Postal Connections franchisee Lee Kennedy

Franchising and Millennials – A Surprising Match Made in Heaven

Commonly, the main group of individuals interested in buying franchises has been those on the “bridge to retirement,” as I like to call it.

The “bridge to retirement” refers to those who have had a successful career in their established industry, and are now looking for the opportunity to be their own boss and establish a new source of income. This franchise ownership will carry them into retirement and could be an excellent opportunity to provide their family with an existing business.

However, in recent years, a new group has emerged in the franchise ownership space: Millennials. Gen Y, or Millennials, are the generation made up of those today who are between the ages of 25 and 40. Many Millennial-aged professionals are choosing to take control of their personal and professional futures by grabbing hold of the opportunity to enter entrepreneurship. Only now, more and more are choosing to do it in franchising, mainly because of the level of support and the proven business model that comes with a franchise. It almost could be considered entrepreneurship with a parachute.


Business, especially franchising, must deal with the most powerful force known-to-man: Aging. The latest statistics reveal the obvious that “the two generations following the Baby Boomers are larger and growing faster than Boomers who are aging out,” according to the Pew Research Center.

As reported by FranchiseInsights.com: July 21, 2021 – For the first time in history, more Millennials are seeking franchise ownership than Baby Boomers. While Generation X, has shown the greatest share of franchise interest for some years, that share may have peaked in 2020 at 48.2%, based on year-to-date data in 2021 through June.

The Gen-Y or Millennial cohort (ages 25-40 in 2021) is growing rapidly in share, and now makes up the second largest generation of future franchise owners at 24.7%, edging out Baby Boomers at 23.4% of franchise inquiries.

So, what does all this mean? See the last discussion in Franchise Fred below. Millennials are interested in many things at home and work that have not been the priorities of the Baby Boomer (ages 57-75 in 2021) and the Gen X cohort (ages 41-56 in 2021). Technology, environment, personalized service and meaningful work come to mind as top priority among Millennials. Franchises that embrace these aspects of human endeavors and business interests will fine the greatest appeal.


Millennials now represent nearly 20% of new franchise owners, otherwise known as franchisees. Plus, that number is increasing in part because this age group brings a lot to the table. Their skillset often works hand-in-hand with owning and operating a franchise business.

Some of the talents commonly found in Millennials include:

  • Increased collaboration
  • Enhanced problem solving
  • Interest in self-improvement
  • Competent communication

Let’s explore some of the main reasons why Millennials are a great fit for franchising.

Strong knowledge of technology

Technology and computers are as natural to this generation as walking. Millennials are the first generation to have been raised in a highly tech-advanced culture. The ease with which they absorb new technology makes them skilled for franchise business management, which is a challenge to older franchise prospects.

Millennials fully embrace digital life by not only purchasing technology but also consuming technology in their daily lives. To stay up to date with the latest trends and consumer behaviors, almost all businesses are now building platforms and digital tools, which boost their effectiveness. These tools, such as mobile applications, can embrace the franchise owner and customer needs and expectations.

In 2021, the integration of technology into businesses is a must. As an example, we have invested heavily in advancements for our franchise, Postal Connections/iSOLD It®, and now consider our concept to be at the leading edge of the business services franchise category. New service centers are equipped with digital menu boards for ease of customer service, websites configured to download files and online ordering and as well as eBay technology, such as Quicklist™ for iSOLD It services, is being implemented.

Purpose

It’s a common misconception that this generation is lazy and unmotivated. Rather it’s quite the opposite. Millennials are just motivated differently than previous generations, and we have to take that into account as they pursue franchise investments. According to a 2018 study, Millennials want to spend their time doing work that has a positive impact on others.

Millennials seek purpose in their lives and their careers. Many are naturally inquisitive and eager to learn from others, making them great candidates for franchising. The best type of franchises for Millennials are those with strong missions that give back to their communities to tie into a greater purpose. At Postal Connections, we start when our candidate joins up as a franchisee with explaining what our operating values—service that is trustworthy, friendly, savvy and leading edge—means to business activities and treatment of customers.

Schedule

Being tied to a desk and a specific schedule is often viewed as an ancient practice for Millennials. Online meetings, classes, and smartphones have made it easier to be efficient and flexible with scheduling. It has been found that companies that offer flexible scheduling are much more successful than those with the standard 9 to 5 schedule. When you can “be your boss” you can have the flexibility that you would like. Owning your own business and making time for family or other commitments when needed creates freedom and control. Franchises that offer business models with flexible operating standards, instead of regimented and mandatory requirements offer Millennials a place to apply entrepreneurial creativity to advance the business.

One of Postal Connections’ newest franchisees, a Millennial, Lee Kennedy in Bend, Oregon, has found a great path with opening his first Postal Connections franchise. He has chosen to operate the business with help from his family – a selection he made strategically as a way to incorporate those he loves into the business for now and future generations. His strong desire to learn and grow within his business and the community is proving to be an asset.

“I have been impressed by the Postal Connections franchise model since day one and have witnessed firsthand how a business service center with time-saving, personalized services will meet the needs of residents here in my Bend community,” said Lee Kennedy.

As Millennials begin to lead us from the office life and launch their careers to new entrepreneurial models through franchising, we can learn a lot from them. Careers are moving away from what we once knew, and begin to incorporate more technology, purpose and flexible scheduling of work, we look ahead to new, successful models of franchising. Franchises that accommodate savvy customer needing support working in with online commercial and customized service solutions.  The future of franchising is expanding beyond the traditional “bridge to retirement” goals, but is a refreshing direction to launch careers as “budding entrepreneurs” for a new generation of individuals becoming their own boss.

Anne Marie Marvin

LOCATION, LOCATION! But First What is the Business

Typically, when people make the decision to own their own brick and mortar business, they begin to envision themselves in a specific location. It’s natural to think about where your business would operate considering you’ll be the owner, you know the community, and it’s probably a venue or address you’ve always found well-suited for a business.

Franchising offers a strong opportunity for entrpreneurs to pursue those business ownership dreams right in the community where they’d like operate. In fact, in many cases, franchises offer sophisticated real estate site mapping services to provide accurate information about opitmal location placement. It will include drive-by traffic and many other details pertaning to the viability of the location.

Not all franchises can offer a new location in your neighborhood or dream location. Of course, many established franchises already have someone occupying a protected franchise territory which blocks new franchisees with the same brand from doing business inside the current franchisees designed territory. This is important to all parties concered and avoids dimenished revenue potential and failures. Frequently, established franchise brands first select a site and offer than offer this to a franchisee candidates.

However, many franchise candidates believe they already know where to place their units and they start scouting locations, contacting real estate brokers and begin to get “hard wired” into the fact that “this is the place.”

Yet, in most cases this puts the cart before the horse. Since every franchise has a different set of characteristics that have proven the model out, it’s important to first match up with the franchise model of your choice, then look for a location. A potential franchisor should be able to describe the type(s) of neighborhoods, traffic paterns, customer income levels, kids, etc. are needed to be successful. The franchisor should be able to expalin competitor issues and greatest potential where the“under-served” marketplace(s) are. Get this information when you start looking to save time and intelligence for where to go for a good location.

The franchise model that you choose to join is an invaluable guide in the site selection process. With that said, there are always a few things to keep in mind when considering locations to open your franchise:

  1. What size location does the franchise’s corporate leadership recommend?
    • You pay rent based on how much space is being occupied. Too much room is wasteful because space cannot be used to produce revenue. Too little space and there is not enough room to tend to customers and maintain back-of-the-house operations. Early in the process of considering a retail franchise selection, visit an existing franchisee’s business. View how the location’s space is used first-hand.
  2. How well do you know the area?
    • The key here is knowing the immediate and surrounding areas like the back of your hand, including where direct or indirect competitors who may influence your prices up or down are operating. Assuming you’ll do a great job with delivering the product and/or service, will your franchise business depend on generous margins from loyal customers or mainly from other demographics? First consideration is to think as a customer might. Convenience is KING. Is a location easy to travel to? Can you get into and out of the site without dealing with no-turn postings or difficult traffic? Is there enough parking near the store?

 


A few years ago in Southern California, one of my pack, ship and postal store Franchisees chose what at first look seemed to be a perfect site. The space and rent level were OK. The location was at the corner with a high-level of traffic who would see the store sign and know what was being offered. And best of all, it was one door down from the hottest coffee shop concepts.

After signing the 5-year lease it was discovered early that the popularity of the coffee shop was a plague to nearby parking, easy access with drive lane lines and coffee customers who came and left without a 2nd stop to other mall merchants.

The lady Franchisee resolved at the end of here 5-year lease not to renew and move to a larger space 100 yards to an adjacent mall. She kept her customers from the first location and spike new revenue helped by accessible parking, easier access and egress and more space to offer new products and service.

Consider from the start whether high traffic counts into the center can be a boon or curse for the personality of your franchise business.


 

Shopping malls can be a great location for franchisees to open a site. A shopping mall-based business will bring traffic and customers on your first day of business. Remember these hints when you start the site-selection process:

  1. Having an exclusive right in a retail mall or shopping center to sell your specific items is a major key.
    • The right to sell things in your store needs to be defined on the lease. It’s important to know there usually are two categories of “Use” in a commercial lease.  One is “exclusive use” and another is right to sell even though another store or business is selling the same or similar things. “Exclusive” is the key to avoid competition from retail neighbors in the mall such as grocery stores, pharmacy or other businesses that sell a specific product that you also sell. Start your site selection efforts by getting information on “Use” for any location you may think is good for your business. Landlord’s, R.E. brokers or questioning current tenants can get you this info. It will save time if you do this up front—don’t wait until you ask for the lease. Be ready, learn what may be competitive threat by getting product/service sales percentages in a typical store. The franchisor will know this.  It’s important to know if a sales item is a minor portion of your revenue and negotiate the right to sell but not exclusively.
  2. Be aware of your direct neighbors and other nearby businesses.
    • Often, the mix of fellow mall and shopping center occupants or nearby businesses may be traffic generators for the area surrounding the site or, they can deplete customer traffic to your business. Grocery stores usually boost traffic for their neighbors while destination enterprises such as furniture stores, home improvement, auto parts, movie theaters, etc. where people come, buy, and leave, can hinder traffic.

Keep in mind these specific things your franchisor can help you determine when finding a new site:

  1. Help review the lease with you before you engage an attorney.
    • Legal advice is expensive yet needed when you are considering signing the lease. The franchisor is there to help review the lease and guide you concerning typical terms.
  2. Rent and common charges
    • Negotiate a rent abatement for the first few months. This is usually a reduction and not free rent. Monthly abatements from the front of the lease can be added to the back of the lease, so make sure to negotiate shrewdly. Typically, landlords will abate the first few months, but not the Common Area Charges (CAM). This occupancy cost also called the “Triple Net” monthly charge for taxes, insurance and administrative work managing the property. You pay a portion of the total mall or center CAM based on the percentage of space you occupy. Learn what this expense is when you get the rent figure because frequently it can add 25% to 33% more to the rent.
    • Franchisors should be able to tell you how much a typical franchise business should get in what is called “tenant improvement” allowance. This is money the landlord allots to the new business to customize the location for the specific model. Know the condition of the space you’re considering. If the site is new or perhaps recently vacant, the tenant improvement may need removal of walls, a new ceiling cover or flooring, relocating utility outlets, paint, etc. These improvements can be costly and impact your initial investment and cash operating reserves. So negotiate aggressively! Most important be assured by the landlord the heating and air conditioning system (HVAC) is inspected with a certification it is good condition. This item when it goes down can break the back of a new franchisee.
  3. Location-based services
    • The franchisor should identify all necessary vendors that can service important supplies and goods due to the location and protected territories of competitors. Be sure your franchisor discloses whether there are any typical items the franchise model sells but cannot be sold at the location chosen. This frequently occurs with a nearby competitor has the exclusive right to sale an item your business depends on. It also can occur if a vendor product/service cannot be sold in a business model in your city, county, state etc. This can include districts and proximity to a school

Learn more about franchising opportunities with Postal Connections.

 

Are you still learning about franchising and do you remain curious if it is right for you? Lean into franchise investing a bit more with Postal Connections/iSold It’s top executive Fred Morache.   For a fresh perspective and high-quality educational information on franchising, read the Franchise Fred blog. Check back regularly for new articles!

Married Couples Turn to Franchises To Own Their Own Business

The last year-and-half has seen rapid changes to commerce and where we work and live. Beyond the much-reported ascendancy of ecommerce and working-at-home, there is strong evidence married couples are seeking new opportunities to be their own boss. They want to participate in the American dream to own their own business, opposed to working for others. Large numbers of married couples are turning to franchises.

Franchising has unique, positive benefits for married couples wanting to control of their careers while building a financial asset. Couples have unique advantages to join a franchise. They combine financial strength, talent, and family support frequently with participating children.

Research from FranchiseInsights.com by Franchise Ventures, a large collection of internet lead-source companies for franchisors, measures and analyzes online franchise candidates who come to them to investigate opportunities.  From January to April 2021, it is revealed that “Nearly two-thirds of prospects [candidates] interested in buying a franchise are married….” “This is significantly higher than the national marriage rate of 55.7% for adults aged 24 and older.”

Married couples exploring franchise opportunities, according to FranchiseInsights.com, account for 65.5% of inquiries and are significantly above the national marriage rate of 55.7% of adults 24 and older 

Business is exciting. Not only the financial rewards but also the emotional gratification especially shared by a man and wife team. As an entry-level business model franchising is a good option since you start up with a proven business, something that works. For married couples, the franchise business formula is ready to go and ongoing training and support enables the couple to combine their financial strength and apply different talents while maintaining a household or continuing a separate career or simply keeping either person from becoming exhausted. Plus the old saying about franchising applies: Go into business for yourself, but not by yourself.

From my years in the franchise business here are key ideas for married couples:

  • Test with discussion what is the most important, 1 goal spouses shared. Before looking into a franchise business, before investigating a formula—e.g., restaurant, senior care, cleaning, plumbing, educational tutoring, etc.—agree on the reason you want to own your own business. This is critical to combining talents and energy as business partners. A few examples:
      • Make as much money as possible
      • Build an asset and income bridge to retirement
      • Create a family business
      • Gain experience as a business owner while building an asset that can be sold
      • Have a business near home
      • Develop a multi-unit business with greater revenue and asset value

Investing in franchising by married couples has the career strength and creativity from two entrepreneurs with the multiplier of talent for operating the business. Below are three examples for how this has worked for others.

Elizabeth & Jim Bowe Franchisees (center), and Franchisors Andy Thompson (Right) and Fred Morache (left)

Couples focused on their shared No.1 goal in choosing a franchise investment. This is demonstrated in a couple’s priority to build a family business. The couple bought out of relative’s failing franchise and revived it into be a thriving, profitable venture. Combining their talents a commercial airline pilot and housewife-mother concentrated on building a family retail operation, turning the store into one of the national chain’s top performing sales units. They achieved a million sales operation in one store. 

But priories grow, just as families do. Now the couple own three franchise stores in southeastern Pennsylvania and employ many local people while their family business served as the nexus for their children to learn how business works, successfully finish college and venturing out on their own.


  • Only after a shared goal, begin investigating franchise concepts that excite both of you. Most important, be sure you agree on the knowledge, talent, and capacity that each spouse will provide to the business. Avoid that one-half effort is excited and the other is lukewarm for a concept. It’s too easy when on partner pursues a separate career or the household. Emotional, physical support and financial decisions suffer. A harmonious and cooperating married couple is a powerful business force.
  • When you land on a franchise concept know the requirements of the business. The franchisor will provide a Federal Trade Commission (FTC) document called the Franchise Disclosure Document (FDD). It is filed annually to certify the details of the franchise business. Both parties should review and discuss what’s required what the obligations are and whether you can do what it takes. There should be no verbal promises from the franchisor that are not in the FDD.
  • Often married couples have different talents that complement each other—one is a savvy user of technology; another is a people-person; one is focused on financial matters while the other is a visionary with creative business solutions; one has a high-level physical drive while the other is less so, etc. The best part, is unless the couple are newly-weds, a married couple should know each other.

An entrepreneurial couple’s shared goal was to diversify their agricultural, seasonal business in their Oregon smalltown. They invested in a mail, pack & ship service franchise opening “…where everybody knows your name.” Both husband & wife are savvy customer service and marketing experts sharing owner-operator duties in-store while the partner switches off to manage other outside priorities. The wife contributes her talent gained from advertising experience. The husband adds a sharp eye for new sales opportunities introducing new services and products that attracts customers.

Postal Connections franchisees Don & Sue Harteloo,

In their 18th year as Franchisees, the couple’s harmony and talents have consistently made their hometown franchise store a success while continuing a successful second unrelated mail-order business.


 

  • Funding is always a key issue, especially for married couples, are there more than themselves to consider. Do you lead a family unit with kids or parents? The household budget needs to be kept in place at greater or lesser levels. It will affect funding a franchise. The FDD gives you a range a range for initial investment. You have the advantage of combining incomes and investments. Currently, SBA backed loans are offering favorable funding terms and low interest rates. Typically, these loans require 20% to 30% down of the total loan and a logical business plan. Experience in the business is a big plus. Be sure to consider in your loan application two key expenses that often are overlooked
    • Household expenses projected for the next year. Which spouse can cover this with separate employment until the business is making money? Or perhaps a household reserve set up by adding to the loan debt?
    • A business operating reserve is always needed for a new business. It’s rare to open a business and have salary or profit to support operations with labor cost, maintenance and repair, marketing and advertising cost, etc. The best way to get an answer for how long is phone calls to current franchisees and ask “how long?”

A married couple’s shared commitment started with building an asset bridge to retirement. They brought savvy and unbending enthusiasm to their franchise investment following a lay off due to a corporate failure. The couple’s partnership has been supported a two-track career strategy with the wife as an employee of a private educational system and the husband develops a new franchise business that is the asset that can be increased and cashed in when the times comes.

Located in Boise ID, the mail, pack & ship service center has had one of the fastest new store revenue climbs and continues in 2021 on a rapid pace with 6-month 2021 sales 75% higher than first half 2020. The wife continues to bring home stable employment and benefits; while the husband succeeds in being his own boss. He brings retail and sales experience to his operation; and keenly understands how personalized customer service is key to loyalty where a population relies on ecommerce yet starved for face-to-face service attention when needed.


  • An important aspect of choosing a franchise is how well will you get along with the franchisor. My company, Postal Connections®, a mail, packaging, shipping & business services retail service center arranges a personal, face-to-face meeting with one of the owners and the candidates where they live. We asked that both spouses attend. It’s important to know each other as persons before an Agreement is signed. This is not a howdy visit, but a meeting for a day or more to discuss goals, remaining Agreement questions, business practices, obligations, etc. There are many ways franchises do this personal introduction: discovery days at HQ, phone conversations, regional meetings with representatives, etc. Because a franchise relationship is for several years, it is important to know each other. The confidence of both spouses that commitments and support will be there and when you pick up the phone there already is some understanding for why you called.

Franchising Trends

Franchising Trends

With franchising growing every year for the past six years, the successful franchisees and franchisors, for that matter, stay on top of societal trends to keep business booming.

Demographic Changes

US population shifts impact today’s consumers and as well as the labor force. Owners must adapt to this shifting base to mine growth opportunities:

Millennials- This cohort, born roughly between 1981 and 2000 affect everything because of their sheer numbers which are greater than that of baby boomers. Raised on the internet and technology, this group loves to be catered to. They want the owner to know what they want before they even go shopping!

Baby Boomers- As they age, boomers need new and customized services including housing, fitness, aging parent assistance and financial and retirement planning. Other programs and services tailored to their aging experiences will be in high demand.

Minorities- A new majority consisting of Hispanics, Asians and African-Americans is being formed. The growth here presents new opportunities for franchises focused on serving these groups.

Growth Areas

Recession-proof businesses- Businesses like shipping and packaging, hair care, tax preparation, childcare, pet care, computer services and many more do well in any economy. House cleaning and mailing services businesses especially appeal to those who want to stop doing maintenance work in order to pursue more life-fulfilling activities.

Personal care- This includes fitness centers, spas, tanning centers, healthy fast good and tailored education programs designed to improve physical appearance and mental well-being.

Green businesses- With LEED-certification and other guidelines aimed at sustaining and improving the environment, opportunities have arisen in areas such as home improvement, energy savings and green home care.

Staying current with these trends helps the franchisee and franchisor stay relevant in the ever-shifting market.

Fred Morache is a franchising expert and a partner in Postal Connections of America and iSold It franchisors.

Leadership- the Five Bs

Leadership styles vary just as people do. Usually, the ways individuals lead are outgrowths of their personalities. Some are bombastic, some quiet and others are mix of many traits. However, there are ways to act as a leader that transcend all personality traits… the five Bs:

Be Yourself: In a time rife with phony smiles and chameleon-like changes because of the circumstances, stay authentic. Be true to yourself. It makes others feel like they know you and because of that, they want to help you be successful. And make sure you put the best part of yourself for your employees and customers to see.

Be an Immigrant: This means that when you arrive on new shores, you look at the landscape, including opportunities, with fresh eyes.  Everything is not only new, but exciting! You cannot wait to sink your teeth into what you’re about to face. You may even see potential that others miss.

Be Calm: Screaming does not work. If your customers or employees spend time wondering about what mood you’re in, not much gets done. Stay calm, steadfast and focused on the tasks on hand.

Be Accountable: This may be the toughest of all because this includes acknowledging when you make a mistake and few like to do that, yet we all admit we make them! If an error has been made with an employee’s pay, a customer’s order or a supplier’s shipment, ‘fess up and fix it. People know mistakes are made. It’s how mistakes get handled that separates the true leaders from the posers.

Be Questioning: Business owners often fall into a: The process is good because that’s the way it’s always been done or if it’s not broke, don’t fix it mentality. Question everything! If something has been around for a while chances are it could use some scrutiny.

If you can maintain the spirit of the five Bs, not only will you have set the foundation of good leadership but your company will flourish.

http://www.postalconnections.com/franchise-opportunities/

Franchising Over 50

Business myths are rife with stories about youthful entrepreneurs who concocted wild ideas while eating pizza in a tiny college dorm room, raised hundreds of thousands of dollars of VC capital and founded million dollar ventures. While this does happen, it is rare. The typical entrepreneur is a middle-aged professional who taps into a market need and uses his/her own savings to get into a venture like franchising, for example.

In fact, AARP’s (A nonprofit, nonpartisan organization that helps people 50 and older improve the quality of their lives) has done studies on self-employment and the over 50 population. Their research indicates that almost half of the self-employed population is over 50. What’s more about 33% of those first became self-employed at or past the age of 50.

The over 50 years proved to be the best time to start their own business for these people. For many of them, buying a franchise was the best way to do that. It’s a trend that is expected to continue for the foreseeable future.

Why? Well, many franchisees are retirees or downsized corporate soldiers who always wanted to own their own enterprise. With rising life expectancies, at 50, there are most likely many years of fruitful labor remaining in their lives.

Also, do not underestimate the power of mid-life reflection. It’s a time when people seek meaning in their lives. Working in a career that is not providing fulfillment can often be a springboard to considering a franchising opportunity.

A franchise can be attractive to this age group because it’s a fast way to get into business with a proven product or service. Coupled with a good support system, it can make entry into small business ownership franchising a less risky proposition.

Understanding and wanting to fill a business need comes from experience and experience comes with age. Hopefully, a little wisdom does also. Because owning a franchise can be a beautiful experience in this rich stage of life. http://www.postalconnections.com/franchise-opportunities/ 

The History of Postal Connections of America

Today, you know your Postal Connections of America (PCA) store as a one-stop shop for many useful items and services for businesses and consumers. The stores offer anywhere pack and ship, printing, copying, shredding, mailbox rentals, office supplies, computer rentals, notary services and much more. In addition, to maintain the local flavor of the stores and because so many are community driven, several stores offer other items. These have included stocking greeting cards, gifts, local craft merchandise and selling media like games and DVDs.

The History of Postal Connections of America

Postal Connections of America started in 1995, 21 years in business in 2016, an enduring accomplishment by any standards. The company originally built and furnished postal, packing and shipping stores for independent operators. The very next year, 1996, PCA started franchising by providing franchisees a support system for daily operations, marketing and preferred vendors.

In 2000, a holding company bought the franchisor as an adjunct to a collection of businesses, operating Postal Connections as a subsidiary. In 2002, the current owners, C. “Andy” Thompson and Fred Morache, joined Postal Connections as experienced managers to develop the franchise business.

New Franchisors

Andy and Fred ended up buying the franchise in 2007 and made it a privately held company dedicated to expanding franchise stores across the US. Their concept was to update the version of the original postal, shipping and business services concept they helped create at Mail Boxes Etc. which was based on providing community-oriented products and services, stellar customer service and competitive pricing.

Franchisees are encouraged to add new services and hard-to-find products unique to the community. The Postal Connections staff and area franchisees dedicate themselves to assisting and guiding franchisees to grow their shops.

We love this business!

Note: All stores do not provide all services. Contact the store in your area to inquire about a particular product or service.

Potential Franchisees and the Franchise Disclosure Document

One big advantage that occurs within the potential franchisee’s due diligence timeframe is that the franchisor is required by law to provide what is called a Franchise Disclosure Document (FDD) during the pre-sales disclosure process. (Note: This used to be called a Uniform Franchise Offering Circular.)

This document is required to be submitted to potential franchisees by the Federal Trade Commission (FTC) Franchise Rule. This rule gets into the specifics of FDD disclosure obligations including when (at least 14 days prior to any contract signing) the franchisor has to provide the document.

The FDD contains the following valuable information:

  • Franchisor information like how long they have been in business and likely competition
  • Key person business experience
  • Any litigation history that has occurred with the franchisor
  • Any information on if the franchisor ever filed for bankruptcy
  • The franchise fee and other fees and expenses the franchisee will have to pay such as advertising costs, monthly royalties and training expenses
  • The training and assistance program used by the franchisor
  • Your estimated initial investment and obligations to the business
  • Financing arrangements
  • Franchisor obligations
  • Territory, trademarks, patents, copyrights and other proprietary information
  • Restrictions on any goods or services you can offer
  • Renewal, termination, repurchase, modification, transfer of the franchise and the dispute resolution process
  • Financial information about the franchisor including financial statements
  • A list of franchise outlets

This is not a comprehensive list but it provides the majority of what you will receive with the FDD. The FTC site at http://www.ftc.gov/bcp/franchise/faq1.shtm provides more information on the disclosure obligations of the franchisor.

Franchising Service and Advertising

Simply understood, customer service is the value added during a transaction. This is especially important when the product is a commodity. It’s about the extra value a customer gets when they buy a product readily available in many other places.

Successful service franchisees have figured this out and are overcoming economic issues and competition. They know people like to have a healthy dose of value added in commercial relationships.

Consider these stories:

  • A Play Station System got snatched from a doorstep. Although, Amazon was not responsible, the retailer sent a replacement, didn’t charge for shipping and got it there in time for Christmas.
  • A security staff member at Nordstrom’s noticed a customer crawling on the floor looking for a diamond that had fallen out of her wedding ring. The staff member recruited a small team to help her search. They found the gem while picking through the dirt and debris picked up from the vacuum cleaner
  • A woman ordered six pairs of shoes from Zappos to test after undergoing medical treatment that left her feet sensitive. Her mother called to receive instructions on how to send back the shoes that didn’t work. Two days later the daughter received a get well flower bouquet. Then, her, her mother and sister were also upgraded to “Zappos VIP Members.”

As service guru Tom Peters writes in Beyond Close to the Customer:

  • Service is about turning adversaries into partners
  • Service is soft and low tech – about attitude, listening, perception and empathy
  • Service is about delight, not satisfaction

Service differentiates your business so allow your passion for it to stand out.

Advertising

According to a recent study in Ad-ology, when a business continues to advertise, especially in tough times, consumers see this as a sign of commitment to their enterprise.

It’s not only good for consumers, it’s good for businesses to advertise because:

Your message is more likely to get noticed and your business is more likely to be remembered when businesses start advertising again.

In fact, tough times are an incredible opportunity to build market share. Studies through recessionary periods in all decades (only three shown here because of space) showed:

1990s: Jif and Kraft Salad dressing grew sales by 57% and 70% respectively by advertising during a recession. (MarketSense Research Study)

1980s: Sales of aggressively advertising firms during the recession grew 275% over those who didn’t. (McGraw Hill Research Study)

1970s: Companies who advertise and market hard can not only maintain but increase their revenues during a recession and subsequent years. (American Business Press Study)

Throughout the Great Depression and all recessions, Proctor and Gamble practiced a philosophy of not reducing advertising budgets even while their competitors cut ad buys. It’s not a coincidence that the company progressed during each of these economic downturns to become the giant it is.

Franchising 2016- More Projections

From 2010 to 2015 franchising has seen nothing but strong growth. Consider these two statistics:

– The economic production of franchise establishments has increased from $699 billion to $892 million.

– The number of franchise establishments has increased from 740,098 in 2010 to 795,932 in 2015.

2016 Projections

The International Franchising Association (IFA) projects continuing growth in its Franchise Business Economic Outlook for 2016 prepared by IHS Economics. It’s expected that the number of franchise establishments will grow by 1.7% this year: 

– Franchise output will increase by 5.0%.

– Employment by franchises will continue to remain strong with 3.1% growth.

– The six-year period from 2011 to 2016 (projected) realized a 2.7% growth which is 0.5% higher than all businesses economy-wide.

     A driver of this expansion will be the expectation that business spending will grow in 2016, boosting franchises that provide business services. In fact, business services franchises are projected to rank first in the growth in establishments and are tied for second in employment growth with a 3.3% gain.

Fast food and table service restaurants are also expected to expand nicely throughout 2016.

What this Means to a Prospective Franchisee

Franchising comes with built in advantages most prominent of which is that most mistakes have been bled out of the enterprise for prospective franchise owners. The business system a franchisee works with offers proven business concepts. This means in each of the main business disciplines like finance, marketing, sales and operations all of the processes and procedures have been refined to reflect what exactly is needed to make a successful business.

For example, in marketing, a franchisor will be able to explain to its franchisee what marketing works best (the internet, trade journals, industry shows, etc.) for the business. If the franchisee focuses efforts in those areas, odds are, they will pay off if executed well.

Another built in advantage is if franchisees struggle, they can turn to a support network that includes others that have faced and conquered the same issues. The accelerated learning curve very much works in favor of success for all franchisees.

The fact that the franchise industry as a whole is performing well for the US economy is a positive factor for the prospective franchisee to consider during the due diligence process. Simply put, it means the franchising concept works and is a viable way to make a living and in the process, possibly help others make a living as well.