McDonald’s introduces another Snack Wrap

The product, introduced Tuesday, is the third chicken snack wrap offered in the past year. The wraps have helped McDonald’s bring more customers in during the usually slow afternoon hours and may give it a leg up over rivals like Burger King and Wendy’s, analysts say.

“It’s probably one of the better products we have seen in the last several years,” says Larry Miller, an analyst in Atlanta with RBC Capital Markets. “They have really attacked the mid-afternoon as an area of opportunity.” Along with expanded

Opinion:

Being part of a larger, publicly traded franchisor has its benefits, particular in innovation.  The CEO must respond to negative publicity such as law suits or poor quality control, and it must be able to “tell a story” why the stock price is undervalued.  The CEO’s story is usually that investors are not fully valuing the upcoming improvements in the product or service offerings, such as a new menu item, a new promotional campaign, a faster system of delivering to the customer, etc.  This dance with stock analysts help franchisees by ensuring that there is some R&D and brainpower behind executing better strategies and more profits.

Furthermore, being a franchisee where the frachisor is a publicly traded company has other often-overlooked benefits. Disclosure rules and various SEC compliance regulations place a heavy burden on the franchisor to honestly disclose information. For example, most publicly traded franchisors (see McDonald’s, Buffalo Wild Wings, Jack in the Box, Gymboree, Choice Hotel, H&R Block, Regis Corp, to name a few) disclose monthly or quarterly same-store sales results, and disclose some transaction involve the sale or purchase of stores. A potential franchisee can likely reap sales data from these SEC filings and press releases.

The franchisor’s executive team must sign-off on these disclosures, and releasing false information can result in jail and huge fines imposed by the government. Instead of pursuing a franchise with a private franchisor who refuses to disclose any earnings claims, perhaps limiting your evaluations to publicly traded franchisors is a prudent decision. For the same disclosure reasons, many investors limit their investments to publicly traded securities rather than delve into the restricted world of private placement investments.

BOSTON — Au Bon Pain has announced the 100-percent elimination of trans fats from its menu items, and the launch of a new Web site that provides in-depth nutrition information for consumers.

Sign-A-Rama, the world’s largest retail sign franchise, has been awarded the United States Department of Commerce’s Presidential “E” Award. Sign-A-Rama is the first franchise company to ever win the award.Commerce Secretary Carlos M. Gutierrez joined President Bush at the White House to present Sign-A-Rama , along with ten other organizations, with the “E” Award for excellence in exporting. The company’s export sales increased 700% in three years, growing from $1.5 million in 2002 to $12 million in 2005.

In attendance were president and founder Ray Titus and his wife Andrea. Also in attendance was Tony Foley. Foley is president of World Franchisors which has assisted Sign-A-Rama and countless other franchisors for many years with their global expansion goals. World Franchisors is comprised of an advanced team who helps other franchisors quickly and cost effectively sell master licenses and establish a strong presence outside the United States.

Also assisting the franchise with their success in export sales is the U.S. Commercial Service. This government agency is the trade promotion unit of the International Trade Administration and works with companies to help get them started in exporting and increasing their sales to new global markets. The Fort Lauderdale, Florida office was instrumental in Sign-A-Rama ’s export success and subsequently their being honored with the “E” Award.

The President’s “E” Award is the highest honor the federal government can give to an American exporting company. The award serves to recognize U.S. firms for their competitive achievements in world markets and their part in increasing U.S. exports abroad. This marks the 45th anniversary of the Presidential “E” Award created by President John F. Kennedy in 1961.

“Winning this award was a great honor for our company coupled with the privilege of meeting President Bush in the Oval Office,” says Ray Titus, president of Sign-A-Rama . “Since we began more than 20 years ago, we have grown to over 850 locations in 50 countries. We are extremely proud and honored to have the opportunity to have helped so many people over the years achieve their dream of becoming their own boss.”

Sign-A-Rama , headquartered in West Palm Beach, FL, uses cutting-edge industry software programs to provide a full range of comprehensive sign and graphic services to both the private and commercial segments of the business community.

Cross Posted: Let’s Talk Franchising

After growing a successful franchise selling desserts, Bruster’s Real Ice Cream  is ready to serve up a full meal.Tim Schooley reports in the Pittsburgh Business Times, that the Bridgewater, PA, based ice cream chain recently began a strategy to co-brand its stores with The Nathan’s Famous Corp., the publicly traded New York-based hot dog chain known for its nationally televised Fourth of July hot dog-eating contests.

So far, six of Bruster’s 260 locations have become two-in-one Bruster’s/Nathan’s stores, including the region’s first in Dormont, said Dave Guido, vice president of concept development for Bruster’s. Two more area locations are slated for conversions, said Guido, estimating that 15 to 20 Bruster’s could operate jointly with Nathan’s by the end of the year.

While Bruster’s only began testing the co-branding strategy in February, and the Dormont location was the pilot store, Guido sees broad potential from early sales tallies, which he declined to disclose. “The results are going to tell the tale. But early on, we’re very, very happy with how it’s gone,” said Guido, adding the company is considering co-branding with other franchises, although he declined to name them.

“If we continue to get favorable results, it will be an option for everyone who is an existing store.”

Randy Watts, vice president of operations for Nathan’s, sees the co-branding franchising effort as a way for Nathan’s to reach new markets through Bruster’s territory, which extends throughout the eastern United States.

“It seemed like a natural synergy for the two brands to use their real estate a little better,” Watts said. “We’re the No. 1-selling all-beef premium hot dog in the world. We definitely think they have a real top-quality ice cream brand.”

Co-branding is nothing new for Nathan’s, which also owns Kenny Rogers Roasters. Nathan’s also operates joint locations with Subway in Wal-Mart locations, Sbarro and Pizza Hut, among others.

Bruster’s began considering teaming with Nathan’s because it wanted a daytime component to add to its made-from-scratch ice cream, which sells better at night.

Adding Nathan’s to established Bruster’s locations has not been complicated.

Besides adding a fryer and a few other pieces of cooking equipment, as well as new signage, Bruster’s expanded its menu to include hot dogs, french fries, chicken tenders and lemonade.

Co-branding in franchising is an increasingly popular formula employed by such companies as Yum! Brands, which often operates its Pizza Hut, Taco Bell and KFC restaurants out of single locations.

“The advantage is you save money in management and personnel,” said Gary Garda, principal of Downtown-based TLC Brokers/Garda Realty, and formerly an area supervisor for Pizza Hut.

“With Yum! Brands, you have one manager managing three concepts in one location.”

Garda also said rising real estate costs made it increasingly difficult for a fast-food chain to exist on a single-menu item alone.

Cross Posted at: Let’s Talk Franchising

The Dayton Business Journal reports that Allied Capital Corp. will pay $45.2 million to support the buyout of Comfort Keepers Franchise by Boston-based private equity firm Webster Capital.

CK Franchising Inc., which provides home care around the country as Comfort Keepers, has been sold to private equity investors.

Dayton, Ohio based CK Franchising operates more than 500 Comfort Keepers franchises in 46 states and seven countries.

“Both companies have long histories of identifying strong companies with significant growth potential and providing guidance and resources for growth,” said Jim Booth, president and chief executive officer of CK Franchising. “This is an ideal marriage for CKFI and our franchisee owners.”

Comfort Keepers ranks as the area’s seventh largest home health care agency with $4 million in 2006 revenue, according to Dayton Business Journal research.

Cross Posted at: Let’s Talk Franchising 

Mexican-food chain to expand in Chicago area

“We thought we had more interest from our franchisee base (in Chicago), but we didn’t,” Mr. Beisler said. “But we’re pleased with our existing
stores.”

Qdoba plans to focus on opening corporate-owned restaurants from the northern border of Cook County down to Indiana. One franchisee has purchased the right to develop Qdobas in Lake County. The company is counting on its established stores in the Indianapolis, Milwaukee and St. Louis areas to boost brand recognition in Chicago.

After seven years of same-store sales growth, Mr. Beisler said now is the time for Qdoba to aggressively expand into markets such as Chicago, Manhattan, Seattle and Minneapolis. The company currently has 375 stores in 40 states.

…

Qdoba — a made-up word that Mr. Beisler said resonated with him — serves burritos, salads, soups, nachos and tacos.

“There’s nothing really Mexican about cilantro lime rice, poblano pesto or tortilla soup,” he said. “We’re modern, nouveau Mexican.”

Fair Franchising Is Not An Oxymoron: AAHOA’s 12 Points of Fair Franchising

Looks good and worth a read to understand the legal aspects of the franchise agreement. Point 1 is discussed in this articles, which encompasses:

A. Voluntary Buyout or Involuntary Termination and Liquidated Damages
B. Windows Provisions
C. Early Termination for Underperforming Properties

Here is sample analysis on windows provisions:

In franchise agreements containing “windows” or “additional termination right” provisions, the types of “gotcha” clauses that are most unfair are those that explicitly state a franchisee’s rights will automatically terminate, without notice, (1) the franchisee fails to cure any default under the franchise agreement within the time permitted, if any, in the notice of default sent by the franchisor, or (2) the facility receives a poor score on a QA inspection, and then does not receive a higher predetermined score set by the franchisor during a re-inspection of the facility.

Pizza franchises throughout the U.S. are struggling with escalating costs of cheese. Block cheddar cheese – the benchmark for mozzarella and other cheeses – reached $2.08 a pound Thursday on the Chicago Mercantile Exchange, up 78 percent from $1.17 a pound a year ago. Industry observers attribute the price surge to strong demand and higher production prices – from the cost of milk to the cost for dairy farmers to feed their herds. Pizza Hut and Papa John’s International have raised their cheese-only pizza prices, and smaller restaurants, including Fat Jimmy’s in Louisville, Ky., have raised prices, too.

Papa John’s uses about 100 million pounds of cheese each year, and the cheese typically makes up 35 percent to 40 percent of the food cost in making a pizza.

Read the story “Pizza makers struggling with higher cheese costs” by Bruce Schreiner in the Daily Herald.Something tells me that America’s Desire for pizza will remain.

According to Pizzaware .com

• Americans eat approximately 100 acres of pizza each day, or about 350 slices per second.
• Pizza is a $30+ billion dollar per year industry. There are approximately 69,000 pizzerias in the United States. Approximately 3 billion pizzas are sold in the U.S. each year. (Source: Blumenfeld and Associates)
• Pizzerias represent 17% of all restaurants. (Source: Food Industry News.)
• Pizza accounts for more that 10% of all foodservice sales. (Source: Food Industry News.)
• 93% of Americans eat at least one pizza per month. (Source: Bolla Wines.)
• 66.66% of Americans order pizza for a casual evening with friends. (Source: Bolla Wines.)
• Each man, woman and child in America eats and average of 46 slices, (23 pounds), of pizza per year. (Source: Packaged Facts, New York.)
• Italian food ranks as the most popular ethnic food in America. (Source: National Restaurant Association.)
• According to a recent Gallop Poll, children between the ages of 3 and 11 prefer PIZZA over all other food groups for lunch and dinner.
• A study done by a U.S. Department of Agriculture statistician and home economist found that in a three-day survey period, 42% of children between the ages of 6 and 11 has eaten pizza. (Source: Smithsonian Magazine.)
• 94% of the population of the U.S. eats pizza. (Source: Parade Magazine.)

Cross Posted at: Let’s Talk Franchising

Quiznos CEO puts turnaround skills to work

The former Burger King boss is applying his turnaround expertise to the troubled sandwich chain, whose dissatisfied franchise owners have complained about low profits, company operating requirements and the franchisee recruiting process.

Since jumping into the fray in January, Brenneman has worked to reduce food costs by as much as 4 percent, improve communication with franchisees and test new products, like a Quiznos taco, to boost profits.

…

Last year, private equity firm J.P. Morgan Partners became an ownership partner, and Brenneman later became a partner through his company, Turnworks.

Through the roller-coaster ownership ride, the chain expanded quickly, to at least 5,000 stores. Today it’s ranked third behind Subway and Arby’s by Technomic, an industry analyst firm.  Although Quiznos does not release much information, Technomic restaurant industry analyst Darren Tristano said Quiznos has average sales of about $425,000 a year per store while Subway has average sales of about $375,000.

Quiznos’ success has come with growing pains.

Lawsuits by franchise owners in Illinois, Michigan and Wisconsin allege the company draws in prospective owners, who pay $25,000 for a franchise, but doesn’t give them complete facts about restaurant locations and business operations.

…

Lawyer Justin Klein contends many franchisees sign contracts only to wait a year or more for the company to build a restaurant. The suits
also accuse the company of requiring franchise owners to buy all supplies from Quiznos at higher prices than if they bought locally.

The company denies the allegations and filed motions to dismiss the suits.

Brenneman, meanwhile, has reached out to franchisees and targeted their food and other costs. If he can cut food costs by 3 percent and coupon discount offers by 4 percent, Brenneman believes he can add $25,000 to $30,000 in franchisees’ profits.

Change has to come from the top and it will be slow, getting a better handle on the franchise sales group will be difficult, but relief for most owners will likely never come. The realistic best case scenario is lower costs, same or better quality, and more efficient and effective promotions. Cutting food costs by 3% and coupon discounts by 4% seems hardly enough to squeeze $25k – $30k in profits. The franchisor prefers heavy coupons because it is paid on gross sales, and the franchisor dislikes coupon generally beacuse they still have to find a net profit margin on sales.

Muslim Dunkin’ Donuts franchisee can sue over anti-pork stance

The decision reversed an Illinois federal court judge’s 2004 ruling that rejected Walid Elkhatib’s argument that Dunkin’ Donuts discriminated against him based on his race by making the sale of breakfast sandwiches with bacon, ham or sausage a mandatory part of his franchise agreement.

According to court papers, Elkhatib, a Palestinian Arab, has been a Dunkin’ Donuts franchisee since 1979, before the company began selling any pork. Once breakfast sandwiches were introduced in 1984, Elkhatib’s Chicago-area outlets sold them without bacon, ham or sausage for nearly 20 years. The company did not object, even providing him with a sign that said “Meat Products Not Available.”

Who will win? My guess is the franchisor, as Dunkin’ Donuts has full discretion in deciding whether to renew the franchise agreement.

Buying a Franchise versus a Business Opportunity

How to tell the difference between a franchise and biz opp and determine which is the better fit for you.

The primary differences mentioned by the author are:

1. Common Brand and Operating System
2. Ongoing Support
3. Ongoing Fees
4. Legal Disclosures

Basic stuff, but it is what you are paying for as a franchisee. If you feel able to pursue a business opportunity and can do so without piggy-backing on another brand, operating system, and support, then you may be better off going it alone and foregoing the franchise fees, royalty fees, advertising fees, operational constraints, and required purchases.

Update 7-10-2007: Good comment by the always alert Michael Webster:

The article was terrible. It leaves the misleading impression that there is such a catergory as biz ops which don’t have to prepare a UFOC. Uh, well then how would one account for the fact that the FTC routinely closes biz ops because the failed to comply with the Franchise Rule? Really bad article.”

I came across this franchise and thought it was interesting, particularly because of the strong potential for commercial contracts with repeat business.

Vehicle relocator opens Columbus office

Auto Driveaway provides personal and fleet relocation services for cars and light-duty trucks, and arranges certified drivers for trucks and heavy equipment.

“We’ll be a full-service office, able to move any type of vehicle that can be driven on the highway,” Schultz said in a statement.

FIPB faces franchisee fan fury-Policy-Economy-News

Finance ministry officials are of the view that the move will lead to discrimination since many foreign brands such as Chanel, Marks & Spencer and Tommy Hilfiger are already present here, and restrictions will deny a level playing field to those who are waiting to enter the Indian market.

The food processing ministry is worried that infusion of technology brought in by brands like Pizza Hut and McDonalds—which operate here through franchisee arrangements—will be hampered. Similar is the concern of the textile ministry since a number of global brands operate here through franchisees and their arrival here has led to introduction of modern technologies.

Protectionism is a fact of life in foreign countries, but rarely works out for the best in the long run. The economic benefit is usually muted by higher prices.

Sports Bars’ Customers Love Their Hometown Teams, Drive Profits Up

[Buffalo Wild Wings] Same-store sales since the start of 2006 have jumped from 8% to 13% quarterly. For five straight quarters, profits have grown in double digits.

…

But rather than “worry if we are going to comp over last year,” the company “needs to make sure we’re executing and operating and giving our guests great value and experience,” she said.

Buffalo, N.Y.-style chicken wings are a big part of the guest experience. Though wing prices have risen, Smith locked in prices through the year that are now below market rate. She’s keeping an eye on other costs as well.

Buffalo also serves salads, burgers and a variety of specialty items.

As a neighborhood sports bar, it serves as a gathering place for friends and family. Guests play trivia games and watch sports and other shows on big-screen TVs. HD screens are replacing many of them.

Professional and college football and basketball playoffs are big draws, especially in the company’s core Midwest markets. Ohio stores make up about 20% of the store count.

“In Ohio, people are fanatics about their local teams,” Lyon said.

I’ve posted previously on the sustainability of chicken wing franchises – most everyone loves good wings, and matched with a large modern sports bar it makes for a solid business with an excellent chance of success, in my opinion.

Perry business offers free flags to replace worn ones

If the flag you unfurled today looked a little more pink, beige and lavender than red, white and blue, Goin’ Postal wants to help.

Throughout July the Perry packing and shipping business is offering a free American flag to anyone who brings in a faded or tattered flag. It’s a companywide effort by the chain, which has 250 locations.

Hopefully your franchisor can come up with clever ways to get free PR and get people in the doors.  Free in-store give aways, promos with local radio stations, big donations of products/services – are a few commonly used techniques that will get you noticed.  However, many franchise agreements forbid franchisees from endeavoring on their own public relations efforts, so I would be sure to choose a franchise that gives the franchisee the flexibility to promote oneself in clever ways.

“Best Overall Company in North America”

World’s Premier Business Award Competition Gives Global Business Coaching Franchise Its Top Honor; Contest Judged by International Business Leaders

Action Coach announced today that it has won one of the world’s top business honors: the 2007 International Stevie Award for “Best Overall Company in North America.”

The Stevie Business Awards is the only international, all-encompassing business awards program. Judged by a blue-ribbon panel of CEOs, business school academics and industry leaders from around the world, the Stevie Awards exists to raise the profile of exemplary companies among the press, the business community, and the public. The New York Post has called the Stevies “the business world’s own Oscar Awards.”

As “Best Overall Company in North America” for 2007, ActionCOACH is recognized for its innovation, integrity, and growth. The company will receive its award at a gala dinner ceremony September 10, 2007 at the Munich Marriott Hotel in Munich, Germany.

“Besides the long-term success of our franchisees and clients, being named ‘Best Overall Company in North America’ is one of the highest accomplishments ActionCOACH could hope to achieve,” said Brad Sugars, chief executive officer of ActionCOACH. “This is an award that recognizes not only the exceptional worth of our system’s coaching services, but also the way we at ActionCOACH conduct ourselves — our culture, our values and the way we’ve chosen to do business. On behalf of our employees, as well as our 1,000 franchisees in 23 countries around the world, I’d like to thank the International Stevie Awards for this tremendous honor.”

Winners of the International Stevie Awards were chosen from over 1,000 nominations received from more than 30 countries. A two-step judging process determines winners, with the Stevie Awards’ distinguished panel of judges and advisors deciding the Stevie Award recipients from a select group of finalists.

In addition to the Best Overall winners, the Stevie Awards recognizes companies for specific achievements including social responsibility, innovation, customer service, human resources, marketing, and new products. Stevie Award winners receive a statuette designed by R.S. Owens, the same company that makes the Oscar®, Emmy, and Clio awards.

ActionCOACH, is one of the fastest growing franchises and is the largest business coaching company in the world. The company was established in 1993 in Australia by a young visionary named Brad Sugars. Brad recognized early on that most owners of small and medium-sized businesses were unaware of how to effectively grow their businesses and achieve their goals. He developed a comprehensive system and methodology to assist business owners in achieving their goals and realizing their dreams with dramatic results. The company began franchising in 1997, and now has nearly 1,000 offices in 23 countries around the globe. For more information visit Action Coach.

Cross Posted at: Let’s Talk Franchising