What is the UFOC, and what does it disclose and why? The following article from 2004 goes through the basics of a UFOC.
General overview of some issues in hotel franchise agreements:
Hotel Franchise Agreements: Opportunities And Pitfalls
The issues mentioned include:
- Franchisee Opportunity
- How Franchise Agreements Differ From Management Agreements
- Negotiating Franchise Agreements
- Property Improvement Plans/Restoration
- Approval of Management Companies
He walks through the income and statistical analysis of whether this opportunity is worth giving up your current job from a financial perspective. Kudos to Arbonne for providing a seemingly honest earnings claim, despite the chances of earning an acceptable rate per hour being low.
When I was growing up: Wednesdayâ€™s was always Prince Spaghetti Day, but at least once a week we had pizza from Papa Ginoâ€™s. Â Â Itâ€™s great to hear that Papa Gino’s is planning to more than double its restaurants to 335 pizzerias over the next five years and expand for the first time outside its hometown New England market.
The Dedham company is looking to add 135 stores in New England, including about 90 of its first franchised restaurants, and open shops in new regions along the East Coast in Florida, Virginia, and North Carolina.
“We’re taking a giant leap,” said Anthony Padulo, Papa Gino’s senior vice president of franchise development. “We’ve been a market leader in the pizza business here, and we want to grow at a faster rate than what we’ve been doing. The timing is right.”
The push comes as other major pizza purveyors, including Little Caesars, have targeted the competitive Boston market for expansion. Papa Gino’s, which was started nearly 40 years ago as a single East Boston pizza shop, was ranked as the 21st-largest operator with about $145 million in sales in 2005, according to the most recent figures from trade publication Pizza Today.
Last year, Papa Gino’s sales exceeded $160 million, and existing stores have seen a 5 percent sales growth annually over the past five years, Padulo said. Papa Gino’s says this makes it a prime time for the company to expand its brand through franchises and take advantage of the growing $35 billion US pizza market.
Papa Gino’s, whose parent company Papa Gino’s Holdings Corp. also owns D’Angelo Grilled Sandwiches, has already secured the market’s first franchise location, in Portland, Maine. Papa Gino’s recently unveiled the prototype for company and franchise stores that aims to create more of an authentic, yet contemporary ambience. The prototype features a new logo, larger interior, prominently displayed pizza preparation and baking area, and upgraded booths, tables, and chairs.
Read more: Papa Gino’s seeks bigger slice of pie By Jenn Abelson, Boston Globe Staff Â March 9, 2007
Entrepreneur’s Franchise 500’s
Best Franchise Businesses — Franchise 500 Top 10
Entrepreneur managezine’s best of the best.
- Dunkin’ Donuts
- Jackson Hewitt Tax Service
- 7-Eleven (the recently bought out the White Hen chain in Illinois)
- UPS Store
- Jiffy Lube
- Sonic Drive In Restaurants
- Papa John’s Pizza
Here are a few I noticed in particular (some for good, some for bad reasons):
384. Nature’s Way Cafe: Healthy foods, salads, wraps, soups, smoothies
325. Cash Plus Inc. : Check cashing & related services
312. Rent-A-Wreck: Auto rentals & leasing
298. Steak n Shake: Steakburgers, fries, milkshakes
273. Nestle Toll House Cafe by Chip: Cookies, baked goods, coffee, ice cream
252. HomeVestors of America Inc. : Home buying, repair & selling system
225. It’s Just Lunch Int’l. LLC: Dating service
212. Pita Pit Inc.: Pita sandwiches
151. Super Suppers: Do-it-yourself home meal preparation
105. Bark Busters Home Dog Training: In-home dog training
87. Qdoba Mexican Grill :Fast-casual Mexican food
75. CiCi’s Pizza : All-you-can-eat pizza buffet
72. Sport Clips: Men’s sports-themed hair salon
58. Jimmy John’s Gourmet Sandwich Shops: Gourmet sandwiches
56. Edible Arrangements: Floral-like designs from sculpted fresh fruit
Franchise 500 Criteria (important):
All companies, regardless of size, are judged by the same criteria: objective, quantifiable measures of a franchise operation. The most important factors include financial strength and stability, growth rate and size of the system. We also consider the number of years in business and length of time franchising, startup costs, litigation, percentage of terminations and whether the company provides financing. Financial data is audited by an independent CPA. We do not measure subjective elements such as franchisee satisfaction or management style, since these are judgments only you can make based on your own needs and experiences. The objective factors are plugged into our exclusive Franchise 500Â® formula, with each eligible company receiving a cumulative score. The 500 franchises with the highest cumulative scores become the Franchise 500Â®.
A franchisor empowered with the discretion to purge poor performing or non-compliant franchisees is critical to the brand. For example, most everyone by now has heard of the KFC that had rats. The same franchisee with the rats also owned other Yum Brand franchises (they own 350 in total). Yum promptly shut down a few others temporarily, most likely for violations of the franchise agreement. What would the impact have been to innocent franchisees if the franchisee with rats continued to tarnish the brand? The franchisor needs this type of discretion.
The slogan of Simply Done is â€œUnpacking Made Easyâ€ — and it is made easy for relocating executives, upsizing families, and downsizing seniors — even vacation homebuyers.
Sounds like an interesting niche if you have prior relationships or can secure large contracts. But, emove.com, started by U-haul, is a popular eBay-style web site to find movers and strong guys to help you unload a moving truck, move furniture, etc. emove and Simply Done target different customers, and Simply Done may want to take a page form the emove strategy book and create a similar auction and peer-review web site for high-end unpacking and decorating service.
In its first major overhaul of its franchising regulations in nearly 30 years, the Federal Trade Commission is finally calling for greater disclosure by franchisors.
The FTC aims to insure that prospective franchisees “avoid harm” when considering a franchised business, the FTC said in publishing the revisions, which will become mandatory next year.
Under the revised franchise rule, confidentiality agreements preventing current or former franchisees from talking about their experiences would have to be disclosed. Regulators often recommend that would-be franchisees contact former or current franchisees to get their take on a business.
The FTC also wants franchisors to provide information about franchisee associations operating under a trademark, so prospective franchisees can learn more about the pros and cons of a system. Some examples of franchisee associations are: North American Association of Subway Franchisees NAASF, and Dunkin Donuts Independent Franchise Owners DDIFO.
Franchisors will now have to reveal lawsuits they brought against their franchisees under the revisions; the FTC’s original rule only required that franchisors disclose litigation filed by franchisees.
“The nature of the relations between the seller and the purchaser, as reflected in litigation, is of central importance” in assessing a major investment such as a franchise, the commission concluded. Other requirements include disclosure of exclusive territory.
Often franchisees think they won’t have to worry about another franchise opening up down the street, only to find that they’re not protected. “Taken together, each of these amended disclosures … will enable prospective franchisees to better assess the quality of the franchise relationship, and their likely success as franchisees,” the FTC said.
However, I am disappointed that the revised rule fails to require disclosure of a franchise’s financial performance. I think itâ€™s very important to the future success of franchising that more franchisors make financial representations and I believe it would have been a good time to require franchisors to make financial representations. Hopefully we wonâ€™t have to wait another 30 years.
The revised FTC rule becomes mandatory in July 2008, but franchisers may comply beginning July 1.
Cross Posted at Lets Talk Franchising
This is an interesting “full-service” approach to gaming. They have a â€œtry before you buyâ€ policy, do game console repairs, in-house tournaments, and sell all the gear a gamer needs. Selling 200 stores in 10 months (1,000 store goal in 3 years) is a dangerously fast – how can a young franchisor adequately service so many franchisees? I’m skeptical.
Update March 2, 2007:
Great comment by a reader:
I think this concept will have legs for another 5 years, but then it will crumble. All the new game consoles and obviously the PC games are played in group mode online. Downloading patches and extended game mods are all the rage, so it only make sense to download the original game too (which PC users often do now). So, Play N Trade will live a short life much like video rental and trading.
Of all business to invest in, why would you choose a product that would obviously be replaced in the near term? Iâ€™d prefer a high-end game center because many kids canâ€™t afford the $1,500 – $3,000 for top-of-the-line gaming PCs and video cards.
Smoothies, iced coffee and other specialty coffees could be added to the menu at U.S. McDonald’s restaurants, a top executive of the world’s largest restaurant chain said Wednesday.
McDonald’s already has scored a hit beverage recently with the addition of premium coffee to its more than 13,700 U.S. restaurants a year ago. Alvarez said coffee unit volume is up 15% as a result.
“McDonald’s is so large that they don’t really need to invent anything at this point,” he said. “For McDonald’s, it’s more important to recognize new things that are working well for competitors and finding a way to incorporate it into their system.”
As one of the first “New Concept” stores to open nationwide, some of the remodeled highlights of the Philadelphia store include:
- An updated image featuring a new logo that contemporizes the current Dunkin’ Donuts logo, but maintains the core DNA of the brand
- A new warm bakery display and a baker/merchandiser at the front counter offering samples of warm, freshly baked products throughout the day
This new design concept is complemented by a new, innovative menu that moves Dunkin’ Donuts beyond breakfast. Some of the new and exciting all day menu items created by Dunkin’ Brands’ culinary team that customers will enjoy throughout the day include:
- Warm baked goods available throughout the morning and afternoon, including a variety of freshly made muffins, danish, croissants, gourmet cookies, brownies and blondies
- Three varieties of Flatbread Sandwiches — Wedges of toasted lavas bread containing one of three fillings: three cheese, ham and cheese, and turkey, bacon and cheese
- Personal breakfast pizzas, topped with egg and cheese or sausage, egg and cheese
The South Broad Street location is open 24 hours a day, everyday.
But not all turnover is necessarily due to failure, they say.
Sometimes franchises buy back stores and terminate franchise agreements for
strategic reasons or the franchisee wants out for reasons besides failure.
Mario Herman, an Adamstown, Md., lawyer who represents
franchisees, says franchisers might be tempted to underreport turnover rates.
“They don’t want to put a number that looks too bad,” since turnover is often a
deciding factor to would-be franchisees. He says he’s seen many franchisees fail
because the franchise fees and royalties are too high for the franchises to
sustain profitability or the franchiser isn’t providing enough assistance.
Â The NY Times highlights several despondent Quiznos franchisees.Â Â The article does a good job of summarizing the major complaints and law suits currently pending against Quiznos.
Hat tip:Â Perry in the forum.
- A Pizza Pizza franchisee in Ontario recounts his decision to buy into the system, the training, paying the franchise fee, and steps along the way to opening.
- Atlanta Bread Co. and Sbarro bail from the Macon, Georgia mall.
- “40 percent of Quiznos units are not breaking even”
The single most important factor in the long term success of the best franchise systems is effective leadership. When you look at the cause of every significant achievement or problem there is always one driving force; effective leadership or lack thereof. Â
Leaders have always faced the job of inspiring others while making important decisions with incomplete information. Franchise executives face even more significant and unique challenges. They must first and foremost fulfill the traditional corporate leadership role, ensuring their organization deliver on its promise to its customers, behave in a responsible manner and earn profits. Â
But they must also play another role that is far less defined in its responsibilities, the franchisor role. This requires them to coordinate the ambitions of their franchisees â€” people who are franchise leaders in their own right. Â
The best franchise executives all exhibit similar key elements to good franchise leadership. They all have a clear vision: This is not just a one sentence mission statement about being the best franchise. It requires a precise mental picture of how the leader wants all aspects of the franchise system to evolve. Â
Itâ€™s important for effective franchise executives to maintain believability and integrity: sustained success is only possible if the people, especially franchisees, feel they can trust and respect you. The best franchise systems have an intelligent strategy: itâ€™s important to ensure that the franchise organization goals fit with the needs of its customers, franchisees and the market in which it operates. Â
Effective franchise leaders build commitment to change: social and economic changes mean that the best franchise systems must be adaptable in the way they do business. Also as a franchise system grows and develops, changes will be needed to maintain adequate levels of support to its franchisees. Â
The most effective franchise executives are adept at managing conflict: while people have a natural inclination to cooperate and help each other, they also have their own individual needs, expectations and approaches. This is particularly so in a franchise network where there can be several agendas operating at once. Â
The long term success of the best franchise systems depends on effective leadership.