Australia’s quirkiest franchises

Weeding Women gardeners, Lollypotz chocolate bouquets and potted plants, peace lilly installers to clean air, lice removal salons – those are some of the odd but growing franchises in Australia. See this article for more examples.

Franchisor’s Business Coaches

Most franchisors with 20+ units assign dedicated business coaches to franchisees to ensure operating compliance, help solve problems and bolster sales.

For example, here is what Jimmy Johns claims to do:

1 coach per 26 stores and they visit for a full day at least once every 30 days. If there are any issues or suggestions they are discussed with corporate if necessary and a written response is provided thr following day.

The reasoning goes that nothing should linger and everything is fixed immediately.

As comparison, Culvers has one coach for about 20 stores, but obviously they are much bigger stores. I believe Culvers has had only one store closure. A ratio under 40 units per coach is better than average.

GE Capital, Franchise Finance Provides $4.1 Million to Jimmy John’s Franchisee

I was told at the National Restaurant Association show in Chiacgo a few weeks ago that GE was no longer underwriting franchisee loans. I guess the speaker in that breakout session was wrong as they just provided $4.1 million in debt and line of credit to a 14-unit Jimmy Johns franchisee in Kansas. http://www.marketwatch.com/story/ge-capital-franchise-finance-provides-41-million-to-jimmy-johns-franchisee-hinz-jj-llc-2012-05-16

9 Common Interview Questions That Are Actually Illegal

http://finance.yahoo.com/blogs/secrets-toyour-success/9-common-interview-questions-actually-illegal-201733303.html

Interesting perspective on illegal interview questions. Franchisees and the hiring.managers should be aware of these as training guidelines.

I think The article can be more clear about what the actual action is that is illegal. Asking the questions or discovering the answer isn’t illegal, only using it as the reason for certain employment decisions is prohibited. But why tread on thin ice with these issues? Just avoid these topics as a general rule.

Another Gaming Chain in Trouble

GAME, the European and Australian retail gaming giant with over 1,200 outlets similar to USA’s GameStop and Play n Trade, filed for Bankruptcy.

GAME has 600 hundred stores in the UK with a £15 million rent bill per quarter and a £10 million wage bill per month. Would their reach be more effective with only a few marquee retail stores and the rest online sales?  While gaming is experiencial and in store demos and marketing can help drive sales, similar to retail book stores the overhead laden higher prices will push customers to online. Competitors, especially in the gamer demographic, will buy from tye cheapest outlet. Further, many games are downloaded bypassing even online retailers like Amazon. I wouldn’t buy a Play n Trade for those reasons, even though the used game disc market is alive and well.

[Updated Mar 15, ’12] Pizza Fusion agrees to buyout from Unique Pizza & Subs

Unique Pizza and Subs, a 7-unit pizza-sports bar chain traded on OTC Pink Current tier, has agreed to acquire the well branded Pizza Fusion, an 11-unit organic pizza chain. I think there is more to this story, as Pizza Fusion seems to be a much strong player than Unique Pizza & Subs. It could be seen as more of reverse merger with Pizza Fusion as the driver, whereby Pizza Fusion can now be publicly traded and potentially raise more cash for expansion.

[updated March 15, 2012]
I found another interesting article about this merger. [more here] It seems there may be some Bacon Raton, FL penny stock promotion linked to this merger, and it’s not the first time Pizza Fusion has flirted with the Pink Sheets marketplace to attract needed capital, as you can read below:

Trafford, Pa.-based Unique Pizza, which recently issued news releases about two franchising agreements, also said in January it was in the “secondary stage” of selling its pizza in China. The China announcement, which indicated a financial partner was actually still seeking a distributor in China, was issued by Mirador Consulting via PR Newswire and gave a Boca Raton phone number.

Boca Raton is known nationwide as a center of penny stock promoters and penny stock companies, which would include Pink Sheets companies like Unique Pizza.

Unique’s Pizza 2007 filing said the company had raised $718,993 of a $1 million offering, so one question is how the current deal will be funded. The news release said the deal is subject to execution of a definitive agreement and other conditions including the availability of working capital.

A chart on MarketWatch shows no trading volume in Unique Pizza since January, when the announcement of the China deal and a sports pizza sports bar were made. However, trading volume started to appear on Thursday. At 5 p.m., Unique Pizza announced a master franchise deal in Michigan.

Woodbridge Holdings, which merged with BFC Financial Corp. in 2009, made a $3 million investment in Pizza Fusion in 2008 and an additional $1 million investment the following year.

In a U.S. Securities and Exchange Commission filing in December, BFC said Pizza Fusion was in need of further financial support to continue operating under its business plan, and that BFC had no plans to make further investments. In that filing, Woodbridge said it held a 45 percent equity interest in Pizza Fusion.

For its part, Pizza Fusion had not be successful in raising additional capital, the SEC filing said.

It’s unclear how much of a role BFC has continued to play in the pizza business. BFC also has a majority stake in Bluegreen Corp. (NYSE: BXG) and BankAtlantic Bancorp, which has missed its previously stated goal for releasing its annual report and whose stock hit a 52-week low.

Tim Horton may switch from fresh to premade donuts, judge says

http://www.cbc.ca/news/business/story/2012/02/28/tim-hortons-class-action.html

Justice George Strathy of the Ontario Superior Court recently issued a summary judgment in favour of Tim Hortons, dismissing an attempt by some franchisees to argue that the chain was wrongly profiting from a switch in how the company makes its baked goods.

Under what’s known as the “Always Fresh Conversion” several years ago, the company stopped making baked goods from scratch in each location every day, and instead started shipping partially baked items that had been flash frozen before final baking in ovens at all Tims locations every morning.

The new system has proven very profitable for the parent company, but some franchisees complained it simply downloaded new costs to them while the parent company pocketed the savings.

The case also alleged that Tims was requiring franchisees to sell new lunch menu items at break-even prices — or sometimes even at a loss.

The plaintiffs allege that’s a breach of their franchise agreements, which states ingredients would be sold to franchisees at commercially reasonable prices.

The judge dismissed all aspects of the suit, saying Tims is well within its rights as a franchisor to implement new procedures and technologies to its business model

“In order to keep the system healthy and competitive, the franchisor must be permitted to introduce new products, new methods of production or sale, and new techniques,” the ruling reads. “It would not be commercially reasonable to require that the franchisor can only implement system-wide changes … if the proposed change is [demonstrated] to be an improvement that benefits that particular franchisee.”

Nearly ever franchise agreement I’ve read allows the franchisor flexibility in specifying what products must be sold, even if this involves a fundamental change in the way the product is produced. I doubt the primary motivation of Tim Horton’s is financial, I’m sure there are consistency and labor cost savings involved, but stepping into the shoes of the franchisee I understand their frustration of this added “fee”. On a side note, Dunkin Donuts uses frozen dough.

21 Essential Lessons to Growing a Business

I loved this list. One of the United Kingdom’s most successful entrepreneurs, Luke Johnson, shares 21 lessons he’s learned in business:

1. The world is in love with the romance of start-ups. But all other things being equal, I believe it can sometimes be better to buy a business than start one.

2. Never demand a certainty: if you wait for that, you will be on the sidelines for ever.

3. Leave behind the notion of the big idea and just do what most successful entrepreneurs do: copy and improve. Imitate first, and then devote yourself to constant incremental improvement.

4. Whenever you can, make sure a name has some underlying meaning. Don’t copy the example of Diageo; one of the world’s biggest drinks manufacturers. “Diageo” means nothing. It’s not even easy to spell, or to Google. For everything that’s bad about high-concept names, look no further than Diageo’s own toe-curling explanation: “The word Diageo comes from the Latin for day (dia) and the Greek for world (geo). We take this to mean every day, everywhere, people celebrate with our brands.” I wonder if Diageo’s management realize that having to listen to that sort of rot could well make its staff want to quit and start their own business.

5. Today is a better time to start a business than tomorrow, no matter how today looks.

6. Achievement changes people. Once someone attains status and wealth, their attitude towards sharing the spoils and the glory alters. It slowly dawns on them that actually all the clever moves and breakthroughs were their idea and, in fact, they are the only one who really does any work.

7. When I interview managers, I ask them about their customers and competitors. The high achievers will know them intimately, and can talk for hours about the strengths and weaknesses of their rivals.

8. I tend to respect actual experience in a line of work, or a specific trade qualification, over an MBA.

9. It can be better to take a bad decision and correct it later than procrastinate and sit on the fence.

10. Anyone who employs talented people knows that talent is a rare commodity. The entrepreneur should move heaven and earth to hire it. Yet at the same time, no company should ever be in thrall to its stars.

11. Football clubs are essentially charities run for the financial benefit of staff, as are most investment banks.

12. It’s a sad fact that if an entrepreneur employs enough people, sooner or later there will be a thief on the payroll.

13. The most common personal issue I’ve encountered among associates has been the male mid-life crisis, with the classic accoutrements: mistress, motorbike, drugs, long hair, and even cosmetic surgery.

14. The very utterance of the letters HR should strike fear into the heart of every self-respecting entrepreneur. Human resources are like many parts of modern firms: they are a pure expense and a burden on the backs of the productive workers.

15. The life of a self-made man is not always pleasant. Driving hard bargains, dealing with litigation, juggling creditors, making staff redundant, fighting for customers – these are all part of the craft of running your own show. Managing a business can have a brutalizing influence on your character.

16. Hugely successful entrepreneurs probably don’t make for tranquil life companions as a rule.

17. The greatest ritual of all is, of course, the “meeting”. This is a magnificent engine of bullshit of all kinds. It gives the participants the feeling they are making progress with their project, whatever it may be.

18. It soon becomes apparent that some angel networks are run by people with no obvious record of great success themselves. 19. Robert Frost put it best: “A bank is a place where they lend you an umbrella in fair weather and ask for it back again when it begins to rain.”

19. The most fertile period for innovation is when people are in their twenties: from Nobel Prize winners, to entrepreneurs, to composers, to writers, real breakthroughs and greatest works tend to be the province of the young.

20. A complaint that’s well handled often leads to repeat business. The fascinating thing is that good service does not necessarily cost a firm more to deliver than shoddy service.

21. Beyond a certain point, the trappings of wealth are merely a game to keep boredom at bay.

Burger King tries home delivery

http://www.usatoday.com/money/industries/food/story/2012-01-12/burger-king-delivery/52604104/1

At first I thought Burger King delivery was a dumb idea.  But, after thinking about it a while, it may prove to be a smart move – in the right locations and for the right premium.

Burger King is using custom packaging for the fries that won’t trap steam to make them soggy, but it will trap the emitted heat.  The delivery bags probably have a heating element too.

I could see delivery being a surprise hit with customers. There no reason pizza should be the only popular delivery food.  Jimmy Johns owes a lot of its success to delivery.

Fast Food Advertising – Are the Photos Enhanced?

How close are fast food advertising pictures to the real thing?  I’m sure everyone accepts that the food is “prettied up” for pictures, but by how much?   Below is an example, you decide if it is a fair representation.

If burger ads are enhanced, what about the materials and representations you get as prospective franchisee?  Is that material “prettied up”?

for more humorous analysis of ads, see here.

Taco John’s Tries Lowering Food/Labor Costs w/Workshops

Taco John’s, a “West-Mex” fusion fast food restaurant, held voluntary workshops in most of its territories for franchisees to learn ways to reduce their food and labor costs with a goal of 1% reduction. They were in the form of interactive round tables and discussion about how to streamline operations, and there was lots of networking between unit manager.  Also discussed were ways to better advertise locally.

It sounds like a great way to reach out to franchisees.  Hopefully it will help.

Last Minute Gift for 19-35 year olds – the book BALLSY

If you are in a bind and need a quick gift for someone in the late teens to 30s, I recommend the book BALLSY: 99 Ways to Grow a Bigger Pair and Score Extreme Business Success by Karen Salmansoh.

 

It is in-your-face, real world advice and inspiration for your career, whatever field you’re in.  It’s the opposite of academic, and gives the advice a wise old CEO would give after a few gin and tonics.  It’s not a long book, it only has a few sentences on each page with pictures, but it focuses on the importance of marketing yourself and your talents, dealing with people, and getting yourself into positions that will eventually lead to more opportunity and “luck”.  I’ve found a lot of it to be true after being in the workforce for 20 years, and would have benefited from this type of advice early in my career.

Here’s a some of my favorite samples:

Tip #1&2 /  More important than talent, have balls.

Sure, talent matters, but if you don’t have balls, your talent won’t matter – because nobody will ever find out about all your swell stuff.

Fact: If you’re seeking extreme success, you cannot be afraid to go against the crown, make mistakes, look dumb.

If you want ot reach extreme heights in your career, get over your fear of fail.  You must become confident in your abilities to deal with any crisis or obstacle if you plan to pursue your passions with cockiness, vigor and sense of playful adventure need to snag ’em.

Tip #3 /  There are no wishy-washy rock stars, no wishy-washy astronauts, no wishy-washy CEOs, no wishy-washy nobel price winners.

Be like a cockroach, survive everything nature and man can throw at you for millions of years.  If you get sprayed with a lethal dose of negativity, you must quickly wipe off your antennae, find your bearings and keep going for all those goodies!  Indeed, you must use each spray as a spirit strengthener to build up a strong tolerance for dealing with future sprays of negativity…and thrive against all odds.

Tip #4 /  Mom was wrong, it is okay to talk to strangers

  • Start friendly conversations often.  Schmooze.  Network.  Join organizations.  Go to parties.  Go to galas.  Go to soup kitchens.  Never have cold feet about cold calling anyone you want to meet.  Depend on the kindness of strangers.
  • Every person you talk to = 3 degrees of separation from someone you might want to talk to.  The more people you know, the luckier you’ll be.

Tip #39 /  Whenever possible, play with people who are better than you.

TIp #73 / Learn Under a Substitute Teacher

  • When faced with a problem, substitute someone you trust and respect as being in your place – and imagine what they would do.

Tip #90 / It’s better to communicate difficult stuff sooner than to try to fix a really difficult problem later.

Always squoosh a work problem when it’s a mini.  The longer you wait, the bigger and scarier problems get.

Franchisors at or near Bankruptcy

Here is a partial list of franchisors that have filed bankruptcy, or are reported near filing bankruptcy recently.

  • Perkins
  • Marie Callender’s
  • Old Country Buffet
  • Real Mex Restaurants
  • Giordano’s
  • Cork and Olive
  • Dial-a-Mattress
  • Bally Total Fitness
  • Friendly’s
  • Souper Salad
  • Sbarro
  • Dippin’ Dots
  • The Little Gym
  • Fatburger (A little controversial -Fatburger parent company not part of bankruptcy, but the two subsidiaries accounted for 72% its total revenue in 2008. The bankruptcy came under pressure from G.E. Capital Business Asset Funding, which Fatburger owed $3.9 million for defaulted loans.)
  • Mrs. Fields / TCBY

A bit older bankruptcies.  It shows that some brands can recover quite well, especially Denny’s, Day’s Inn, 7-Eleven and Church’s Chicken:

  • Bennigan’s – 2008
  • Baker’s Square – 2008
  • Roadhouse Grill – 2007
  • Ground Round -2004
  • Boston Market – 1998
  • Denny’s – 1997
  • Church’s Chicken – 1991
  • Sizzler’s – 1996
  • Krystal – 1995
  • Day’s Inn – 1990
  • 7-Eleven – 1990

Giordano’s, You Fool

 

What a sad story. Giordano’s is a leader and well-known institution in Chicago’s stuffed crust pizza game. It owns 10 corporate  stores and manages 35 franchised locations in Illinois and Florida.  Somehow this chain, where people (often tourists) stand in long line for an overrated $20 deep dish pizza, owed $45 million to a lender and had to file bankruptcy in February when it stopped paying back a note. Bidders for the company include the parent companies of Gino’s East and Connies Pizza.

It sounds like they over-leveraged their real estate acquisitions and didn’t have enough income for debt coverage.

Giordano’s was acquired by VPC Capital Partners in Chicago for $52 million.  It’s chairman, Richard Levy, hopes to elegantly apply his legal, bio-pharmaceutical, and energy background into the pizza industry, an obviously natural next step for him and sure to reassure franchisees.  Luckily, the Giordano’s family is going to stick around and collect big salaries to help out.   Don’t the new owners look happy in this picture (pic courtesy of Chicago Tribune) to the right?   They have BIG plans for the brand, hoping to clone the success of Paul Newman’s $200 million grocery business including developing a line of products for grocery stores “similar to what Paul Newman has done for salad dressing” and expanding the restaurant footprint beyond its Chicago and Florida markets.

Commodity food prices drop, Pizza stocks rise, Pie Five Pizza starts strong

Cheese

Average block cheese prices continued to drop last week on the Chicago Mercantile Exchange, averaging $1.77 from $1.81 the previous week.

Cheese reached its 3-month high of $2 on Nov. 15, but continues to drop on slowing demand.

Wheat

Wheat prices fell again last week on the Minneapolis Grain Exchange, averaging $8.43 from $8.54 the previous week. Two weeks ago, wheat was as high as $9.26. The current multi-month low is the result of a larger-than-expected grain output from China, and a positive jobs report from the U.S.

Pizza company stocks

Pizza stocks were boosted by lowering commodity prices and an upward trending stock market the past week.

Pizza Hut parent Yum! Brands Inc. closed last week at $56.25, up nearly $4 from the previous week, which closed at $52.72. The company hit its 52-week high in August when shares were $56.72. Yum! traded as low as $46.40 in January.

Domino’s closed last Friday at $33.56 up from $30.51 the previous week. DPZ hit its 52-week high earlier in the day on Friday, trading at $33.81. Shares remain substantially higher over this time last year when the company traded at $14.72. The company has a P/E ratio of 30.8, above the average leisure industry P/E ratio of 22.4 and above the S&P 500 P/E ratio of 17.7

Papa John’s closed last week at $37.25, up from $35.50 the previous week. PZZA hit its 52-week high earlier in the week, at $38.18. PZZA’s 52-week low was last December when it traded at $25.83.

CEC Entertainment Inc., parent company of Chuck E. Cheese restaurants, closed out last week at $33.17, up from $32.35 the previous Friday. CEC hit its 52-week low of $27.42 in September. The company hit its 52-week high of $41.75 in July.

Pizza Inn closed at $6.28 Friday after hitting a new 52-week high of $6.60 earlier in the day. The company closed at $5.30 last Friday. PZZI traded as low as $1.88 in November 2010. Domestic same-store sales increased 2.7 percent for the first fiscal quarter compared to the prior fiscal year driven by a 3.2 percent increase in same-store sales for the buffet-style concept.

Most notable, and what I find most interesting, is the success of their new “Pie Five” concept. Pie Five offers 9′ pizzas for $6.50 baked in 5 minutes, with a target demographic of mid-to-upper income. In the first quarter of 2011, the first Pie Five Pizza Company generated $230,000 in sales and $50,000 in operating income before taxes.