South Dakota Feature Articles

Ricky Warman already knew a lot about finance when he left his job as an investment manager for Prudential Securities in Miami to start a life in franchising in the early 1990s. Warman was a friend of Jenny Craig and started in franchising with nine Jenny Craig weight loss centers. He would go on to try other franchise brands, including Schlotzsky's. Today he's wholly committed to the Papa John's brand, operating 42 pizza locations. (He had 53, but recently sold 11.)

As savvy franchise companies continue to flourish in this challenging economy, FUSR will bring you Good News each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow - despite the economy… maybe even because of it. And as the U.S. economy struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities through master franchise deals.

After graduating from the University of Maine, Michael Kern landed jobs at top advertising agencies including Young & Rubicam and McCann Erickson. He later held top marketing jobs for KFC and Long John Silver's, at one point serving as worldwide chief marketing officer for Long John Silver's.

The franchise registration states require an updating of your FDD annually. This requirement necessitates the filing of a renewal application (including the revised FDD, current audited financial statements, and supplemental documents) with each registration state in which you plan to continue selling franchises.

Why would both a franchise capital finance company and the CEO of a retail franchise brand sign on as franchisees of a new concept? That's what Siegel Financial Group and Gabriel Bottazzi, CEO and founder of Bijoux Terner, have done. They are among the six franchisees who have signed on with RetroTax. Part of the reason, both say, is that it's a great concept. RetroTax, as the name implies, finds tax credits for both franchisors and franchisees--and gets paid as a percentage of what they find.

To be the best at what you do. To be the best in your market, your industry, your niche. To take your passion and build a business that excels in every way. To build teams, train managers, and win the loyalty of customers. To gain recognition and win awards from your franchisors. And to provide for your family and build a life--and a business you can pass on to your children. All these goals and more are what drive multi-unit franchisees to dominate. In our annual "Dominators" issue, we feature six operators what drives them. Here's a "sneak preview."

The constant theme of this column is Do It Effectively, Do It Legally, Make a Difference. How a franchisor addresses its sales promotional materials fits this theme. That is, a franchisor's sales promotional materials must effectively capture a candidate's attention and also must comply with the rules.

Dennis Hitzeman has had some legendary mentors in his life. First there was McDonald's founder Ray Kroc, who hired the 16-year-old Hitzeman as a crew member for his third location. Later, as a West Point Cadet, he played football for assistant coach Bill Parcells and studied under Gen. Norman Schwarzkopf, Jr.

Charles Loflin started climbing the ladder of success from the bottom rung, and he hasn't stopped yet. "I've been in food and beverage all my life, starting when I was washing dishes at the age of 15," says the 40-year-old multi-brand franchisee.

It's no surprise that multi-concept franchising continues to soar. So much so, that for a second consecutive year, we have devoted an issue of Multi-Unit Franchisee to covering it in detail. This high-flying approach to expansion is growing in popularity for a multitude of reasons. As a growth strategy it offers more units, brands, territory, and income--while spreading risk across the different concepts in a franchisee company's portfolio. Multi-concept operators typically have a solid infrastructure in place that, among other things, allows them to hire and retain talented individuals by providing growth paths within the organization. And of course there's the leverage of economies of scale in this type of operation.

You'd think selling franchises in one of the worst economies since the Great Depression would daunt even the hardiest franchisor. But many franchisors, both well-established and new to the scene, keep on plugging when the economy goes south. Some even consider this a great time to grow.

Many franchisors have reached their limit on expanding into suburbia, but the imperative to grow remains strong. In response, an increasing number are training their sights on America's cities.The move to the suburbs has been a decades-long trend in the United States, and franchisors have followed suit. But more than half of the U.S. population live in the country's top 25 metropolitan areas, and nearly 80 percent live in the top 100 metro areas.Cities are complex, crowded places, running the gamut from blighted ghettos to luxury high-rises. Suburban commuters flood into them by the millions each day to work and shop, creating a vibrant marketplace. And the under-served inner cities are hungry for retail goods and services, jobs, and entrepreneurial opportunity, making them fertile ground for franchisors who take the time to learn, understand, and develop relationships with the people who live there.The Initiative for a Competitive Inner City (ICIC), founded in 1994 by Harvard Business School Professor Michael Porter, studies inner cities with a focus on economic development. According to ICIC, "[T]he inner city retail market offers significant profit potential for retail companies now operating in the highly competitive, over-saturated suburban markets." According to an ICIC study, the country's inner cities contain:

All franchisors place a high priority on gaining new recruits and responding to contacts from prospective franchisees. But who's setting the pace on performance? Once again, Franchise UPDATE's mystery shoppers hit the phones--and the websites--checking out franchisors from coast to coast to see which were doing the very best work. The best and the brightest were recognized in the 10th annual STAR (Speaking To And Responding) Awards--from the three top national performers to the companies that excelled at fielding telephone contacts or quickly getting back to website leads.

"One day I had 1,000 people, the next day I had a hair salon with 5 stylists," says Richard Bielecki, Fantastic Sams regional owner for South Texas and New Mexico.

Franchise Association of Southern Africa's (FASA) primary role is to define the business of franchising and ensure that all parties adhere to the franchise business principles adopted and accepted internationally.

IN TOUGH economic times, franchises are a relatively safe way of doing business. This is evident in the 2008 Standard Bank Franchise Factor survey, which showed that only about 3 percent of franchises fail, whereas the percentage of failed start-up businesses is much higher.

When Pat Williamson was a sophomore at the University of Georgia in 1969, he was home from school one weekend and heard about a summer job opportunity. A Frito-Lay route man stocking the shelves in Williamson's father's retail store had asked if there were any kids looking for a summer job. Williamson's grandfather overheard the request and passed along the info to young Pat.

Florida-based businessman Peter Economys and New York entrepreneur Rob Tobias have a very special talent important to area developers: they're champion multi-taskers. But the concentration and mental agility necessary for the success of any area developer is doubly important for them--because each oversees multiple concepts.

"I love the action of the restaurants and the strategy of the real estate. This is the jackpot business for me," says Mike Scanlon, president and CEO of Thomas and King in Lexington, Ky., where he opened his first Applebee's in 1988.

Think of it as hoses-to-go. A broken hose can spell disaster for many businesses. A machine breakdown at a job site or factory can cause work to grind to a halt. And sometimes it can take days or weeks until the proper replacement hose can be obtained and the machines repaired. In purely economic terms, a $20 broken hose can bring a $3 million crane to a standstill - not to mention the paid employees who are idly standing by.

In franchising, no one has to be reminded of the importance of making deals and signing fabulous new franchisees. But unless you actually open new units, inking the deal is only part of the story. This important distinction--between units sold and units opened--led us to examine six franchises that grew by more than 100 units between 2005 and 2006 and ask them how they did it.

For over a quarter of a century, I have been a critic of the United States' franchise sales regulation system.

Elaine Stroman was making great money. She had spent the better part of two decades working as a mortgage banking consultant helping people buy and renovate brownstones in old New York City neighborhoods such as Harlem. She worked on 100 percent commission and was completely in charge of every penny she earned.

It's fitting that Guillermo Perales does business in the state of Texas--a place where things are known for being large. Fitting because Perales heads the largest Hispanic-operated multiunit franchise company in the U.S., with more than 140 units across five brands. And he's looking to expand.

A number of franchises now reaching a middle stage of life are facing issues they never anticipated when they first started selling franchises.

In the chronicles of franchising history, some names come immediately to mind - Ray Kroc, S. Truett Cathy, Dave Thomas. The names conjure up images of independent-minded entrepreneurs with the savvy, know-how, and vision to create successful business models replicable anywhere. As part of the celebration of Franchise UPDATE's 20th anniversary, we look back at some of these colorful, inspiring, and sometimes controversial characters.

Until he hit 40, Rick Guerra ran hotels and restaurants "making a lot of money for other people," he says.

Conventional wisdom has it that young franchises are jumping on the area developer bandwagon to grow quickly and establish their presence in the most efficient way.

Innovation has played a progressive role in franchising since the beginning. Over the years, there have been new spins and fresh angles on all kinds of products, services, and concepts. As if there were any doubt, consider the more than 300 new franchise concepts introduced last year alone, according to franchise research firm FRANdata.

When Denise Taylor decided to move back home to Denver from Kansas, she sold the direct mail business she had built from scratch.