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We begin this blog post with a personal anecdote.

We were recently visiting Stockholm, the Swedish capital. It’s a very hip city with a keen eye to modern design trends, which you might expect from the home of Ikea. But it was shocking to walk by a McDonald’s in the heart of the city and glimpse the interior design: there were plush cushions and round, comfortable-looking chair and lamps that hung down from the ceiling. It looked like a very fashionable place to sit down and have a meal. It couldn’t have been further from the sterile interior of the McDonald’s in Garwood, NJ where I used to go for Happy Meals years ago.

Recently, Burger King has announced that it is about to roll out its new ‘20/20’ units. Burger King CEO John Chidsey described these stores as “contemporary, edgy, futuristic”. Sixty of these stores will be opened around the world and feature “rotating red flame chandeliers, brilliant TV-screen menus and industrial-inspired corrugated metal and brick walls”.

Burger King is clearly trying to reposition itself to compete alongside ‘sit-down’ restaurants, not just McDonald’s. But it poses a serious question for franchisees: you can upscale your unit and broaden your profile but you will do so at a substantial cost. New units are estimated to cost between $300,000-600,000. The question, I suppose, what do people expect when they go into Burger King? Is it modern design or is it an affordable meal? Or do the two overlap?

There is something clearly masculine about the design of these stores, which makes sense when one considers the meatier aspects of Burger King’s menu. Another QSR franchisor that is looking to make younger men feel at home is Andrew Puzder, CEO of CKE Restaurants, who is profiled in the newest issue of Franchise Times. Their “hot chicks eating burgers” ad campaign has raised eyebrows among both franchisees and customers. But the story provides a fascinating profile of one man’s efforts to bring a franchise group to the next level.

Many people tracking developments in the domestic economy are examining the state of the franchise sector. Franchising has lead the economy back during past recessions and some experts are using franchising as a measuring stick for the economy’s progress as a whole. Which is interesting, because the word that many are using to describe franching at the moment is Momentum.

QSR magazine is a great resource for comprehensive reporting on affairs pertaining to the quick-service sector. They’ve published an honest story that charts some of the lows of the economic downturn for QSR franchises, and hints at a growing optimism among franchise owners. Most importantly, they say that new franchise applications are up.

Sandella’s Flatbread Cafe CEO Mike Stimola tells the magazine that he has received 30 franchisee applications this year and says that he has “definitely sensed a change” in the mood around his franchised business.

This positive sentiment is also shared by the head of Penn Station East Coast Subs.

“From April forward, franchisees started to become aggressive again,” company president Craig Dunaway says. “I think franchisees reached a conclusion that the worst was behind us.”

This is not simply an attitude of wishful thinking on the part of franchisors. They’re witnessing an upsurge in interest. That said, a mood of pragmatism continues to rule, with more franchisees looking to open single-unit franchises, as opposed to multi-unit franchises.

April seemed to be the tipping point, the month where franchisees decided the economy had reached rock bottom. As the story suggests, progress is slow. But this is positive news from the franchisors side, especially as it comes from one of the most vibrant franchise sectors.

The ice cream franchise sector is displaying strength despite the economic challenges of the moment, the latest franchise report by Franchise Direct states. Franchise Direct, one of the world’s top franchise portals, has assessed the ice cream market after examining the UFOC’s of 18 franchises and in its ice cream franchise report, it found an industry overcoming seasonality to provide a truly affordable luxury during hard financial times.

Franchise Direct brings great expertise and knowledge of the franchise industry to these studies. It has published a number of reports on various franchising industries this year, assessing the pizza, coffee and automotive franchise industries as well as the recently released rankings of the Top 100 Global Franchises.

Ice cream franchises, like all businesses, are dealing with challenging economic factors at the moment. This is simply another hurdle for ice cream franchises, which exist in an industry which is, by nature, seasonal. But Franchise Direct found that ice cream franchises have displayed a knack for innovation in recent years that makes them somewhat immune to both changes in the weather and the economy.

Industry-wise, the study found an industry that is consolidating. While revenue across the industry has slipped 4% since 2004, total sales among the top ten percent of ice cream franchises is up 32% over the same period. The Franchise Direct study found that the main consumers of ice cream are families and children, with the African-American community particularly loyal to this industry. Of the 18 franchises assessed here, 8 have been franchising for four years or less, which shows a developing industry.

While the quintessential image of the 1950’s ice cream parlor continues to exist in the minds of many consumers, today’s ice cream franchises come many shapes and sizes. The classic ice cream stores like Ben & Jerry’s and Carvel now compete with specialist ice-cream franchises like Marble Slab or Maggie Moo’s or mobile ice-cream franchises like Coolcycle.

Ice cream franchises have a proven track record of innovation which prepares them well for these uncertain economic times. With a range of healthy, low-fat products and an interest in green technologies, ice cream franchises have proven adaptable to changes in consumer taste. They have responded accordingly to the recession, marketing ice cream as a tasty and cheap treat.

Thanks to a perennially popular product and a range of franchise concepts, ice cream franchises are displaying resilience in what continues to be difficult economic times.

Our thoughts again turn to the restaurant industry, especially the quick-service restaurant sector. Our Top 100 Global Franchises was dominated by the QSR franchises and for those considering expansion, either on a domestic or an international level, have to figure out how to negotiate a tricky and competitive market.

Franchise Times has an eye-opening story about the QSR sector in their most recent issue. It starts in Quaker Steak & Lube unit and the promises its founders made 35 years ago: that customers are having fun and feeling the food is unique. When a number of customers responded ‘No’ to both questions, Quaker Steak & Lube begin a root-and-branch examination of how their business functions. They encouraged staff to have more fun with customers and spend more time with them, while adding on extras wherever possible.

The result: Franchise Times reports that Quaker have enjoyed steady growth over the last year, despite the economic downturn and the exceedingly-competitive QSR sector. The reason: “They put more scrutiny on where they spend their dollars,”  Ken Cole, Quaker CEO, told the magazine.

Here’s how Franchise Times breaks down the restaurant sector at the moment:

A more discerning consumer is insisting on strong value and customer service and is punishing brands that don’t provide them to their satisfaction. Diners “are less influenced by prestige and more influenced by performance,” said Malcolm Knapp, publisher of the Knapp Track, a monthly report which tracks casual dining sales.

There’s a lot to chew on in this article, pertaining back to issues we were discussing yesterday. More and more, franchises are being asked to deliver a unique experience, unique even from other franchises operating under the same umbrella. If you’re a prospective restauranteur/franchisee, keep in this mind.

You’ll not only be expected to deliver a product that’s original, but an experience as well.

The sandwich franchise market is one of the most competitive in the food franchising sector. Overheads are low and margins are tight, which creates a saturated market that franchisees have to compete tooth-and-nail in in order to make a splash.

There’s a very interesting dispatch on sandwich franchising in the latest issue of Franchise Times magazine. The story centers around the introduction of the $5 dollar foot-long sub by Subway last year. The idea, which was quickly copied by other sandwich franchisees, was met with some consternation by franchisees like Jim Underwood of Alabama, who thought the discount would further eat into their profits (no pun intended).

The end result has been quite different.

Underwood isn’t hesitant anymore. “I’m paying a little extra food costs, and am getting a little less on the bottom line as a percentage,” he said. “But I had the best year ever, profit-wise, in 2008. So how could I really complain too much? It worked.”

He’s not the only one who had a good year. Subway’s sales were up 17 percent last year, according to the restaurant-consulting firm Technomic—a hefty amount for such a giant chain. Much of the credit goes to that $5 promotion, timed perfectly at the outset of a recession that would turn diners into value-conscious consumers.

At the same time that ice cream franchises are enjoying a resurgence, sandwich franchises are providing great sustenance to franchisees during the recession. It’s easy to understand why: their food is a cheap, healthier alternative, and for prospective franchisees, easier to purchase than a massive unit during a time when banks have little capital. The Franchising Times article is well worth the read, as it speaks with a variety of people in sandwich franchising about the future of the industry.  It also testifies to the advantages of offering discounts to attract new customers.

As a side note, the foot-long discount was introduced by a franchisee in Florida before eventually being taken up by the franchisor and put into effect on a national level. This kind of initiative shows how effective franchisees can be at bringing about change.