The tightening of capital markets in recent years has engendered significant changes in the traditional franchise sales process where funding was discussed as the last step. The almost complete disappearance of investment capital for small businesses has resulted in a severe decline of franchise sales for many franchisors. Only those franchisors that responded to new economic conditions with a different approach have kept franchise sales going strong. One of the biggest changes in the franchise sales process revolves around funding.

In order to sell franchises, franchisors have been forced to become more hands on about sourcing funds for their franchise candidates. The traditional broad list of preferred lenders no longer does the job. New relationships and strategies have to be forged to assist candidates through the current financing hurdles; and thus, while in the past funding conversations and education took the back burner, today they must be at the forefront.

More than ever before it’s critical to know as early as possible whether or not a candidate is fundable. This has always been a concern to some extent since franchisors don’t want to waste their time, but when the criteria for lending were changed prospective franchisees lost confidence. Fear of not having access to capital places franchise candidates in a holding pattern forcing franchisors to find ways to restore the level of confidence to keep the process moving forward. The traditional initial financial qualifications are no longer sufficient. Today franchisors and franchise candidates need to know with a greater level of certainty whether or not the latter will have the capital needed to fund the investment.

Proactive franchisors are either hiring funding strategy specialists or aligning themselves with partners to assist them with the current credit access issues. The role of these experts is to put together innovative financing packages for franchise candidates as well as to educate them about their options. Retirement funds have become a key component of these packages, but are not by any means the only source. The nature of the investment is dictated by the franchise business model and together help define the structure of the package. Only professionals with financial expertise are adept at finding ways to structure these packages according to the investment requirements and the candidates’ financial strength.

By engaging in the funding conversation early on in the franchise sales process, franchisors create a new level of confidence in candidates. Having hope restored keeps franchise candidates motivated and moving forward and franchise sales going strong in spite of the current economic conditions.

Related posts:

1. The New Breed of Franchise Candidates – Who Are They?
2. 7 Reasons to Franchise your Business
3. Are your Franchise Prospects Thieves?

Competent franchise attorneys know how to write agreements that comply with Federal Guidelines and state franchise regulations, yet they don’t commonly have practical experience in running a business, let alone a franchise organization. This franchising operational and marketing know-how is indispensable to avoid costly and unnecessary mistakes.

Although heavily regulated, franchising affords you, the business owner, the flexibility to achieve your short and long term goals through this business growth vehicle. Most attorneys don’t have the practical experience to guide you in answering the business questions that must be addressed in a franchise agreement. You know your business, but initially, you lack the franchise expertise to answer these questions effectively. A qualified franchise advising and coaching firm can guide you through this process.

Here are some examples of issues that your attorney, in all probability, lacks the experience to help you answer.

1. What type of franchise offering should you have? Should you offer single units? Multiple units and/or Area or regional development agreements? Each one of these offerings is different in operational requirements and results. Determining which one meets your goals before you write your franchise documents is critical.
2. How much should you charge for your franchise offering? What ongoing fees should you have? A franchise advisor can help you determine these fees based on your type of business and franchise opportunity.
3. How much training are you going to provide to your franchisees? Where and when should franchisees be trained? Who will undertake the training of new and existing franchisees? You may know what information a person needs to have to run the franchised business, but are you qualified to design the training curriculum that assures that your franchisees will have the knowledge to be successful?

The above three points are just examples of areas that need to be addressed in the franchise legal documents. If you can’t answer these questions, your attorney is likely to take the answers from other agreements previously written in your industry. These answers do not necessarily apply to your business or to your goals.

Once your franchise legal documents have been prepared, you also need to know how to market your franchise offering, how to find the right franchise candidates, how to close deals, how to train your franchisees, what type of staff you need to recruit, train and support your franchisees, and many more franchise operational issues that only someone who has been there can coach you through. A good franchise advisor is a trainer and a coach and will prepare you to deal with all these issues so you can become a successful franchisor.

During hard economic times, it is easy to justify saving money. Yet some things are too critical to cut corners. If you want to avoid costly mistakes make sure to retain the services of a competent franchise advisor or coach with the practical franchise experience to complement the efforts of a good attorney. Together, the franchise advisor and the franchise attorney can create a successful framework to allow you to meet your objectives while protecting and growing your business.

Related posts:

1. Why write a book about franchise success?
2. 5 Steps to Differentiate Your Franchise Offering

The New Career Economy® is much different than what our parents’ generation experienced. Long gone is the era of working for Corporate America for 30 or 40 years toculminate our careers with gold watches and the security of retirement plans and a strong Social Security system. Unemployment rates have continued to rise in the last few years and layoffs and retrenchments have become the reality for more and more people.  Adding to these economic woes, the decline in the stock market has drained most people’s savings; and, the real estate crisis has eroded their greatest asset, in some cases leaving them owing more in their homes than they are worth. Just like nature evolves due to conditions in the environment, this grim economic landscape has given birth to a New Breed of Franchisee Candidates.

Many people have realized that their only option is to take their destinies in their own hands. They have become proactive and no longer rely on Corporate America for their financial security. They no longer trust the reactive investment market and are now becoming more proactive in finding ways to  take control of their economic future. These are savvy and educated individuals who have reached a point of frustration with the current economy that makes them willing to be more self-reliant. Tired of the ups and downs of the stock market, this New Breed of Candidate is looking to diversify their investments away from the reactive stock market into something they control.   The growing distrust of those in control of the financial markets has evolved into a renewed confidence in their own ability to generate higher returns than leaving their financial future in the hands of others.

The current economy has certainly redefined the term “job security.” Yet, these challenging economic conditions add fear to an already frightening process. Making important economic decisions during these uncertain times creates anxiety even in those individuals who habitually have beenmore risk tolerant; and of course, it increases the hesitancy of people in general. Traditional sales tactics and processes that put pressure on candidates to make decisions and move the process along are a sure bet to backfire. This New Breed of Candidates demands a different experience.

If you want to award franchises during this economic environment the pertinent questions are:

• Are you structured to attract this new Breed of Candidate?

The New Breed of Candidates wants more control over their lives. They are willing to take responsibility and educate themselves. If you are not using technology to streamline your franchise award process, you will never be able to attract these individuals.

• Are you using the same franchise sales process you’ve used for more than a decade?

If you haven’t changed your franchise awarding process to address the fear gripping emotions of the current economic landscape you won’t be able to engage the New Breed of Candidates. Processes that worked in the past have become totally obsolete. You need to learn how to improve your ability to “coach” individuals through the natural fear that occurs in our current environment.

• What do you need to do differently to create the different experience that the new breed of candidate demands?

You need to understand the consequences of the economic environment in which we live.  You need to learn to understand the New Breed of Candidates, their needs and expectations. You need to forget what worked in the past and seek new strategies that leverage technology to educated candidates. You need to find ways to remove the barriers created by the lack of funding and coach your candidates through financial pre-qualifications. You must start the discussion about funding a franchise much earlier in the process. You MUST stop selling franchises and start awarding them.

Related posts:

1. Talking Funding First – Why a Reversal of the Traditional Franchise Sales Process is Critical
2. Challenges of Selling the First Franchises
3. Looking for Franchise Leads? Start With Your Website

The premise of the “Master Mind Group” is that before we can achieve our goals and desires we must first acquire the specialized knowledge in the field we have chosen tor bring our dreams into reality. Hill claims that it’s unlikely that we possess or that we are willing to learn all the knowledge we need in order to make this happen, and that a Mastermind Group can and will ‘bridge our weaknesses.’

What does this all mean in the world of franchising?

Franchisors, regardless of their industry, share common goals of awarding more franchises, supporting and training franchisees towards success, and operating a financially rewarding company.  For new franchisors the world of franchising is complex, multifaceted; and, at times, quite scary. Most new franchise companies try to learn as they go, yet this is not the most efficient or effective path. If experience is not complemented by other methods of acquiring knowledge and information, new franchise companies struggle needlessly and the growth of mature companies becomes sluggish. Hiring coaches is one option that can pay for itself by avoiding costly mistakes. Forming or joining a Mastermind group is another powerful method to help companies learn the skills and access the information that will empower them to excel in franchising.

Franchisees can also benefit greatly from joining a Master Mind Group. There is a lot to learn about growing a successful franchise and Mastermind groups can certainly shorten the learning curve for new franchisees while assisting mature franchisees get out of unproductive ruts.

Whether you are a franchisor or a franchisee joining a Mastermind group can:

• Bring you and your objectives into focus
• Provide accountability
• Support you in your efforts to achieve your goals
• Offer new information and specialized knowledge
• Afford you the opportunity to learn new strategies and methodologies
• Bring a new perspective and new ideas
• Help you formalize an action plan and keep you on track

For Mastermind Groups to work in franchising they must:

• Meet on a regular basis
• Follow an agenda
• Have members committed to sharing  and supporting others
• Maintain perfect harmony
• Have diversity of experience and knowledge in the areas that support each member’s needs

Napoleon Hill shares how Mastermind groups worked for Henry Ford and for Andrew Carnegie. They can also work for you! Accepting that we don’t know everything and that others can assist us is the first step. Seeking help is what brings winners closer to success!

Consider joining or forming a Mastermind group today!

Related posts:

1. What Are the Challenges Faced by Start-up Franchisors?
2. Are Your Franchisees Able to Absorb the Information They Need?
3. Are Your Franchisees More Interested In Being Right Than In Being Successful?

More and more people continue to lose their jobs and they are searching for alternatives such as those provided by franchising. This was obvious at a recent franchise show organized by The Entrepreneur’s Source in Chicago. The event was extremely well attended and by serious prospects.

People are searching for opportunities and The Economist’s is joining the many resources to available to assist these people  with their virtual fair. This online event will be held June 28-29.

The Economist Franchise Fair connects potential investors with franchisors and consultants who can provide advice and guidance on buying the right franchise. It is completely FREE to attend.

Registration is now open at

http://register.economistfranchisefair.com/?source=expansionexperts

Visitors can:

- Meet franchisors & consultants

- Browse virtual booths of a variety of franchise concepts

- Engage with live webinars & chat sessions

- Log in any time during the 48 hour event from the convenience of their home or office computers

Exhibitors at The Economist’s last Franchise Fair (March 24-25 2011) included:

-Dunkin’ Donuts ®

-Carl’s Jr. ®

-Hardee’s ®

-Maid Brigade ®

-Express Employment Professionals ®

-Carvel ®

-Auntie Anne’s Pretzels ®

-Cinnabon ®

-Moe’s Southwest Grill ®

-Schlotzsky’s ®

-The UPS Store ®

-PLM Franchise Consulting, LLC

Related posts:

1. Looking for Franchise Leads? Start With Your Website
2. 7 Challenges Home Based Franchisees Face

When we went to South Africa in 1992 I got a real understanding of the challenges one faces when franchising in other countries. It was obvious to us that just because a concept was successful in the United States, it was not necessarily going to be so in South Africa. At the time,  however, there was a strong initiative to bring US franchised concepts to South Africa to assist this country with its massive unemployment. What better way to help people who had no training. Franchising would bring the know-how and the experience, or so it was believed. What we soon found out was that the challenges one faces in a different country are totally different than those we face here in the US; and, most franchisors, unless they already have a strong international presence, are not equipped to handle them. Therefore, we focused our energies in developing indigenous franchise concepts.

One of the projects we worked on was Lapa Foods. Clover International was the largest dairy and poultry co-operative in South Africa. They wanted to penetrate the now accessible townships and thought they could do so best via franchising a ‘bodega’ concept using shipping containers. Here are some of the challenges that we faced:

• Opening – To get approval to open the store took over 8 months and many, many meetings with town council and other parties. The most difficult part of the permission process was making sure that we did not step on anyone’s toes and respected the township hierarchy and politics.
• Dust – the dust in the townships used to get inside the electronic cash registers and we had to constantly call a repair person who did not necessarily like going to the township. In  addition everything in the store including all the equipment had to be dusted at least three times a day, whether or not you were busy.
• The Franchisee – choosing the first franchisee was in many ways easy. We were working on a pilot so we partnered with a self- educated resident of the township. To avoid politics we decided to offer a series of entrepreneurial workshops and choose the best student. And, the franchisee we chose was excellent. The problem arose with the extreme success experienced from the first day of opening the location. The franchisee had never seen the amount of cash that he now had. And, the franchisor was not prepared for the level of demand and kept poor records of all the deliveries leading to disputes and mistrust between franchisee and franchisor from the very first week.
• Success – yes, this was a real challenge because it surpassed the most optimistic projections and keeping the store supplied was nearly impossible.
• Staff – the two staff members chosen to help in the store were in their mid-twenties and had never held a job. They were smart and willing, but their lack of experience resulted in an absence of what to us is common sense making training them a real challenge. One time, I took the role of ugly American and was frustrated with one of the staff members because she did not know how to dust the shelves. I will never forget when the franchisee called me aside and said: “Lizette, she has never been taught. She probably has never been this close to shelves of food. Her mother couldn’t teach her. She hardly went to school. She is doing the best she can.” What a lesson!!! I am still grateful to this man after all these many years for showing me my stupidity and my own lack of common sense!

The time we spent in South Africa was not only my best franchising experience; it taught me important lessons about life, people and cultures. Perhaps the most important lessons were to make NO assumptions and to embrace the differences, because it is in understanding them that success exists.

Back in Ecuador the first Papa John’s location had just opened and everyone was excited about it. I couldn’t help myself and had to go visit the location. Did you know that Cuenca, Ecuador has the perfect weather and that there is no air-conditioning ANYWHERE! My question when I saw the new large Papa John’s location in one of the malls was how are they managing with the heat that is generated from the ovens? Also, Cuenca sits at 8,500 ft. above sea level. I wonder how they had to modify their recipe to make sure they got product consistency. Interesting operational challenges. How about sharing yours?

Related posts:

1. Franchising as a Community and Social Development Tool
2. Client Reaches Exit Strategy Objectives
3. What Are the Challenges Faced by Start-up Franchisors?

I had used the perfect word to express my feelings, as well as its causes! That word ‘disillusioned’ was the key.

The dictionary defines ‘disillusion’ as ‘to free or deprive of illusion’. And, I definitely had been under a self-created illusion.  I believed that because the franchise relationship is based on the win-win principle, the parties involved must care ‘first’ about the other party; and, must always seek the win of the other party because it is in the other party’s win that they can find their own.

When the veil of illusion was lifted, I could see that I had created standards impossible to achieve. The problem was in the absolute nature of my belief. The use of the words “must,” “first” and “always” tainted an otherwise true statement.

People in most cases care more about themselves than they do about others. We even see it in the closest of families; so, why on earth would I think that a business relationship would be exempt of this human trait? The franchise relation is dictated by a legal and operational structure that invites more cooperation and more dependency than other business relationships. In more than one way the franchise relation resembles a family. Yet, although it invites cooperation, it cannot make an entrepreneur care more or less about others; nor can it make a franchisee be a better team player. People who are drawn to franchising their businesses, in most cases, feel the pull because of the economic and ego rewards it offers. Very rarely have I heard people express that their main reason for franchising was to help others. That has been my trip, my blind spot, and the cause of my disillusionment. I had created a belief to match my own preferences; and thus, when reality did not match my expectations I felt a sense of discontent and disappointment.

When illusions are lifted one can see, accept, and even appreciate, things as they are. There is nothing wrong with the franchise relationship. There is nothing wrong with franchisors seeking their own gain and franchisees doing the same. That’s just the way it is; these parties are human. The structure of the relationship makes franchisors aware that it’s to their best interest to support franchisees and likewise encourages franchisees to protect their brand and team.

Now that the illusion is gone, I can appreciate the franchise relationship even more for what it is and for what it’s not. In franchising we are dealing with people with their strengths and their weaknesses, and with their humanness. Yet, in franchising people are encouraged to bring their best qualities to the forefront; they have an economic incentive to do so; and when they don’t, they suffer the consequences. Franchisors who don’t support and/or abuse their franchisees experience a shrinking of their network of locations. Franchisees who decide not to follow the franchisor’s system or not to be part of the team have a harder time achieving the success they seek.

Last year’s debate triggered by the CNBC report “Behind the Counter: the Untold Story about Franchising,” in my opinion, resulted in the best of franchising coming forward as franchisees joined the franchisor of Cold Stone Creamery to defend their brand. This is what franchising is all about: the team, the single objective, the win-win. Franchisees and franchisors may have differences; but, like in many families, when an outsider attacks the system or the family, its members unite.

The recent economic downturn definitely has taken its toll and this time franchising was not able to escape it. As many franchisors were not able to respond quickly enough to the economic changes, their franchisees experienced drastic consequences and in many cases failure. Yet, overall, I bet that franchised businesses still have done better than most small independently owned ones.

So, yes, Franchising is not perfect. But, what is?

Related posts:

1. Franchising: the Beauty and the Beast
2. Franchising: a Love Affair by Lizette Pirtle
3. Are franchise relationships dependent or interdependent?

• Vision
• Skill
• Money
• Ego

Vision encompasses those people who want to grow their business quick, yet lack the resources to do it with company-owned locations. They want to enter new markets and understand that the cost and energy to do so themselves may be too high for them. Franchising thus affords these people the answer, as prospective franchisees invest their own capital in the new locations within their markets.

The skill reason category is broad. People seeking to expand their businesses often do not want to deal with more employees, so franchising is a perfect answer since the employees of the new location work for the franchisee. These people are often also seeking more motivated workers than employees tend to be. Franchisees have more to loose and thus have a vested interest in the business. On the other hand, people seeking to expand their businesses may actually lack the managerial skills that a company with multiple locations requires. Franchising calls for a totally different set of managerial skills. Since franchisees are not employees, franchising requires stronger human relations skills than managerial ones.

Money is always an element in the decision whether or not to franchise. Although franchising is expensive to set up, it saves the cost of opening locations as franchisees use their own capital for this purpose. The economic rewards do not have the same potential of an expansion via company-owned locations. However, franchising does not have the risks nor does it require the time and effort that come with the former method of growth.  Franchising creates an annuity. It can also create wealth; and, it can serve as a profitable exit strategy for small business owners. Franchising does not dilute the owners’ equity nor does it necessarily have to create debt.

Finally, there is ego. Yes, ego plays a big part in the decision to franchise. People who choose to franchise their business usually have the desire to see their creation appear all over the place. The yearning to be recognized for one’s accomplishments as a business leader and the longing to make an impact on many lives are also strong motivations to franchise a business.

What are (or were) your reasons to consider franchising?

Related posts:

1. 7 Reasons to Franchise your Business
2. 5 Tips to Creating an Effective Franchise Operations Manual
3. Who Should NOT Franchise Their Business?

During my first experience working in a franchising company I heard the voiced and common belief that franchisees are happy as long as they are making money. Now, after over 20 years of working in the franchise field, I know that the truth in this statement is not absolute. Although I also have  learned first hand that it always helps when franchisees are financially successful, but for most franchisees there is more to it than just ‘making money’.

I have found that franchisee success has to do a lot with the numbers, yet we must dig deeper. Non financial goals and objectives play an important role, although for some people more than for others. However, there is no question that the numbers are critical and how franchisors deal with them or ignore them can determine the success or failure of their franchisees.

Kate Groom is a franchise expert residing in Australia and her focus is franchisee financial performance. Kate assists franchisors have the much needed conversations around profit, performance, and results. I call these the ‘tough conversations’ because they involve topics outside of the comfort zone of franchisors and the franchisees.

“Most franchisors don’t have a financial background, and lack the experience talking about and managing this subject,” Kate said to me in a recent conversation. “The result of this lack of experience is that many franchisees don’t know where they are going nor do they know how to, or even when, they get there.”

I definitely agree with Kate. Franchisees need clear objectives and a way to measure their results. Kate mentioned: “These days technology has provided franchisors with a multitude of ways to gather, benchmark and report financial and operational information. Sadly, however, lots of people get caught up in the process of creating process; and, we make things complicated just because we can.” Kate continued;  “It doesn’t have to be difficult.”

Franchisors like to tell their franchisees that they need to get back to basics. It seems to me that franchisors need to heed their own advice. As Kate says: “It’s easy to get caught up in the ‘wretched hows’ and forget that we can make a difference one conversation at a time, one franchisee at a time. Sometimes a good place to start is with what’s simple and easy to do with what’s available.”

Kate has lots of great information in her blog; make sure to visit it at http://www.starfishconsulting.com.au/

Related posts:

1. Are Performance Tools Important for Franchisee Success?
2. What’s the Makeup of a Franchisee?
3. Are You Listening or Merely Hearing What Franchisees and Prospects Are Telling You?

And, because I have worked with small businesses my entire career, I know how many of them disregard or become overwhelmed by record-keeping. So, this contest by BookKeeping Express will come to the rescue of one lucky company. Hopefully you will be the lucky one.

__________________________________________________________

CMIT Solutions Refused to Participate in Recession

Nation’s Leading Small Business IT Franchise Expanded at 50 Percent Pace During Downturn

CMIT Solutions is one of the leading small business IT franchise company and it has expanded at a rate of 50 percent during this recent economic downturn. Now that’s something to celebrate!

“Plain and simple, it’s a winning business model,” said Jeff Connally, president and CEO of Austin, Texas-based CMIT Solutions. “We hit home hard on two key differentiators: First, we give downsized corporate America professionals or those seeking to make a career change a successful business model that fills a critical need today; second, small business owners can’t find the type of IT solutions we provide with tremendous affordability anywhere else.”

During the tumultuous past two-plus years in the American economy, CMIT Solutions has flourished as a franchise. Nationwide, the company added 38 new offices in 2009, 26 new offices in 2008, and is continuing exciting growth in 2010.

CMIT has obviously refused to participate in the U.S. economic downturn. Good for them and congratulations!!!!

For more information about CMIT Solutions and franchise opportunities, visit www.cmitfranchise.com, call (800) 710-CMIT or email franchise@cmitsolutions.com.

___________________________________________________________

Contest to Award $25,000 in Bookkeeping and Accounting Services to Small Business Suffering from Financial-Recording Disaster

America’s Small Businesses Savior: The “Great 2010 Accounting Makeover”

From Boston to Tacoma and everywhere in between, small businesses entering the “Great 2010 Accounting Makeover” contest stand to win a comprehensive BookKeeping Express 12-month service package.

HOW TO ENTER:

Business owners and management interested in the makeover must enter the contest by e-mailing a link to a video, photos or a few sentences conveying the accounting nightmare they are facing to makeover@bookkeepingexpress.com. BookKeeping Express will post entries to www.facebook.com/BookKeepingExpress and the winner will be named on Monday, December 20, 2010. All entries must be e-mailed by noon ET on December 17, 2010.

The contest winner will be chosen through a “like” vote system, in which small businesses encourage business associates, friends and family to “like” their entry on the BookKeeping Express Facebook page. The small business’ entry with the most “like” votes will be deemed the winner.

The winning small business will receive:

• A review of previous year’s financials (up to 12 months)
• Comparison reports to industry standard
• 20 hours of consultation (can be used at beginning or spread out)

Plus, BookKeeping Express will give all entrants a waiver on their set-up fee (up to $500 value).

To help ensure a full accounting overhaul, BookKeeping Express will customize its consultative and strategic accounting services for the winner.

So, are you overwhelmed by records? Don’t wait, send your entry today.

BookKeeping Express is a national company with more than 150 locations. For more information, please visit www.bookkeepingexpress.com or contact 877-525-5337.

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Disclaimer: I am not affiliated with either CMIT Solutions nor with BookKeeping Express in any way.

Related posts:

1. What’s Happening in Franchising?
2. Disillusioned about Franchising?
3. Franchising: what is it, really?