Archive for January, 2011

Domino’s Pizza – Still a Hot Franchise?

January 29th, 2011

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SAC Takes a Slice of Domino’s

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 Steven Cohen’s hedge fund, SAC Capital, disclosed on Monday that it had acquired a 5.3 percent stake in Domino’s Pizza Franchise.

While it is a passive investment, the news caused Domino’s shares to rise more than 2 percent in after-hours trading.

The filing comes at a time of renewed investor interest in fast-food chain franchises, as the economy slowly improves and as deal makers perceive value, as highlighted by 3G Capital’s deal for Burger King in September.

SAC now owns 3.19 million shares of Domino’s Franchise, making it the fifth-biggest shareholder. The biggest is the private equity firm Bain Capital, which bought Domino’s Franchise from its founder, Tom Monaghan, in 1998 for a reported $1 billion. After taking the company public in 2004, Bain now has a 13.65 percent stake, according to Thomson Reuters data.

Domino’s Franchise, based in Ann Arbor, Mich., operates a network of nearly 9,000 company-owned and franchise pizza shops nationwide.

Mr. Cohen’s passion for pizza has been noted before. According to a New York Post Page Six item in January 2006, Mr. Cohen was seen buying a pie from Pizza 33 on East 33rd Street and Third Avenue, using an American Express “black card,” the ultra-elite Centurian charge card.

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Popularity: 6% [?]

Celebrities – What Franchises Do They Own?

January 24th, 2011

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We all know from the   photos  in celebrity magazines that famous people walk their dogs, go to the gym, attend their kids’ Little League games and get pulled over for speeding exactly like us regular folk who don’t make $20 million on every movie or record deal. Many of them try to make a killing in franchising, too–frequently turning to fast food, a resilient investment even in harsh economic times. Here are five celebs putting their money where mouths are.

Dick Clark
The venerable  American Bandstand  host and longtimeNew Year’s Rockin’ Eve  ringleader first tuned in to the Krispy Kreme franchise brand during the 1960s, while   traveling  in the South with his Caravan of Stars rock ‘n’ roll road shows. When the chain went national in the 1990s, Clark lobbied unsuccessfully to purchase a New York City location–but in 2002 he and his business partners were granted the rights to develop 25 Krispy Kreme locations in Great Britain. Day-old doughnuts are apparently not an option for the World’s Oldest Teenager.

Hank Aaron
The Baseball Hall of Famer swapped his jaw-dropping bat for a mouth-watering chicken leg in 1995, when his 755 Restaurant Corp. opened a pair of  Church’s Chicken franchises in Atlanta. 755 (so named for the record-breaking number of homers Hammerin’ Hank hit during his 23-year career) now owns five Church’s franchise locations across the southeastern United States, as well as 20 Popeyes Louisiana Kitchen and two Krispy Kreme units.
Success:  It tastes like chicken.

Phil Mickelson
Golf superstar Mickelson took a swing at entrepreneurial glory when he quietly joined a group of investors awarded the  Orange  County, Calif., rights to the fast-growing  Five Guys Burgers and Fries  franchise, the first of which opened in August. Mickelson’s involvement in Five Guys franchises became public days after he slyly trumpeted the chain as “hands down the best burger I’ve ever had” during the 2010 Players Championship. Weeks later, he pulled the opposite of a good PR move when he turned vegetarian in an attempt to ease his psoriatic arthritis.

Caron Butler
Basketball is a team sport, but business is all about having it your way. Just ask NBA veteran  Butler, small forward with the Dallas Mavericks and sole proprietor of six  Burger King  franchise locations across the country. Butler worked at BK as a teen, saying he knows the business “from the janitorial spot all the way through the management side.” Burger King also feeds Butler’s unusual habit of chewing drinking straws during games: He would gnaw as many as a dozen a night before the league banned the practice in early 2010, citing safety concerns. “I don’t do 7-Eleven straws or anything,” Butler once explained. “McDonald’s, Burger King, that’s it.”
Fun fact:  Straws are actually tastier and more nutritious than most fast-foodfare.

Kanye West
Hip-hop superstar West expanded from beats to eats in mid-2008, when his KW Foods signed on to construct a series of  Fatburger franchise locations across his native Chicago. As of press time, only two of the proposed 10 Fatburger franchise units have opened, however. There’s apparently no truth to the rumors that the delays are a result of West’s insistence on renaming the chain “Phatburger”–or that he interrupted pop singer Taylor Swift’s own plans to partner with the burger chain.

Now of course, you don’t have to be a celebrity to own one of thesed Franchises.  Give me a call for more information.

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Popularity: 7% [?]

U.S Franchise Industry Poised for Growth in 2011

January 20th, 2011

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This post has been written and published by SARAH E. NEEDLEMAN of the Wall Street Journal:

The U.S. franchising industry is poised for modest growth in 2011, according to two new studies to be released this week.

Franchise businesses in most sectors are expected to add more store units and employees this year, concludes an analysis produced by consulting firm PricewaterhouseCoopers on behalf of the International Franchise Association, a trade group in Washington. PWC attributes the positive outlook in large part to the recently enacted tax and unemployment benefits package, which includes payroll and income tax cuts.

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The study projects that the number of franchise units will grow 2.5% in 2011 to 784,802. Last year, franchise units increased just 0.3%, and their ranks declined 3.6% in 2009.

Franchises are also expected to create 194,000 new jobs in 2011, a 2.5% increase that will bring total employment to an estimated 7.8 million. Franchises expanded their payrolls 0.6% in 2010 after shedding 2.8% of their employees in 2009.

Economic output—the gross value of the goods and services a business produces—is projected to grow 4.7%, or $33.3 billion, for franchise businesses, reaching an estimated $739.9 billion in 2011, PWC said. Last year, economic output rose 3.4%, following a 0.3% increase in 2009.

By sector, all business lines except business services are projected to increase in store volume and employment this year. The largest gains in these areas are expected in lodging, automotive and retail products/services. In terms of economic output, industries expected to see the greatest increases are automotive, commercial and residential services, personal services and retail food.

Business is starting to improve for Driven Brands Inc. and its six franchise brands, which include Maaco and Meineke, said Ken Walker, chairman and chief executive of the Charlotte, N.C., auto-repair company. Following a relatively flat 2009, Driven Brands’s revenue increased 3.1% last year, and Mr. Walker anticipates a 5% increase in 2011 sales. “We’re going to see a good period,” he said. “I am very confident.”

Meanwhile, a recent survey of 142 franchisees by the franchise association also suggests that 2011 will be a better year for their businesses. Nearly three-quarters of respondents said they expect “moderate to significant” increases in same-store sales over the next 12 months, while 40% said they expect to see an improvement in business conditions. Forty-five percent said they expect to increase employment “moderately to significantly.”

To be sure, survey respondents also noted that obtaining sufficient funding remains a major hurdle to success. Thirty percent said lack of credit has had a “significant impact on ability to expand business,” and 25% reported it has had a “moderate impact.” In addition, 42% of franchisees said they’ve seen “no improvement” in access to credit in recent months, while 28% reported a “moderate improvement.” Just 18% said that a lack of credit had “no impact” on their business and that they were able to obtain financing, while 27% said their business did not require any financing.

“Without more consistent access to credit, franchisees can’t grow,” said Steve Caldeira, president and CEO of the association. “We’re beginning to see some light at the end of the tunnel, but clearly again we have a long way to go.”

These days, only about 40% of BrightStar Care franchisees rely on bank loans to get started, add more units or make renovations, whereas three years ago just about all of them tapped home-equity loans for such purposes, said Shelly Sun, chief executive officer. Today, 40% of the home health-care company’s 195 franchisees nationwide are also funded by owners’ retirement savings, and 20% operate with cash investments, she said.

BrightStar Care earned $100 million in system-wide sales last year, up from $52 million in 2009. The company projects sales of $175 million in 2011, plus the opening of 86 more locations. Its corporate staff increased to 53 people last year and “because of the [extension of] the Bush tax cuts, we plan to add 15 additional personnel in 2011,” Ms. Sun said. She further attributes the company’s expansion to a growing preference among seniors for home-based health care rather than relocation to a nursing home or assisted-living facility.

To help prospective franchisees get started, some franchisors have begun offering in-house financing options in recent years. Nadiene Raia said she launched a Money Mailer franchise last September by borrowing roughly $30,000 of the $40,000 total cost from the direct-mail advertiser. The loan includes the option to defer interest-free payments for the first two years.

Ms. Raia had previously been laid off from a publisher position at an alternative weekly newspaper in Sarasota, Fla., and she said she didn’t bother to seek out a bank loan because she lacked a track record of owning a business. “For somebody that’s looking to get involved in franchising and doesn’t have the capital, this is the way to go,” she said of the option she chose.

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Popularity: 4% [?]

Kick Start Your Path to Entrepreneurship Interview

January 7th, 2011

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Greetings:

A few days ago I had the opportunity to be interviewed by Michael Surkan, the founder of Meetup Seattle.  Meetup Seattle is a Linkedin Networking Group of approx 28,000 Members.

Michael had an interest in knowing more about the Franchise Industry, so he asked if I would give him a short interview.  Here is his description of our interview:

In this episode Thomas Wolter explains that starting a Franchise can be a simpler and more reliable path to successful to entrepreneurship than starting your own firm from scratch. Franchises come with a proven business model and a turn-key operation (not to mention guidance) to get started. Franchises aren’t just about retail food. Thomas shares his suggestions of some great Franchise options which are both inexpensive, and tailored to different expertise and personalities. There is a wide assortment of Franchise opportunities, with options right for almost everyone.

Click Here for the link to the podcast Franchise interview:

If you have an interest in Franchising, you may want to download this podcast and listed to some of the details discussed.  If there are any question you have, don’t hestitate to email me at: info@buyafranchiseblog.com

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Popularity: 3% [?]

Prediction or Fact? Top 10 Franchises for 2011.

January 4th, 2011

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Are you currently considering Buying a Franchise in 2011?  If so, you may want to consider reviewing the most recent issue of Entrepreneur magazine.  In this issue they review some very prominent Franchise Concepts.  Click here

Keep in mind that there are many more Franchise Concepts available in the marketplace that are not mentioned in this article.  Please contact me for more Franchise information.

Popularity: 3% [?]

FRANCHISE BUSINESSES RECOMMEND IMPROVEMENTS IN MENU LABELING IMPLEMENTATION

January 3rd, 2011

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WASHINGTON, Dec. 17, 2010—The International Franchise Association today  submitted comments urging the Food and Drug Administration to complete a full rulemaking process for all provisions in the new menu-labeling regulations at the same time, rather than a tiered approach to help minimize the cost and confusion for small, franchised restaurants and more efficiently provide valuable information to consumers.

“The International Franchise Associations continues to support providing consumers with clear and consistent nutrition information,” said International Franchise Association President and CEO Stephen J. Caldeira. “However, as we have more fully explored the myriad of questions associated with implementation for all of the different types of franchised restaurant systems, we believe that by implementing all the provisions at the same time, FDA can implement the law with the least amount of confusion and in the most efficient, cost-effective manner possible with adequate time to comply.”

Caldeira explained that the franchised restaurant business model is complex, with no two companies alike. Certain business models franchise all their establishments while others divide between franchised ownership and corporate ownership. While the new law requires chain restaurants to post certain specified nutrition information for consumers, International Franchise Association member restaurant chains are made up of hundreds or even thousands of individual owners who may operate slightly differently, but operate under the same brand.   

“For these small business owners, the cost of implementing the law two or more times, becomes quite daunting, particularly during the current economic crisis, Caldeira said. “By implementing the provisions all at the same time, small businesses struggling to stay afloat will be awarded with regulatory certainty that will help them manage the costs involved.”

The determination of how to provide calories on menus for franchised restaurants can be complex. Some franchise companies require all foods to be approved by the corporation. Other corporations allow individual franchise owners to put a certain number of their own items on the menu, without corporate approval.  Others allow the franchise owner to develop an entire menu consisting of “non-system” foods.   

“The determination of what is ‘standard’ and what is not become more complicated,” Caldeira said. “In cases where the franchise owner determines the entire menu, the cost of implementation will rest solely on the franchise owner.”

The International Franchise Association supports implementation of nutrition menu labeling, Caldeira added. “Our comments are meant to help the FDA write efficient and effective rules for the franchised small businesses that make up most restaurant chains,” he said. “We truly appreciate the ongoing dialogue with FDA officials and their willingness to consider reasonable suggestions to the new regulations to ease the burden on small businesses.”

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