Financing remains a massive issue for prospective franchisees. In the short-term, there’s no sign of this situation changing. Banks are cash-strapped and reluctant to loan to just anyone. In Washington, efforts to free up money to small businesses are not proving as successful as they should. At times like these, entrepreneurs, people who are already quite innovative, need to be even more inventive.
One of the most exciting innovations we’ve seen on the franchise financing front in years is Sprigster. Most people will at this stage be familiar with so-called ‘crowdfunding’ websites like Kickstarter. These sites were created mostly by artists and creative types who need large-scale funding for various expensive projects. The artist(s) will create a short video that explains what the project is and what it hopes to achieve and then webusers can choose to pledge some amount of money (no matter how large or small). Donors usually receive some sort payback and the whole concept rests on the idea that rather than wait around for the large-scale philanthropy of a few wealthy people, artists are wiser to pursue the small-scale philanthrophy of a wide net of impassioned fans. I have many friends in the arts community who’ve realised projects because of Jumpstarter that they never could have dreamed of before.
Luckily a few people in the franchising community sat up and took notice. Sprigster is a recently-launched crowdfunding website that allows users to provide funding for various franchise projects. Prospective franchisees, some of them military veterans, pitch their business projects to the public at large. They link their pitch to a particular franchise.
There’s also a new ‘Boost A Hero’ campaign that was created specifically for getting veterans back into franchising.
“Sprigster’s ‘Boost a Hero’ program is an innovative solution harnessing the power of social media and crowdfunding to accelerate veteran ownership of franchise businesses,” said Stephen J. Caldeira, IFA President CEO in a press release. “As a sponsor of VetFran, Sprigster’s Boost a Hero is helping to strengthen our industry and the U.S. economy as well as doing the right thing for our veterans and our nation.”
For people ready to get into franchising, here’s a great new tool for finding the funding you need.
YUM! Brands - owner of KFC, Pizza Hut and others - is not simply concerned with being the biggest franchise company in China. CEO David Novak said in an interview that he wants to feed the world.
Novak joined USA Today recently for an interview about the direction of the franchise group. Not surprisingly, a lot of the talk was about YUM!’s international plans and strategy. KFC does after all have the most restaurants of any global brand in China and 36,000 restaurants in 117 countries operate under the YUM! umbrella. Novak says that the key to international expansion is that people abroad desperately want to experience American brands, and he says that he thinks YUM! can be the franchise to satisfy that craving.
“We view ourselves as a global company. We want to be the defining global company that feeds the world. We think that if anyone can define what a truly great multinational company can act like, it should be us.”
Interestingly enough for readers of this blog, Novak says that the rise of imposter or ‘clone’ restaurants is not a serious issue. Of course, Novak speaks of that ever-growing need for franchises to cater their menus to foreign tastes when expanding abroad:
“In Asia, people like spicier foods. We have a Zinger sandwich, a spicy chicken fillet sandwich that is enormously popular. In India, sauces and flavors are really important, so we have a Masala line of pizzas.”
There’s some solid advice here for franchises considering an international step.
Here on the Franchise Blog, we often discuss the most common route to success for franchisees: the entrepreneur who decides go it alone in business by investing in a proven franchise concept. Most often these are people who spent a long time in the corporate world before making the leap into business ownership. But these are not the only kind of franchisees in the world.
There are also serial franchisees, as a story in The Street outlined in a recent story. The Street defined a serial franchisees/franchisors as people who made a ‘career out of either creating successful concepts or investing in multiple proven brand-name companies’. These are people who love franchising so much that they invested in a number of franchising concepts.
In the story, we meet Tony Lutfi, CEO of MarLu Investment Group, Dina Dwyer-Owens (a woman we’ve blogged about it in the past), Greg Carafello, master franchisee of Cartridge World and area developer for Liberty Tax Service, Greg Carafello, master franchisee of Cartridge World and area developer for Liberty Tax Service and Gary Green, founder of Strategic Franchising Systems.
These are entrepreneurs who show exactly what kind of potential exists in franchising. This is not solely a burgers and fries industry, and the wider one spreads themselves, the bigger the profits available.
“For us lesson one [was] stick to your knitting,” Owens said in the story. “As we ventured out into things that were not who we are, we’ve not done well with them. We tried to convince ourselves we could, [but] that’s not our niche. We’re very clear today [on our acquisition strategy]. We want businesses that are franchised and that have strong unit economics and are already succeeding.”
For those not merely satisfied with one bite of the franchise pie, this story shows that the franchising world is your oyster.
Food franchises make up a major platform in the franchising world. Some people might look down on multinational chains, but in the end of the day, a waiter at Denny’s or Bennigan’s has to perform the exact same job as waiters in the fanciest restaurants in Paris or London: they have to get the customer’s attention and properly serve them their food.
There is a great story in yesterday’s Wall Street Journal that examines the science of waitering. It takes a broad, democratic look at the industry of waitering and is a great introduction to the science of the profession for any franchisee. In such competitive marketplace, research proves the waiter experience will prove decisive when consumers have to decide whether they’ll revisit a restaurant.
“Even chain restaurants like Denny’s, T.G.I. Friday’s, and Romano’s Macaroni Grill are focusing more on personalized service by training staff to note body language, eye contact and offhand remarks, hoping to make service feel less mechanical. Traditionally, eateries taught waiters to follow a script and push add-ons like desserts and drinks,” the WSJ reports yesterday.
It’s clear that restaurant franchises are getting savvier in the way they deal with eaters. As the story outlines, the waiters are asked to deduce if eaters are in a rush or assume from information like the presence of a laptop that customers want a brisk, undisturbed experience. On the other hand, if the customer seems like they’re going to stay for awhile, waiters are expected to put in a greater effort to win their affection.
The story goes on to say that some food franchises are training waiting staff for over seven days. If you’re trying to get customers back into your food franchise, start with your wait staff.
Since its introduction in 2010, President’s Obama’s health care legislation has proved tremendously difficult for small businesses. The IFA and other small busienss lobbies have been lobbying with the Government to draft health-care legislation that is more small business friendly over the last two years, but the struggle goes on.
I thought it was worth pointing out a new feature on the New York Times small business blog You’re The Boss where contributors interview small-owners to discuss their issues with health care. The first in the series was posted today and featured an interview with Ann Gish, who runs a company called Ann Gish Inc. that designs high-end bed linens in New York. Ms Gish employs 10 people in her business other than herself and her husband and reveals in the interview that the new health care laws are providing her with a major headache.
She says it has created much more work for her without making the least bit of difference:
Even simple tasks, she said, like adding or removing employees from the rolls, are complicated: “My husband, who does all of the C.F.O. stuff, has spent hours and hours and hours on this. And I spend a couple days a year on it. And I’m not stupid. I’ve started a successful business.”
Also her staff make too much money for her business to qualify for the health care tax credit for small business. Now Ms Gish may not run a franchise, but for what I read and hear, I’m quite confident that the new health care legislation creates similar headaches for those in the franchising community. I’d like to see the You’re The Boss feature focus on franchised businesses and the relationship to the new health care plan in the coming weeks. Hopefully something can be done about this.
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