SuperCoups Franchisees Organize

The franchisees of SuperCoups have formed an association. In an effort to enhance communication and create a forum for franchisee representation and negotiation the franchisees have elected to form the SuperCoups Franchise Owners Association (SCFOA).

For many years SuperCoups has had an Advisory Board, which is organized with the participation of the franchisor. The SuperCoups Advisory Board provides an opportunity for the franchisor to present information to franchisees and visa versa, but the franchisees wanted a more independent forum to enhance communication among franchisees and the franchisor.

A former member of the SuperCoups Advisory Board, Jim McCann, who has been a franchisee (SuperCoups of Mercer County) of SuperCoups for 12 years, said “the advisory council fostered communications between the management team of SuperCoups and the franchisees, recently the parent company was undergoing an ownership change, the franchisees felt it was important to form an association to make sure there was a forum to communicate among ourselves and directly with the parent company while providing the Advisory Board with added support.”

In November of 2006, Jim started looking into ways to organize the franchisees and came across the American Association of Franchisees and Dealers (AAFD). “The AAFD offered a step by step process that made the forming of the SCFOA much less intimidating, we all have businesses to operate and we can’t spend too much time organizing, the AAFD gave us a blueprint to form the association, inform the franchisor, and establish an infrastructure to operate efficiently,” stated McCann”

The first and largest franchisee of SuperCoups, Ron Benedetti conducted a survey in which 43 out of 47of franchisees participated. Ron said, “When Jim first approached me about the idea to start an association, I felt the best place to start was with the franchisees, if they supported an association I would be on board. The survey revealed 92.9% of the franchisees surveyed felt that starting a franchisee association was the thing to do.”

Both Jim and Ron feel the SCFOA will foster better and more productive communications among franchisees, the franchisor and the parent company.

Ron says, “SuperCoups is a great product that consumers will always use to help them make buying decisions, I’ve never seen a home I didn’t want to mail, the most important thing for all of us is to grow and enhance the SuperCoups network, the forming of SCFOA is a big step in that direction.

Jim added, “SuperCoups has been a very good business for me over the years, I would like to see the system grow, just to the west of me in Bucks County, PA there is a great opportunity for a franchisee, I could put some of my advertisers into those areas and I’m sure the franchisee would do the same to my envelopes. The growth of the SuperCoups system benefits us all. I am confident that if we all work as a team we can enhance the SuperCoups system together.”

About SuperCoups: SuperCoups, a wholly owned subsidiary of Valassis, is a co-op direct mail franchise. Since 1982, SuperCoups direct marketing solutions have delivered local coupons with super savings to consumers, helping small businesses grow while maximizing returns on their advertising investment. For more information about SuperCoups or its franchisees visit http://www.supercoups.com

About AAFD: The AAFD is a national non-profit trade association representing the rights and interests of franchisees and independent dealers throughout the United States. Formed in 1992, the AAFD is focused on market driven reform to achieve its mission to define and promote collaborative franchise cultures that the AAFD describes as Total Quality Franchising. Since its formation the AAFD has grown to represent more than 50,000 franchised businesses throughout the United States. The AAFD currently has members in all 50 states and represents more than 100 different franchise systems. For more information about the AAFD, visit: http://www.AAFD.org

Cross Posted at Let’s Talk Franchising

Franchisee Pays ~$200,000 in Damages for Gender Bias

Taco Bell franchisee loses gender bias lawsuit

Katrina Hillis and Diana Pepper, who were store managers at Taco Bell restaurants in McMinnville and Sparta, were awarded $93,000 in damages
….

The lawsuit claimed that a “glass ceiling” at Management Resources (franchisee) kept most women from rising above store manager into upper management. The suit said 60% of Management Resources store managers were women but only 15% of its higher-ranking executives were women.

How to Blow the Franchisor’s Business Model

Domino’s Must Give Franchisees Choice

A federal district judge ruled that Domino’s Pizza Inc. franchisees have a choice of vendors for a computer system the company developed.

In his ruling Wednesday, Judge Richard H. Kyle, sitting in Minneapolis, said the chain’s franchise agreement allows franchisees to buy the hardware and software that would meet Domino’s specifications from any source.

After developing a computer system in-house, Domino’s mandated that the hardware be purchased from International Business Machines Corp. and the software from itself, the judge’s ruling said.

Some franchisees balked, contending that the only reason the company had imposed that requirement was to generate more franchisee revenue. The plaintiffs argued that they should be able to buy the system from any source as long as it met specifications.

Talk to Franchisees Before You Join the Club!

Talking to existing franchisees is one of the most important things you can do to investigate a franchise opportunity. Franchisees know the business. They can help you decide if this opportunity is right for you.

Being well informed at the start will improve your odds of success, of course, just as it does in any new job experience. The franchisees are the ones who can tell you the real deal; how well sales strategies hatched by the franchisor really work, what your day will be like, and when you might expect to break even, for example.

You will want to speak with a number of franchisees, preferably some of whom are very successful and also some who are struggling. By reviewing the responses and comparing your own management style to those currently operating stores, you will have a better idea of where you might end up if you purchase this franchise.

Before calling any franchisee you should have read the franchisor’s Uniform Franchise Offering Circular (UFOC), which will give you a wide range of information about the franchise. But getting in touch with franchisees and getting them to tell you what they really think isn’t easy. The UFOC contains a list of current and past franchisees.

Here are some suggestions:

Have a clear idea what you want to discuss. Create a list of questions.

The most common questions to ask revolve around these subjects: Initial Investment, Training, Opening Support, Ongoing Support, Marketing Programs, Purchasing Requirements, Purchasing Power, Earnings, ROI.

First ask yourself, “What do I want to know?”

Here are some suggested questions to ask franchisees choose the questions that help you answer the question “What do I want to know?” 

  • How has the franchisor responded to your calls for support about business operations or any other general questions you may have had?
  • Do you feel the franchisor cares about your success and is willing to help you as needed?
  • How would you describe your overall franchisor/franchisee relationship?
  • Did you receive assistance in site selection, lease negotiations, build-out and permit processes, or any other areas unique to the opening of the business?
  • What happens in a typical day?
  • What will go wrong?
  • How long did it take for you to realize a return on investment?
  • What are your approximate earnings and are they in line with your expectations?
  • Did the franchisor adequately estimate the amount of operating cash that you needed?
  • Was the training the franchisor provided thorough and did it sufficiently prepare you to run this business?
  • Were there any hidden fees or unexpected costs?
  • Is your territory big enough to hit your goals?
  • Are there restrictions on the products you sell and use in your business?
  • Are you required to use designated vendors?
  • Does the franchisor advertise as much as it said it would?
  • What type of business experience, education and skills did you possess before buying this franchise?
  • Why did you select this particular franchise system over others in the same type of business?
  • Did the training only cover the operating system or did the training prepare you to compete with other businesses providing similar products or services?
  • Did you encounter any problems with the franchisor, the site, or establishing your business and how did the franchisor respond to problems?
  • What are your sales patterns like? Are they seasonal? If so, what do you do to make ends meet in the off-season?
  • Are there expansion opportunities for additional franchise ownership in this system?
  • Knowing what you know now, would you make this investment again?
  • What are your thoughts on this industry, the products and/or services available, and what trends do you see happening for the future?
  • Do you have any issues or concerns with the franchise agreement? Were there any clauses that stuck out over others that may impact your relationship with the franchisor?
  • Has the franchisor responded to any of your own ideas about improving the franchise system?
  • Are there any other franchisees or former franchisees you recommend I contact?

Questions to ask former franchisees: 

  • Why did you leave the franchise system?
  • Did the franchisor cooperate in helping you sell your franchise?
  • If there was a termination or non-renewal, did the franchisor explain why and provide a reasonable opportunity for you to cure the problem?
  • Would you consider buying a franchise from a different franchisor?

Franchisees’ view of the franchisor and the value of the franchise system will be enlightening. Make sure you interview a reasonable sampling of franchisees; I would suggest no less than 5.

Some will have good experiences to report; others may preach doom and gloom.

Remember, no one can predict how you will fare or whether you’ll enjoy the business, but you need to know the mood and understand the mindset of the existing owners before you join their club.

Cross Posted at Let’s Talk Franchising

Revenue to the Franchisor

Spicy Pickle plots growth curve

The above article lays out the revenue for this relative startup franchisor.  $221,643 in franchise fees and royalty in the 1st quarter, but still recognizing a quarterly loss of $538,229.  The loss is mostly likely due to higher marketing, commission, and administrative expenses. 

Franchisors make the most money on the front end with the franchise fee – a one-time windfall of $30,000 for the franchisor from which their variable costs involve commission to the sales person and some executive time – with related expenses of manuals/documents, site selection assistance, and training delivered over the next year.

A small franchisee may produce $350,000 in gross sales, meaning the 6% royalty will generate $21,000 over a 12 month period plus a few thousand in vendor commissions and other revenue.  With the average franchisor selling 12 franchises during the life of their business, it is easy to see why many franchisors struggle despite the illusion of rolling in the money dough.  The profitable franchisors sell new franchises at a fast and consistent clip.

Quiznos Case Proceeds To Trial

Death of a toasted sandwich salesman

Quiznos had sought to strip eight franchisees of their franchises after a franchisee gripe site posted the suicide note of a Quiznos franchisee on its website. The note blamed the Quiznos Corporation for ruining his business and his life. The franchisee, Bhupinder “Bob” Baber, was found dead last November in the bathroom of a Quiznos restaurant in Whittier, California, after pumping three rounds from a .380 caliber handgun into his own chest.

….

Another group of angry franchisees, the Toasted Subs Franchisee
Association (TSFA), took up his cause, and posted his suicide note on
its website to raise money for the Baber family. Quiznos quickly
responded by yanking the franchises of the eight directors of the TSFA,
and the TSFA responded by filing for an injunction in federal court in
Denver seeking to hold onto their franchises until the defamation
allegations filed by Quiznos could be litigated.

When It’s Time to Walk Away From the Franchise?

Baskin-Robbins losing two shops

Most franchise agreements have a term of about 10 years with options to renew. If the franchisee wants to renew, they must sign the then current franchise agreement, which may require upgrades to the building, menu, operations, adherrence to the new operations manual, etc. Sometimes those required upgrades just don’t make economic sense for the franchisee because the economic realities show that you won’t make that money back over the next few years. If you are already netting less money than you hoped (say $40,000/year), do you invest the $70,000 to keep the franchise? Or, do you walk away from your entire investment, all the machinery, investment in the fixtures and local brand, the relationships? One longtime Baskin-Robbins franchisee in Champaign, Illinois faced such a decision, and decided to not continue.

Panchal has operated the store since 1991, but said Baskin-Robbins wants him to spend $70,000 renovating the shop. He said if he were making $300,000 a year, he might do that, but the revenues and location haven’t been that strong.

Stover figures he sells about 3,000 gallons of ice cream a year. The ice cream, made by Dean Foods for Baskin-Robbins, comes in 3-gallon tubs that yield about 72 scoops each.

About 60 percent of his revenues come from ice cream sold by the cone or the dish. Desserts, such as ice cream cakes and pies, account for another 20 percent.

The remainder comes from miscellaneous products, such as prepackaged ice cream.

More Trouble for UPS

UPS Store franchisee files suit against UPS – The Business Journal of Milwaukee:

The suit, which was filed in U.S. District Court in San Francisco, accuses Atlanta-based UPS (NYSE: UPS) of wrongly profiting off of UPS Store and Mail Boxes Etc. franchisees by billing them for differences in shipping rates.

According to the complaint, franchisees weigh and measure customer packages in their stores, and charge customers accordingly. They then ship the package to UPS, where the company re-measures the package and charges the store owners for the difference.

The lawsuit argues that franchisees have no ability to contest the revised measurements and can’t reassess customers for the additional charges. It also claims that UPS uses “inaccurate” methods of measuring the packages.

Junk Hauler

Positive 1-800-GOT-JUNK Article

Uniformed drivers remove junk from where it’s located, break it down to conserve volume, load it in the truck and haul it away.

The cost for the volume-priced service starts at $120 and goes up to
$598 per truck load. The average job in Hawaii ranges from about $375
to $400.

When McDowell took over the Hawaii franchise last year, she started
with two junk trucks. She’s since added a third truck and is
considering purchasing a fourth vehicle. McDowell has grown her staff
to five full- and part-time employees and is looking to expand.

“Business has more than doubled in the last year,” McDowell said,
adding that she’s found quite a need for the business in Hawaii, where
many people struggle to live in small spaces or in multifamily
situations.

Believe it or not, the “800” franchises tend to do well and receive reasonable flow given the name of their business is their telephone number (clever).  Partnering/revenue sharing with local funeral homes, moving companies, or hardware/equipment rental stores is smart way to keep business volume high and expand with more trucks.  The laborers you can obtain inexpensively from emove.com may dampen cap the business potential, but this would be a reasonable franchise for those with a strong back and keen marketing/parntering skills.

Secrets to Arby’s $3.5 million/year Store

Arby’s franchisee finds formula for success

The keys to their success can be summed up as:

  • Hiring reliable employees, and nurturing them so they stay
  • consistency of product quality (linked to employees)
  • flexibility of franchisor to permit altenative and innovative store layout

Below are direct quotes for the article:

Lowe attributes much of the company’s success to hiring standards almost unheard of in the restaurant industry. The company has a turnover rate of slightly above 50 percent, unusually low for the industry. Before an employee goes to work for The Restaurant Co., they undergo a psychological profile, a drug test and a criminal background check, and that’s after having gone through several interviews.

Once the company hires someone, Lowe said, the processes in the restaurant are designed to help them be successful. The company conducts employee satisfaction surveys twice a year to help spot problems.

Restaurant employees also have the authority to solve a customer problem, up to $100.

“We are full-service guys running fast-food restaurants, so we look at things differently,” he said. “We focused on dinner, where a lot of quick-service restaurants focus on breakfast.”

The company supported that effort with innovative restaurant designs including carpet on the floors, softer lighting, granite countertops and wooden chairs. The Short Pump restaurant even serves beer and wine, although it’s a small part of the business, Lowe said.

“If you are really trying to analyze why our average unit volume is so high, dinner has a lot to do with it,” Lowe said. “Our lunch/dinner mix is about 50/50.”

The AAFD Awards Cuppy’s Coffee Franchise with Contract Accreditation

The American Association of Franchisees and Dealers (AAFD) announced today that Cuppy’s Coffee & More, Inc. (Cuppy’s) has been added to the AAFD’s roster of companies earning AAFD Accredited Contract status. This special distinction is available to recognize new franchise systems, or new ownership and management teams, whose franchise agreements substantially conform to the AAFD Fair Franchising Standards, but that lack operating history to evaluate franchise relationships.

Cuppy’s is a specialty coffee drive thru franchise business that offers coffee, lattes, espresso and smoothie drinks. Cuppy’s is a new brand that is arising from the ashes of a much troubled brand known as Java Jo’z.

As part of its response to rebuff suggestions that its new ownership is still connected to Java Jo’z problems, Cuppy’s management has committed itself to a collaborative franchise culture that adopts high standards of mutual respect between franchisor and franchisees. Cuppy’s franchise agreement earned nearly perfect score of 99.5% conformity with the AAFD Fair Franchising Standards, the highest grade ever achieved.

Cuppy’s Coffee & More, Inc. is a Texas corporation wholly owned by Mr. Doug Hibbing and is headquartered in Fort Walton Beach, Florida. Medina Enterprises, Inc., an affiliated company which is owned by Mr. Robert Morgan, is the contractor for the system’s restaurants and other units, as well as a provider of office and staffing services to Cuppy’s. In May 2006, Medina acquired some of the Java Jo’z assets, including the Java Jo’z brand, which was later assigned to Cuppy’s.

The Java Jo’z brand was confronted with major issues regarding Trademark ownership, allegations of unfulfilled contracts and personal problems of its prior owner. Cuppy’s new management team assessed that the myriad of inherited problems required a radical approach to change. That approach involved re-branding, a fresh start on training and support, and most importantly a fresh start with its franchisee community.

Cuppy’s intends to build its new brand on a foundation of respect for the AAFD’s vision of Total Quality Franchising, and Cuppy’s management has committed itself to a collaborative franchise culture, and one that sets a new standard of mutual respect between franchisors and franchisees.

Doug Hibbing, the President of Cuppy’s Coffee is excited about the AAFD Accreditation, he states, “we are committed to support our franchisees, we have great products, and a great staff. Our primary goal at Cuppy’s is to build a business with a reputation for integrity; the AAFD Accreditation is a giant step in that direction.”

AAFD Chairman, Robert Purvin praised Cuppy’s Coffee for setting a new standard in fair franchising agreements, “Cuppy’s Coffee has demonstrated its commitment to fair franchising, the AAFD is delighted to welcome Cuppy’s Coffee to its list of Accredited Franchises.

The story of Cuppy’s is a testament to the AAFD’s efforts to improve the franchising community and to reward Total Quality Franchising practices. The management team of Cuppy’s showed unprecedented willingness to accept the recommendations of the AAFD’s Fair Franchising Standards Committee.

Cross Posted at Let’s Talk Franchising

Motivating Employees

Domino’s slices off precious pizza time

Interesting observation in the pizza business:

No matter how big your global brand or your advertising budget, survival depends to a great degree on the speed of your deliveries.

The screens show employees what percentage of their pizzas are leaving the store within 15 minutes of the order having been received, what percentage are leaving within 15 minutes across the country, and what percentage within the specific franchise of which the store is a part.

The results, according to Domino’s deputy chief executive, Chris Moore, have been remarkable. “When we first thought of the idea, the average out-the-door time for the system was about 17 minutes,” he says. “We thought we would build a programme to reduce that to 14 minutes by the end of 2010.

“But the key thing is that the out-the-door time for that period was 14 minutes. We had already reached our 2010 objective, and the only difference we had made was getting those screens in.” He believes that simply being given the challenge of increasing their team’s speed compared with other stores was enough to motivate employees to move that crucial bit faster, particularly in the hectic periods between 5pm and 9pm on Friday and Saturday, which account for a third of turnover in the takeaway pizza game.

The delivery side now accounts for 51 per cent of the pizza market, having overtaken sit-down consumption within the past two years, and as its share increases, ways of getting the edge become increasingly precious.

Raving Brands Litigation

Raving Brands Faces Copyright, Employee Litigation

COPYRIGHT CL AIM: Raving Brands’ legal troubles go beyond three franchisee lawsuits that allege fraud, misrepresentation, and undisclosed kickbacks. The holding company, which recently sold Moe’s Southwest Grill to FOCUS Brands, faces copyright and former employee disputes. In January, under the radar, federal courts ruled in favor of artist Janie Atkinson, who claimed Moe’s used her paintings—“Lady John” and “Sir John”—without permission. Both sides are currently arguing damages.

EMPLOYEE LITIGATION
: In August 2005, former franchise sales director Anne Wheatley filed suit, alleging she was denied promised stock options in Moe’s and Mama Fu’s…

Wheatley requested 50,000 shares of Moe’s stock and 50,000 shares of Mama Fu’s stock. According to her 2004 Schedule K-1 (IRS Form 1120S), Wheatley indeed had deductions taken from her accounts, with a 0.43 percentage of stock ownership for the tax year. The tax documents do not say, however, whether the deductions were for restricted stock. In February 2005, two months before Wheatley requested her dividends, Raving Brands’ tax accountant advised management to revise shareholder options to help franchise expansion goals.

Franchisor sues Franchisee for Hiring Illegal Aliens

Dunkin’ targets illegals: Sues West Concord franchisee

A spokesman forDunkin’ Donuts said it doesn’t comment on pending litigation. But hesaid that last June, Dunkin’ agreed to voluntarily participate in the so-called “basic pilot” computer system that allows employers to verify whether workers are legally in the country and have Social Security numbers.
….

In its suit, Dunkin’ says West Concord Donuts “knowingly and purposefully breached” its franchise agreement by “violating” federal immigration and employment laws at its shop. The suit said owners “knowingly accepted false identification documents” for hiring purposes.

Dunkin’ also said the company failed to keep up its franchise fees, or the percentage of the shop’s total gross sales.

The Dagwood Sandwich comes to life!

Dagwood’s sandwich-making skills are legendary and have made his name synonymous with outrageous sandwiches. Wikipedia defines “the Dagwood sandwich” thick multi-layered sandwich made up of a wide variety of meats, cheeses, and condiments. It was named after Dagwood Bumstead, a character in the comic strip Blondie who frequently made enormous sandwiches.  The comic strip was written by Chic Young.

Chic Young died in 1973, and his son, Dean, took over the strip, making every thought of Dagwood’s one of his own. And, over the past 30 years, Dean Young couldn’t stop thinking about opening a sandwich shop for Dagwood. He’s collected and created thousands of recipes over the years.

Now Dagwood’s Sandwich Shoppes have become a reality, the result of a partnership between Dean Young, who brings his creative genius to the arrangement, and International Marketing Systems (IMS), which has 17 years’ experience creating communications and franchisee-support programs for large retail companies and restaurant chains.

Read More