in their own franchised businesses. Here are the reasons.
1. There are no corporate jobs out there right now. Almost all of the large corporations in America save a few niche industries have made enormous cutbacks in their labor forces. When college educated professionals were coming out of school into the job market 3 years ago, those $100k jobs were plentiful and offered a very nice alternative for new workers. In the 2009 market finding a good job anywhere will be like winning a car from the monopoly game at McDonald's, not that likely. Franchises offer a valid alternative for those either newly out of school or looking for new opportunities. The absence of work opportunities will make franchise offers that much more attractive.
2. Real Estate Opportunities. Commercial Real Estate prices are at all time lows per square foot in most U.S. markets. When times are good and the Starbucks of the world are dishing out rents at $100 per square foot in Dekalb, Illinois, its impossible for the "little guys" to keep up. Today, if you have been living in a cave and haven't heard, Starbucks is closing 700 locations as well as many other major corporate chains. This leaves ample opportunities for smaller, emerging chains in many different business categories.
3. The Flock Mentality. Most people are pretty depressed right now. People tend to base their decisions on what others around them are doing or saying. Because of this mentality many of the "pretenders" in any given industry will not be participating in 2009 to the extent they would be when the economy is booming. Looking at the investment community, the really successful investors make opposite moves of the general public. During this massive sell-off in stocks during the second half of 2009, Warren Buffett invested over $20 Billion. The franchise companies that make aggressive expansion moves in 2009 will take market share from their competitors and be in extremely good positions when the economy comes out of this slump.
With the increasing numbers of unemployed workers in the United States franchisors have a growing audience and number of potential franchisees. As more and more creative finance tools are uncovered and the federal reserve does everything in its power to loosten the financial markets, the access to capital will begin to come easier. This combination stands to fuel franchise growth at unprecendented levels in 2009 and beyond.
Francorp is the world leader in franchise consulting and development. For more information and analysis on whether a business is suited for franchising, please visit our corporate site where a multitude of free information on franchising and franchise development is available.
Francorp was founded in 1976 and has worked with over 2,000 successful franchise systems from the ground up. Francorp has four separate companies, Francorp Consulting, Francorp Capital, Francorp International and Francorp Connect. The company was founded by Don Boroian who runs and operates Francorp's four companies to this day.
http://www.francorp.com/