DailyFranchiseNews.com

Black and White: Alright!

A flashy logo and laundry list of ingredients aren’t necessary to keep Joshua Auerbach’s business thriving; judging by his success, less really is more.

The Press & Sun-Bulletin reported that while living in New York City eight years ago, Auerbach came up with an idea to open a black and white cookie bakery but it took four years after that initial idea before he was able to begin producing his cookies. Auerbach, president and chief executive officer of The Black & White Cookie Co., started his business in a Binghamton, New York church in 2004 and looked at a few sites before leasing his current space and setting up his baking facility there in July 2006. Auerbach said his investment in the business -- $400,000 so far -- has helped generate cookie sales to customers throughout the United States, Canada and even Iraq. Auerbach and his five employees bake an average of 1,000 cookies every week, depending on orders. Virtually all of his company's orders come from the Web site, Auerbach said.

"Except for the Dakotas, we've sold to every state," he said. "We do everything made to order.”

The cookies can come in the traditional circle shape with black and white icing, but dozens of shapes and colors are also available, Auerbach said. Cookies geared toward specific holidays and those for corporate gatherings and weddings are also popular, he said. Images can also be placed on the cookies or on the cookie's individual packaging.

The future is about franchising and Auerbach is seeking venture capital to hire additional staff and increase production, he said. The company is looking to open its first store in Corning, which will have coffee drinks, ice cream and, of course, black and white cookies. A site in Ithaca is another possibility, Auerbach said, and all regional stores will receive their cookies from the Binghamton-based facilities, Auerbach said. There has been interest from others for stores in several states and overseas, Auerbach said.

"We actually have interest in Japan," he said.

Things That Make You Go “Ohm”

While owning and operating a business is seldom a relaxing process, here’s one entrepreneur that’s growing her empire one deep breath and inversion at a time.

The Chronicle-Herald reported Jenny Kierstead likened selling her first yoga studio to saying goodbye to an old friend but she is happy she chose to franchise because it allowed her to stay involved in the business.

"It’s partly why I chose to franchise," she says. "I’m not teaching anymore at Breathing Space Yoga Studio in the West End Mall and it’s remoulded itself to the new owner’s energy. But the standard is still there and the business is still growing." Kierstead opened the second Breathing Space Yoga Studio in February 2008. “My belief is that yoga is such an amazing practice that I want as many people doing yoga as possible and the way I can do that is to expand my reach through opening more studios," she says. “We’ve created a model that really works and impacts people in a really deep way. I decided to franchise to sustain the essence of the yoga studio, while expanding into other communities."
Like many franchisors, Kierstead sees her main role turning from providing a service to clients to servicing the franchisees.

"I see myself becoming the teacher of these owners where we have regular retreats, deepen our practice and talk about business challenges, so that I become their business and yoga guide. I see that as my role in the near future."

Business 101

Graduating from college without being up to your tassel in debt is a pretty rare occurrence. Graduating from college without debt AND with money in the bank sounds like a dream but for Kyle Baker, it was reality.

The Star Tribune reported that when Baker graduated from the University of Minnesota in 2006, he was not only debt-free but had $35,000 saved. The secret: As a freshman, he latched onto a College Pro Painters franchise that grossed upwards of $500,000 during the five years he ran it -- while also maintaining a 3.1 grade-point average for his triple major in finance, accounting and entrepreneurship. Baker took those savings, put the arm on the Small Business Administration for a $92,000 startup loan and acquired a Floor Coverings International franchise – a shop-at-home approach to selling flooring products ranging from carpeting, hardwoods and tile to stone, cork and luxury vinyls – which has grossed more than $260,000 in just eight months of 2007.

Baker’s road to FCI began quite close to home, as he contacted The Franchise Company, the Ontario-based owner of the College Pro Painters business and several other franchise concepts, to see if there were opportunities for him. There was a wide selection to consider. There was another painting franchise (but he was tired of painting), a home inspection business, (which required a lot of homebuilding experience), a custom closet operation (sold out nationally) and a handyman services concept (but he wasn’t very handy). That left the flooring franchise, which Baker saw as having a model similar to that of College Pro Painters: "There were the home visits and the on-the-spot design choices and estimating," he said. "The difference was a lot of interesting projects -- much more interesting and challenging than painting," he said.

Baker launched the business last April and grew his revenues to $266,000 by year's end. It was a promising start, but given upwards of $125,000 in start-up costs, it was not enough to produce a profit or allow him to pay himself more than $15,000. Which leads us to his 2008 goals: Given the month-by-month growth in sales late in 2007, Baker expects to nearly triple his gross to $750,000 this year. The housing slump and impending recession should not interfere, Baker said. "Our bread and butter is homeowners, and if they're not buying new homes they're fixing up the ones they have," he said.

The Chicken vs. The Egg

What came first? McDonald’s is hoping to settle that age-old argument by offering both chicken AND eggs for breakfast.

The Chicago Sun-Times reported that beginning this spring, an oil-cooked chicken fillet on a biscuit will be the Oak Brook, Illinois-based fast-food giant's first of two Southern-style, breaded chicken sandwiches offered in the United States. Though national advertising begins in May, stores could see the item this month. It'll be followed later in the year by lunch and dinner offerings of a fillet on a steamed bun, dressed only with pickles. Both products mimic successful sandwiches sold at the Atlanta-based Chick-fil-A chain.

The sandwiches have been tested for about two years in Georgia and Michigan, with the northern state being cooler to them, said franchisee consultant Richard Adams. "Those customers get a slab of chicken on a bun with pickle on it, they don't know what to do with that," he said.

Chick-fil-A and Hardee's stores, both with most locations in the Southeast, have sold chicken biscuit breakfast sandwiches for about 20 years. Charlotte, N.C.-based Bojangles’ has a breakfast chicken biscuit at its 400 stores. Southerners are more accustomed to starting their days with meats other than sausage or bacon.

"People outside the South hear about that kind of thing and think, 'Where's the egg?' and 'Where's the cheese?' But once you kind of get over that and try another product, you realize that one of those things on a biscuit and without the egg is actually pretty good for breakfast," said Brad Haley, executive vice president of marketing for Hardee's. "Whether people in places like the western part of the U.S. where McDonald's will sell [will like them], that is another matter."

What Would the Colonel Say?

KFC? Try KGC.

USA Today reported the Louisville, Kentucky-based chain is about to give equal billing to grilled chicken. Kentucky Fried Chicken customers will be greeted eventually by lighted "Now Grilling" signs, starting in coming weeks in select U.S. cities. Storefront signs will be altered to promote the new product — called Kentucky Grilled Chicken. Even the brand's ubiquitous chicken buckets will get a makeover. "This is transformational for our brand," said Doug Hasselo, KFC's chief food innovation officer.

KFC, a subsidiary of Yum! Brands, hopes grilled chicken will lure back health-conscious consumers who dropped fried chicken from their diets, or cut back on indulging. KFC announced last year that fried chicken at all its U.S. restaurants had zero grams of trans fat per serving after the chain switched cooking oils. KFC says the grilled chicken has significantly fewer calories and fat, plus much less sodium, than its Original Recipe fried chicken that launched the brand more than a half-century ago. The grilled product, served on the bone, is being tested in six cities — Indianapolis, Colorado Springs, San Diego, Oklahoma City, Jacksonville, Fla., and Austin, Texas. A national rollout is planned early next year.

KFC has flirted with non-fried chicken before, but each initiative flopped. In the early 1990s, the chain introduced a rotisserie-style chicken, but it was doomed after a couple of years by equipment problems and long cook times. A tender roast product followed, but it lasted only a couple of years. KFC executives say the company has solved operational problems with a new oven that grills a batch of chicken in just over 20 minutes. Still, Hasselo acknowledged that changing perceptions about KFC won't happen overnight.

"With Kentucky Fried Chicken being part of your name, trying to get people to understand that you have these non-fried options available now — it's not an uphill battle but it's certainly something we have to work on and make sure we communicate well," he said.

Eliminating the Downtime in No Time

We’ve all heard the saying “time is money.” Here’s one company that not only comprehends that phrase but truly implements it into its business model.

The Gwinnett Business Journal reported that while broken machinery can derail a project's schedule and send it way over budget, Mike McCarthy, president of Pirtek Norcross, says the culprit in such malfunctions is often a faulty hose. That's where his company comes in. Five years ago McCarthy, after a career as an electrical engineer, purchased a franchise covering half of Metro Atlanta from Pirtek. The Australia-based company has grown quickly in recent years as the demand for on-site hose replacement grows.

"In a typical scenario you have a company out at a construction site laying pipe or moving earth.  They have their big heavy equipment and it's 8 a.m. on Monday morning and suddenly this machine blows a high pressure hose," he says. "In the old days what would happen is they'd send a mechanic out there, he figures out the problem, goes back to a hose shop to buy a new house and then goes back and install the hose. It would take three or four hours."

McCarthy's franchise covers the entire Atlanta region north of I-20 and has grown from three to five service trucks since it opened. He expects demand to continue rising and says there's an "unlimited market" for Pirtek's services due to the wide variety of customers that must deal with hose failures. Each Pirtek truck is stocked with the hardware it needs to replace hoses and fittings on any type of machinery, usually within an hour. McCarthy says users of hydraulic construction machinery and manufacturers tend to be major customers. Other industries such as recycling and transportation are major users as well.

"The key thing in a hose is what goes on the end of it," he says. "There's a huge variety. We carry over 700 different fittings on our trucks, so we can build our own assemblies right there on site. They call us when they need us, so it's a very economical proposition for them. If they don't need our services, they don't have to pay for us. Our business model is based on having a wide base of customers."

Let the Good Times Roll

Never heard of Good Times Burgers & Frozen Custard? If not, consider this your formal introduction because you'll be seeing a lot more of it soon.

The Denver Business Journal reported the Golden, Colorado-based chain thinks the time to grow is now, launching an expansion plan in smaller Midwestern markets towards a goal of 100 locations by 2010. Good Times plans to open eight new restaurants this year in Colorado and Nebraska, and 15 to 20 locations annually in coming years.

Most of those new dining spots are expected to be franchise-owned as opposed to company-owned. In five years, Good Times wants 70 percent of its restaurants to be franchise-owned; it currently has 52 restaurants -- 47 in Colorado and the rest in Idaho, Wyoming and North Dakota. Half those locations are company-owned.

"We really want to ramp up on the franchise side," said Boyd Hoback, Good Times' CEO and president. "We've been around for 20 years and grown slowly, mostly in Colorado ... We're ready to ramp up to the next level."

How Do You Like THEM Apples?

If this deal was one of their menu items, it would be Rooty Tooty Fresh ‘n Fruity for sure.

The Kansas City Star reported in its first sale of restaurants to help fund its acquisition of Applebee’s International, IHOP Corp. has sold 41 company-owned restaurants to the largest franchisee of Applebee’s Grill and Bar restaurants. The restaurants acquired by Apple American Group LLC are in southern California and Nevada. The agreement also calls for Apple American, which already owns 145 Applebee’s restaurants in seven other states, to develop an additional 14 locations in California and Nevada by the end of 2012.

Terms of the deal were not disclosed. Apple American, which had 2007 sales of $380 million and has 9,600 employees, is the third-largest restaurant franchising company in the U.S.  IHOP, which completed its $2.1 billion acquisition of Applebee’s last year, said at the time that it would sell the vast majority of Applebee’s company-owned restaurants to franchisees to help finance the deal. The Glendale, Calif.-based pancake chain expects to complete the sale of about 100 Applebee’s restaurants by the end of 2008, from which it expects to raise $90 million to $100 million after tax.

IHOP Chief Executive Julia Stewart, a former Applebee’s executive, has said she intends to change the operational model of Applebee’s to focus almost exclusively on franchised locations. The company plans to retain only the 30-plus Applebee’s in the Kansas City area as company-owned restaurants. There are about 1,900 Applebee’s restaurants, about 500 of which are company-owned.

Sign of the Times

The path to choosing the right business concept is often a long and arduous one. Just ask Todd and Bambi Stringham.

The Business Examiner reported the Stringhams profiled more than 30 franchisors from across the nation before finding their business match in Maryland-based Signs By Tomorrow. Both Todd and Bambi knew the corporate world well and wanted something different. Todd was a corporate pilot for 15 years until Sept. 11, 2001, when the market turned. He spent the next five years working in the real estate industry. Bambi owned a computer store for more than a decade and was an administrative assistant at a non-profit organization in the years prior to the store’s opening.

“I have always wanted to own my own business,” Todd said. “After a lot of research, we found Signs By Tomorrow had the business model and support system we were looking for.” The Stringhams searched high and low for a franchise company that supported their efforts, but also allowed them to be creative in how they grew their operations. They wanted a proven model for success, not hand-holding. The couple is not alone. New businesses take form each year across the country. One decision that each entrepreneur must make is whether to start a business from scratch or buy a franchise from an already established business. The right answer depends on the situations the entrepreneurs face, and their goals.

The franchise or not to franchise question isn’t as clear as it once was. While franchise opportunities were once limited to fast food and hardware stores, times have changed. Franchise opportunities now range from construction to medicine, from clothing to cold drinks. There are quite a few advantages to choosing the franchise route as well, according to the U.S. Small Business Administration, including quality control standards, getting necessary technical and managerial experience, and being able to market a product or service that is already established. Entrepreneurs are taking notice, as franchise businesses experienced a growth rate of 33 percent between 2000 and 2006. Last year’s numbers are expected to reflect an even faster continuation of that growth.

El Paso Gains Some Muscle

Remember the first day of junior high when one kid was a full head and shoulders below the rest of the students and he ended up towering over everyone else by the end of the year? For the sake of this posting, El Paso is that kid.

The El Paso Times reported Max Muscle Sports Nutrition, a franchised company based in Anaheim, Calif., plans to open its first El Paso store in the next three to six months, said Mick Riddiough, senior vice president of worldwide development. Two more stores will follow within a year and a half, he said.

The company has been in talks with several potential franchisees, but "we haven't found the right one yet," Riddiough said. Store locations haven't been decided yet. "We've picked El Paso as a point of expansion," he said. "The demographics look good to us. Obviously, you have a lot of growth. It's certainly a good sports town, especially for basketball."

Max Muscle, founded by former NFL player Joe Wells in 1990, sells sports nutritional supplements and provides counseling, which includes diet, exercise and supplement plans. Local resident Stefan Swann is already gearing up for Max Muscle’s debut: he regularly plays in adult-league football and likes to hike, hunt and work out in the gym.

"When I find out when their grand opening is, I'll be there checking it out," Swann said. "I'd like to see what they can offer me and see what kind of nutritional counseling they have."

A typical Max Muscle store, Riddiough said, costs about $200,000 to open, including franchise fees, inventory and final construction; has about 1,200 square feet; and employs about six people. The company has 135 stores in the United States and additional 25 under development. Max Muscle plans to add 615 stores within five years, Riddiough said.