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Innovation in Franchising

Did you know that McDonald’s Big Mac and Filet-O-Fish wouldn’t exist today if it weren’t for some creative franchisees? AllBusiness.com did and recently set out to find if franchising and innovation go together like two all beef patties, special sauce, lettuce, cheese, pickles, onions and a sesame seed bun.

“Some franchisees, and some franchise systems, are more effective when franchisees can innovate,” says John Hayes, a franchise consultant, former franchisee and franchisor, and author of several franchise-related books. “More often, however, when franchisees have to search for answers or experiment, the results are likely to be frustrating and quite often the franchisees lose money. Innovation belongs to the franchisor and it's the responsibility of the franchisor.” However, that’s not to say that innovation on the franchisee level hasn’t happened successfully. In fact, franchisee input was the driving force behind the aforementioned McDonald’s menu items as well as Domino's Pizza’s new American Legends pizza line and line of breadbowl pastas which was developed and tested by a Los Angeles franchisee. At WSI, an Internet consulting franchise, innovation is so highly valued that an international excellence and innovation conference is held annually to recognize franchisees who have provided internet marketing solutions in their local markets around the world. In addition, Ron McArthur, president of the franchise, personally meets with the top 30 revenue producing franchises eight times a year to discuss ideas. And 90 percent of the products and services within the WSI e-marketplace have come from franchisees. “New franchisees are trained on the basics of business but innovations are introduced on a quarterly basis to ensure that we are offering the latest and best internet marketing processes to end clients that deliver results,” says McArthur.

There’s an old adage that says two heads are better than one. If that’s true, then it naturally follows that hundreds or thousands of people can make one system run better than just one. But be sure to first research what policy the franchisor has in place for accepting new ideas and then, only after you’ve demonstrated that you can follow the system at hand, introduce your idea. Because, when it comes to innovation, not everyone sees it in the same light.

Photo: Ron McArthur of WSI.

Young But Driven

Traditionally, franchisors have preferred individuals with years of related experience and savings when selecting new franchisees. If the last year has taught us anything, however, it’s that things can change when you least expect them to.

The Wall Street Journal reported that a host of companies are rethinking that logic and are aggressively recruiting twentysomethings through franchise brokers, marketing themselves in youth-friendly venues like Facebook, and in some cases offering financial lures to get young people on board—such as deep discounts on franchise fees, which many beginners can't afford. Why the big change? For one thing, many boomer franchisees are retiring, leaving room for newcomers. And many franchisers say that today's crop of twentysomethings are much better prepared to run a business than earlier generations of youngsters, since more colleges are offering strong training in entrepreneurship. "Sometimes the younger people have more drive and are willing to put in more time and maybe are hungrier than a corporate person who has other commitments," says Patty Meyer, a senior consultant for Toronto-based MatchPoint Franchise Consulting Network, which helps companies recruit franchisees. "Younger people are able to get things moving faster in some cases."

One company taking this route is Valpak: Last year, the Largo, Fla.-based direct-mailing company created the Entrepreneurship Award Program in an effort to recruit young people who could open new franchises or take over existing ones as owners prepare to retire. The potential franchisees sign on with the company as salespeople, and if they hit certain goals they get a discount on their franchise fee. One hopeful is Nicholas Hernandez. If he brings in $1.1 million in three years—the average sales raked in by the top third of the company's performers over the past three years—the 23-year-old becomes eligible for one of three things: $50,000 toward the fees for one of Valpak's dormant territories, which start around $43,000 but range higher as the market size increases; $10,000 toward the franchise fee of an International Franchise Association member company; or $10,000 toward an M.B.A. or other advanced degree. "Quite frankly, sharp people coming out of school have choices, and so we're trying to give them a reason to at least consider us," says Joe Bourdow, president of Valpak, which has about 170 franchises in the U.S. and Canada. He started the program after visiting colleges and finding himself impressed by the students he met.

Click here to see what other franchisors like WSI and CertaPro Painters are doing to attract younger franchisees.

Photo: Valpak sales rep Nicholas Hernandez (right) and his boss, Valpak franchisee Bobby Coco.

Advice Fit for (and from!) a King

It’s been a while since we’ve featured some advice from our friend, The Franchise King, but that streak is ending NOW. Here are some tips from His Majesty Joel Libava from a recent MSN Business on Main article about what to keep in mind before starting a franchise.

- Franchises don't come cheap. The cost can start at $15,000 for small, home-based operations, and go well into six figures for more established chains.

- Don't break the mold. If you want to create your own business model, then franchising may not be for you, because you'll likely have to follow a rigid framework for how the business should be run.

- Watch out for scams. Do your due diligence when choosing a franchise, because the industry is rife with scammers and default rates are at about 25 percent, according to recent data from the Small Business Administration.

Bearing in mind the above considerations, Libava says if you find a concept that fits your skill set and involves something you actually enjoy doing, going the franchise route can be a lucrative and rewarding entrepreneurial option; just be sure it’s something you can commit your heart and soul to working at every day. Here are a few more recommendations before signing on the dotted line:

- Have funding to cover you for the first year or two.
- Talk to other franchisees, past and present.
- Review the Franchise Disclosure Document that includes all the financials on the company.

And Now for Some Expert Advice

Did you know a new franchise opens every eight minutes in the United States? Karol Mercurio does and it’s her job to find the right opportunity for every client.

Oprah.com reported that Mercurio is a New Jersey-based consultant for MatchPoint Franchise Consulting Network who, much like a real estate agent, is constantly seeking the best opportunities and fits for her clients. She says record numbers of people have entered the franchise market since corporate loyalty is generally down during this recession. She says they feel the only way to create self-worth is by becoming your own boss.

Mercurio says it's best to consider your motivation before getting involved with a franchise because they take an enormous amount of commitment. She also says to evaluate your skill set to find strengths, weaknesses, interests and overall goals. There are actually 75 different categories and more than 3,500 franchises to choose from – proving there’s much more to franchising than just fast food – so Mercurio also says to do your research and don't settle until you find a comfortable match. She recommends franchises that are both recession- and Internet-proof, those in the service industry and home-based businesses.

"Most franchisers don't require their franchisees to possess industry experience, but managerial experience is extremely beneficial," Mercurio says.

Photo: MatchPoint's Karol Mercurio.

Game. Set. Match(Point).

Starting a franchise without consulting an expert is a lot like diving into the deep end of a pool without knowing how to swim: a really, really bad idea. Thankfully, this woman can be your metaphorical water wings.

ColoradoBiz Magazine reported Debbie Tarrant is a consultant for MatchPoint Franchise Consulting Network, a Toronto-based company founded in 2006 is an international network of advisors that specialize in matching individual franchise buyers with the franchise opportunity that is best suited for them based on their interests, career goals, budget, skills, desires and more. Former Citigroup employee Brad Brenner started working with Tarrant last year. Desiring a more flexible schedule, certainty over his future and “higher quality of life,” Brenner became a franchisee of CertaPro Painters in Scarsdale, N.Y., in March 2009. “MatchPoint really worked for me,” Brenner said. “I know it was Debbie and her combination of assessment tools and experience.”

Tarrant has helped more than 15 franchisees get off their feet in the two years she’s been with MatchPoint. With more than 32 years of experience in franchising and consulting, Tarrant said, many people don’t know what they’re getting themselves into. Brenner said he had no interest in starting a painting business and had never thought about it before. But he’s happy with his career change and credits the “soul searching” MatchPoint allowed him to do at his own pace. “People often don’t understand things like the owner’s roles, everyday duties and other aspects,” Tarrant said. “I help people make intelligent decisions for themselves and their families.”

From deciding whether to become a franchisee to the actual grand opening of a business, MatchPoint consultants help potential business owners through the whole process. In-depth assessments, MatchPoint’s extended network of franchisees and advice from experienced consultants help people choose the right franchise. “You have the right to call any franchisee in our system. You can even call ones that have left if you choose,” Tarrant said. “You can find out what they like, what they don’t like and what they would have done differently. Most of my candidates are astounded from what they learn from franchisees.”

Photo: MatchPoint consultant Debbie Tarrant.

Finding the Perfect Match

With more than 3,500 franchises nationwide, the search for the right one can be a daunting task to tackle alone. When a professional franchise consultant is at your side, however, the road gets a whole lot smoother as MatchPoint Franchise Consulting Network consultant Jodi Rowell proved during a recent interview with the Salt Lake Tribune. What are some questions a potential franchise owner should ask before making an investment? Read on for those queries and her answers:

Do I have enough money? It is one thing to have enough money to purchase a franchise, but another to have enough money to support yourself until the business can start producing some cash flow.

How strong is the franchise company? People considering franchising should choose a company that's focused on long-term growth and have several programs in place -- such as a marketing fund to increase brand awareness on a local and national level and a mentoring or coaching program to answer questions and concerns -- to help franchisees succeed.

Can I follow a system? Following the proven model is the most important factor in franchising. Many new franchisees think they know more than the company and try to change the process. Abandon this mentality Am I comfortable marketing and selling my business? Many people are uncomfortable with this aspect of the business and choose not to do it. When you don't do sales, however, sales don't come in and the business suffers. Choose a business that suits your sales aptitude or be prepared to hire someone who can complete these tasks.

Click here to check out the rest of the interview. Jodi sure knows her stuff!

Photo: MatchPoint consultant Jodi Rowell.

Are You a Veteran? You Could Win a Franchise!

The best things in life are free is a saying that holds true now more than ever, especially for those that have bravely served our country.

The Franchise King Blog reported Maid Brigade recently launched the Maid Brigade Veterans Franchise Giveaway, a program that will award more than $1.5 million in business ownership opportunities to 100+ veterans and create more than 1,000 jobs nationwide. The contest comes at a time when America's economy is down, but patriotism is high. Maid Brigade is acting on both fronts by offering new careers to veterans — a group it considers worthy, qualified, and proven as franchise owners. Currently, 10 percent of Maid Brigade owners are veterans; others in the network come from a range of careers.

To enter, veterans should complete the form and submit a short essay at www.maidbrigadegiveaway.com by September 30th on how their military responsibilities would translate to successful Maid Brigade franchise ownership. Maid Brigade will waive its $14,500 Select Market Franchise fee for as many as 100 qualified veteran applicants and one grand prize winner will receive a new Maid Brigade franchise operation at zero cost — a total value of $45,000 which includes waived franchise fees, working capital, training, and equipment. Second and third place winners will receive similar packages valued at $27,500 and $17,500, respectively. A Maid Brigade Select Market Franchise is designed for smaller geographical regions.

We salute all entrants…good luck!

Franchise Consulting to Paisano’s: Benvenuto!

Franchise Consulting, LLC (FC), the franchise development company that’s marketed and sold hundreds of franchises for Camille’s Sidewalk Café, Coney Beach and FreshBerry Frozen Yogurt Café, has announced the addition of Paisano’s to its client roster.

Founded in the Fair Lakes area of Fairfax County, Virginia by Fouad Qreitem, Paisano’s has grown to a five-unit chain since first opening in 1997. After refining their systems over the past 12 years and operating the company-owned locations, Paisano’s is a seasoned and proven restaurant concept that is poised to flourish as a franchisor. The menu includes gourmet pizza, pasta, subs, stromboli, wings, salads and more. Qreitem also founded Bella Pizza, which is located in Centreville, Virginia. The agreement between FC and Paisano’s will utilize FC’s organizational and support system to franchise the brand. FC’s services will include marketing, real estate, franchise sales, and other aspects of franchise development. Paisano’s will be positioned as an Italian delivery concept with an average ticket of $19.

“Paisano’s is an innovative delivery concept that serves amazing Italian food in addition to its flagship New York style gourmet pizza,” said Mike Halpern, FC’s founder and CEO. “Paisano’s has proven its solid business model for over a decade. Its franchising potential makes Paisano’s the perfect addition to our portfolio of brands to market in Washington, D.C., Maryland, Virginia and beyond. To begin with, we plan and hope to sign ten deals to open locations in the area by the end of 2010.” Qreitem concurs, stating, “When I founded Paisano’s, it was our goal to transform the way people think about pizza delivery. And now with the help of Franchise Consulting we will be able to do that in the D.C. Metro area, across the nation and ultimately around the world.”

The "E" Word

Are franchise owners entrepreneurs? His Majesty the Franchise King (aka Joel Libava) says “Nay!” Find out the rationale behind his latest royal decree here. What's your take? Leave a comment or share your thoughts with the King himself on Twitter.

And since there may be a few of you left out there that don't know what the Franchise King stands for, check out his recent Q and A with the SmallBizResource blog for all the details. Trust us: you'll consider yourself one of his royal subjects in no time!