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Today is the last day of the 50th International Franchise Association’s annual convention. This year, the convention takes place in San Antonio, Texas and plays host to a number of speakers from across the franchising and entrepreneurship world, along with key speaker, former US President – George W. Bush.

The convention also features an awards ceremony, honoring those who are deemed to have contributed significantly to the international franchise community, along with a tribute to the lifelong contribution of Russell J. Frith, former member, treasurer and chairman of the IFA .

The convention is a great networking opportunity, and attendees at this year’s convention also have the chance to meet with representatives from many franchises available across the US including such recognizable brands as 7-Eleven Ltd., Ben & Jerry’s, Build-A-Bear Workshop, ComForcare Senior Services, McDonald’s, Subway and NexCen Brands who are responsible for some of the most successful food franchises  including Great American Cookies and Maggie’s Moos IceCream. Some of these franchises ranked very high in our recent Top 100 Global Franchises, and have a lot to offer in terms of advice to new and growing franchises. The convention should prove a wonderful opportunity for those franchises looking to expand their franchise network across the US.

Franchise Direct representatives Jill Ptacek and Chaz Williams along with Marie Andrée Maurice are currently attending the convention so we’ll be sure to provide you with an update of all that went on when they return…and recover!

To find out more about the event, visit the IFA’s website, or to find out more about any upcoming franchise expos and events, why not visit our franchise expo and event calendar.

Today we’re very excited to publish a guest post by Joe Nichols, second-generation owner of A & M Vending Machine Sales.

Before we can effectively discuss compensation for account placement, we need to discuss the qualities of the account market. Have you determined the type of company you will be selling to? What type of people are the decision-makers in these accounts, what are their purchasing habits, when do they buy? Create a sales strategy and implement that strategy in a sales program that targets the decision-maker’s habits.

Remember the law of cause and effect. For example, if your desired decision-makers are concerned only about price, your concern should be profitability. If you can obtain placement by lowering the prices of your products – but your company cannot make a profit – there is no reason to place the account, because no profits means no cash flow, which means the business isn’t sustainable. You can grow your business by lowering prices. If your goal is to sell 1 million units and you achieve this goal by lowering prices – but you lose $1 per unit – you are now $1 million in debt. Not a great business model to follow.

Find a business mentor

The vending machine industry is an established industry. An operator that has been in business for 5 or more years has seen what does – and doesn’t – work. Don’t fool yourself into believing that you are innovative and that your new system is going to take the market by storm. Very few ideas are new and somewhere (probably closer than you think) someone has tried to implement it that same idea. Keep thinking, but find an experienced operator with whom to discuss the ideas. You might be surprised by the answers you receive.

I personally did just this with an idea that I felt would give me a huge advantage in the vending machine business. I discussed it with my equipment supplier, who informed me that the concept had been tried by 3 other companies that he knew of – and that all 3 failed for the same reason (a possibility that hadn’t even occurred to me). He saved me thousands of dollars and hundreds of man hours for 20 minutes of conversation; it was one of the best returns on investment I have ever made.

But what about paying for placement?

Paying to place machines is a type of sales program and is a subset of your marketing effort. What are you trying to achieve with this type of sales program? What are the implications of your actions, and why are you doing this action? What are your sales and marketing alternatives? What will this program cost? Will it be profitable? What type of vending accounts will it generate? How do successful operators become successful?

Experience has taught me several lessons about this type of program. There are particular industries and companies where this is a common practice. Shortly after a sales discussion is started, the decision-maker asks what’s in it for him. I have found that these particular locations change vending suppliers frequently, and some companies have no ability to have vending services unless they find new operators.

The law of cause and effect works here, too. If you replace a qualified vending machine operator because you offer the decision-maker a cash bonus for changing, you set a precedent allowing that decision-maker to change again when a better offer comes along. Unless you have a signed contract, you will not recoup your initial investment.

I know one vending machine operator who lost $1000 and never placed the equipment. The decision-maker took the $1000 (cash), told the vending machine operator that he was getting the account, and retired the next day without telling his successor that the company was changing vending operators. The vending machine operator was truly in a no-win situation: The unscrupulous decision-maker had stolen his money and he had no recourse.

While this is an extreme scenario, offering cash incentives to replace vending machine operators gives the industry, as a whole, a bad name. It also creates a level of expectation in customers that implies it is normal.

Concentrate, instead, on good service, quality products, and an enjoyable experience. Those are the best ways I know to ensure low account turnover, higher profitability higher and stable cash flow.

About the Author:

Joe Nichols is the second-generation owner of A & M Vending Machine Sales, a family owned and operated business, for over 40 years. A & M ships new vending machines and used vending machines all around the world.

I don’t like to think of franchising as being governed by a top-down hierarchy. For a franchise system to really function, there must be an even give-and-take between the people at HQ and the franchisees working on the ground.

It saddens one to scour the internet and read about some of the tensions between franchisors and franchisees that have emerged in certain operations. Many of these differences are avoidable. There is certainly an impetus (with a financial benefit) upon the franchisor to keep abreast of how the franchisees are faring.

Linda Burzynski, CFE with the Franchise CEO, has just penned an illuminating article for Franchising.com spelling out the importance of the ‘validation’ system for franchisors. For Linda, it’s essential for a franchisor to open the doors of their organization wide open (and provide access to franchisees) when a new candidate expresses interest.

She provides the four following reasons why validation works:

1. Feedback from candidates or a broker concerning franchisee validation is golden to you.
2. As a leader, it’s key to emphasize that building the brand by adding units is a winning situation for the entire system.
3. Encourage your development team to prepare franchisees and the candidates for the validation process.
4. Continue to be the number-one fan of your franchise development team.

Another thing to consider is hiring consultants to interview franchisees. While they say the numbers don’t lie, franchisors must really go the extra mile to understand how their franchisees are coping with this current market. An open franchise organization is often a thriving one.

The more we think of it, the more we see the surprising structural similarities between franchising and the military.

On the battlefield, you work individually with a mission in mind. But you exist within a hierarchy with expertise in handling similar situations. You are also surrounded by a strong support network.

We’ve been supporting veterans in franchising for nearly as long as we’ve been blogging, and the new issue of QSR magazine expresses its own enthusiasm with the trend. It profiles the veteran franchise programs at restaurants like Little Caesars, Steak-Out and Figaro’s Pizza.

What better person to run a franchised business than an individual who has just come through the rigorous training and discipline of the military,” says Ron Berger, CEO of Figaro’s Italian Pizza Inc.

The piece is particularly bullish on the prospects of veterans in the restaurant industry. But if you’re a veteran looking for a different field, you’ll definitely some interested franchisors. We’d like to especially single out Maid Brigade, who recently joined the Franchise Direct family. They have one of the most progressive networks for military veterans and we look forward to seeing what future strategies for increasing veteran enrollment they come up with.

But if you are a veteran interested in food franchising, perhaps our new Food Franchise report would be of interest to you.

It’s just about a week since Steve Jobs unveiled Apple’s latest gizmo, the iPad, and excitement in the media and throughout social networking websites has barely died down.

Jobs himself has assumed a nearly-god like status among techies and business gurus in the last decade.Interestingly, there are many details in Jobs’s own biography that entrepreneurs can take inspiration from. It is particularly his early life, when Jobs was a young entrepreneur looking to launch a fledgling computer company.

Reading through the pre-business life of Jobs, one doesn’t get the image of a fledgling corporate guru. Instead, one sees Jobs as a bit of a hippie. He did two years at Reed College, a small liberal arts college in Oregon, before dropping out. Then he went to India satisfy his curiosity about eastern religion. It was only when he returned to America and started a computer club called Homebrew Computer Club with Steve Wozniak that wheels for Apple started rolling.

After launching their start-up called Apple Computer Company selling circuit boards Jobs and Wozniak became fascinated by the possibility of creating and marketing personal computers. The start-up money they raised was their own, but their idea was golden, as we know now. Personal computing was an untapped niche in computing and Apple’s vision of its potentials has radically changed the way people live their lives now.

It’s important for entrepreneurs to keep in mind that even Apple was once only an idea. Apple’s technological advances may be what define it, but it took a man like Jobs who had vision and belief to make the company what it is. Everyone with a new business concept should look to a man like Jobs, who has no college degree, and find inspiration.

He advised Stanford grads in 2005 to “stay hungry and stay foolish”. And we think that remains salient advice for those looking to launch their own business at the current time.