Food Franchise

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Consistency, Consistency, Consistency – when your customers arrive at your franchised business, it is likely consistency that drew them there. Franchising is a successful and growing business model because it builds loyalty to a brand, not just loyalty to one location. This means a customer eating his or her favourite dish at one franchised restaurant can come to yours and order it from you, too. Perhaps someone’s aunt in British Columbia found a great toy at a franchised retail store – she should be able to find that same toy at your local franchise in Nova Scotia.

For franchisees, a well-maintained franchise in another city (or even country) can positively impact their own business. Here’s the downside: should a customer have a bad experience at someone else’s location, he or she will likely avoid yours, too. Franchisors know this, so many have developed detailed standards franchisees are expected to follow. These can cover anything from general cleanliness and food preparation to customer service protocols. They can also mandate service of a certain speed, or even “touchpoints” the employees must cover in the course of a customer interaction. For a restaurant franchise, this may mean asking each customer if he or she would like to purchase a combo, rather than a hamburger alone; for a retail store, it may mean asking if the customer has a discount card – and if not, would he or she like to buy one? 

How are these things measured? Both franchisors and franchisees have found ways to do it, but too often, they rely solely on methods that measure customer feedback. Now, it’s always good to gauge your customer’s opinions, and doing so is often quite cheap. However, cheaper isn’t always better; there are many ways your franchise can deviate from the required standard without customers having any idea. Rest assured, your franchisor will be far more aware. The most important customer data for you to monitor is that related to your brand standards, and there are several ways to do this.

Internal Auditing

This approach is exactly what it sounds like – a behind-the-scenes appraisal of every aspect of your operation. It is common for a franchisor to send an inspector to its locations, sometimes unannounced. This individual, often an area manager, will evaluate your franchise according to a pre-determined checklist, though you will certainly be aware of it requirements long beforehand. The purpose of an internal audit is to ensure your business is upholding the level of service expected of its brand. An internal audit can evaluate, even measure, a wide range of products, services, and practices. Does your establishment have a properly stocked first aid kit? Does your franchised restaurant keep the temperature of the grease too high in the deep fryer? Perhaps there is too little syrup poured from the pop machine, too much heat in the refrigerator or too little signage in your retail space.

An auditor can check all these things and rate you according to how closely you align with your franchisor expectations. For example, an auditor will recognize if your franchised pub has failed to update its bar menu to offer the new items head office approved last year – something a customer would not notice if he or she only frequented your location.

Auditors not only understand your franchisors needs, they are also familiar with the needs of the law. That is, the evaluators know exactly what to look for, both in terms of what is important to the brand and what is legally required of your location. A thorough health and safety inspection can clear up any problems before a mandatory government inspection is due. Do your fire extinguishers work (and are they ovedue to be checked)? Do your employees wear hairnets or safely shoes? Do you have a workplace safety poster displayed clearly for their use? Internal audits can even address security issues – are the washrooms properly lit? Are the doors opened and closed at the right times? Are the staff change rooms clearly marked?

Internal audits needn’t be your franchisors responsibility alone – you can do them, too. Many franchisees take the initiative and conduct their own audits, hoping to be more prepared for the franchisors inspection, or just as a means of keeping tabs on their business and its employees. Others feel more comfortable hiring an objective, third-party auditor to inspect on their behalf. The cost of contracting an outside company varies widely – anywhere from $150 to $1000. Higher priced audits usually involve more detail, e.g. 1000 questions instead of just 100 or 200. Audits may also be more expensive if the evaluation requires an auditor with specialized training, such as someone with background in fire safely, food handling or first aid. For most audits, the questions could be asked by anyone. Auditors paid by the hour, with the audit itself taking three or four hours, plus another two hours for the results to be written up.

Mystery Shopping

Hiring “Mystery Shoppers” – third-party evaluators who pose as customers within your franchised business – can tell you many things about how your business really runs, especially as it relates to employees.

Mystery Shoppers evaluate your business based on the specific criteria and standards set by you or your brand; whether it be the courtesy with which customers are greeted, the selling techniques of personnel or simply the cleanliness of the space. The advantage of Mystery Shopping is that it evaluates your business from the customer perspective. With no obvious indication that an evaluation is taking place, your employees with act as they normally do, allowing you to make decisions based on how your business really operates. While one might argue they provide merely a “snapshot” of the business on a particular day, its unlikely a Mystery Shopper’s experience will be totally atypical.

This type of assessment is most useful when evaluating specific, often confidential, brand standards. For example, it can help determine if your staff is “upselling,” e.g. if a customer orders a small popcorn, does your employee ask if the customer would like a medium for 25 cents more? Another technique Mystery Shopping can evaluate is “suggestive selling,” which requires an employee to mention a product the customer has not even considered. Restaurant examples include “would you like fries with that?” and “care for dessert, too?” In clothing retail, an employee might say, “Sir, for nine dollars more, we can sell you a silk tie with that shirt.”

These types of evaluation provide useful information to both the franchisee and the franchisor and Mystery Shopping companies are often hired at both levels. Generally Mystery Shops for a retail store or restaurant cost $100 to $125 per visit.

Half-Way There?

For some franchisees – and more commonly, franchisors – a focus group is an effective way to gather information. Focus groups bring together people felt to be typical of the franchise’s current demographic (or the demographic the franchisor wishes it could reach). This group is then presented with a new product or service and their reactions to it are recorded and analyzed.

Depending on the questions asked, a focus group can function either like an elaborate customer survey card or a fairly detailed evaluation of brand standards (though likely not for your franchised location alone). Their downside is expense. Focus groups often require a moderator, who needs to be paid. The participants are often paid as well, since the focus groups may take several hours.

Most focus groups are franchisor-driven, because they often consider company- wide issues, such as the launch of a new product. Some franchisees form their own “advisory boards” to gauge issues among their own customers but that is rare.

If the focus group or advisory board has a good moderator who asks relevant questions, you can get excellent feedback. However, the opportunity to make an easy $100 (plus gift certificates, perhaps) may attract people who are more interested in their own gain than the good of the company. Selecting good participants is key.

Interviews, in-person or over the telephone, are a cheaper way to get some of the same information. Unfortunately, they can be highly irritating for participants, especially if they’re delivered via an unsolicited phone call.

The Customer Point of View

The simplest, cheapest way for a franchisee or franchisor to evaluate a business is through customer comment cards. Today’s comment cards need not be “cards” at all – they can also be done online, allowing for even greater cost savings. There is nothing wrong with gaining voluntary customer feedback, but it is a mistake to rely on such feedback alone. Though it sounds counter- intuitive, a satisfied customer is not always indicative of a well-run business.

“Extreme” Feedback

Due to limited time or simple disinterest, most of your customers will not participate in a voluntary feedback system. Those that do will often feel particularly motivated, either because they’ve had a very good experience or a very bad one. The data you’ll collect can therefore be very skewed and poorly represent your average customer.

Lack of Brand-Orientation

The biggest concern with these simple feedback systems is their inability to gather statistical information about brand standards. Bob in Halifax and Chris in Edmonton may both have had great experiences at franchised hardware stores of the same brand. What they can’t tell you, however, is that these two patrons had completely different experiences, with only one meeting the franchisor’s expectations.

As a method of data collection, customer comment cards aren’t terribly detail oriented. For example, they may tell you that your customer feels he or she received a drink in a reasonable time, but they will not tell you the drinks were received 15 seconds later than the franchisor’s standard of one minute. An online survey can indicate your service staff is making appropriate and helpful suggestions in terms of menu choices (perhaps the customer will score them a “five out of five”). However, hiring “Mystery Shoppers” to evaluate your service based on specific brand standards would tell you your staff is only suggesting appetizers and wine to customers about 20 per cent of the time.

Nevertheless, focus groups, interviews, comment cards and online surveys are always helpful, if only for the good will they generate by allowing your customers to feel their input is valued.

No One Method Tells All

When franchisees aren’t “on the same page” with their franchisors, consistency is compromised and customers may make a judgment about your location before ever setting foot inside. However, there’s no need for doom and gloom – poor patterns of services or product preparation can be corrected with a little effort and reasonable expense. As long as you know that no one evaluation method can tell you everything, it’s just a matter of spending accordingly.

What are the advantages and disadvantages of franchising?

You have decided to buy a franchise. Which one will you choose? There are so many out there. Are you going to go for a coffee shop or fast food outlet? What about an internet business, printing company or stationary?

There are distinct advantages in buying a franchise over starting your own business from scratch. The greatest advantage is that most franchises are still trading after 3 years whereas most new start ups have ceased trading.

What is a franchise?

With a franchise you benefit from a proven business model and the experience of a larger organisation. You have to pay a franchise fee and a license fee to the franchisor to have the right to run their business model.

In the UK companies like McDonalds, Prontaprint & KFC made franchising very popular in the 70s. Now you can find an outlet in nearly every town & city in the UK. Franchising is now one of the fastest growing areas of business in the UK.

Let’s examine the pros and cons of franchising

The advantages are:

1) You receive full training in the operation of your business

2) You are not reinventing the wheel

3) You receive support from the franchisor when you encounter a problem

4) You have a proven business model

5) It is in the franchisors interest for you to succeed

6) Accounting procedures and business systems are well established

7) You are part of a group of people all running the same business

You benefit from national marketing

The disadvantages are:

1) You have to pay the franchisor a percentage of your profits

2) You have to follow the guidelines laid down by the franchisor

3) The Franchisor controls the development of your business

4) The Franchisor dictates your supply chain

5) You have to market the business in a way that is approved by the Franchisor

6) You have to report back to the Franchisor at least annually

Before you jump in

Before you commit to a franchise make sure that you evaluate the following points:

1) Take professional advice from lawyer before signing any agreements

2) Take advice from an accountant to check the viability of the business

3) Carry out market research to see if the franchise is right for your area

4) Be prepared for hard work – running a business requires commitment

If you’re ready to make the commitment, franchising can be a rewarding, and often highly lucrative business.

In 2008 the economy of the United States is in shambles. The dollar is at a historic low compared to the Euro and Canadian dollar, the prices for everything from fuel to food are skyrocketing, and unemployment is on the rise. With major companies looking to cut its workforce to save money, some people have decided to go on their own and start their own business. The question is though, is it easier to start your own business from scratch, or buy a franchise and piggyback off a proven business model.

According to the US chamber of commerce, there are three main questions you should ask yourself before making this decision. First, do you want to be your own boss? Second, is this a unique idea that you want to nurture to fruition? Lastly, do you want to make a lot of money quickly? If you answered yes to any of these questions, then you probably don’t want to buy a franchise, as a franchisor will limit your ability to make decisions and operate your business independently. And although franchises have had more success stories, it can be costlier to operate a franchise, between increased startup costs and royalties that must be paid to the franchisor. Dr. Timothy Bates of Wayne State University did a study in which the failure rate of some franchises was more than the the thirty to fifty percent failure rate of new businesses. Not only that but that franchisees made less profit than new business owners and that it cost 500,000 dollars to start up a franchise compared to 100,000 dollars for a new business on average.

So, is 2008 a great time to invest in a franchise? It really depends on who you are. It is said that the profile of a franchisee is typically someone who is retired, has extra capital, and/or would like to run a business but does not have the experience necessary to run that type of business on their own without training. Also keep in mind that if you buy a franchise that the usual contract is five to twenty years in length and has significant legal consequences if you break the contract early. According to Nolo.com “most franchisors make franchisees sign agreements waiving their rights under federal and state law, and in some cases allowing the franchisor to choose where and under what law any dispute would be litigated.”

Why is this important? As the economy struggles to regain any momentum, you want to make sure that you can turn a profit, and avoid any monetary problems that can come with a risky investment in a tumultuous economy. According to entrepreneur.com, the top five franchise businesses were: Subway, Dunkin Donuts, Jackson-Hewitt, 7-11 and The UPS Store. Average start up costs for these companies were 50,000-225,000 dollars, so they were relatively inexpensive. Others though in the top ten such as McDonalds, and Papa John’s ranged from 250,000 to over two million dollars.

So as the data shows, starting a business and owning a franchise both have ups and downs. Owning a franchise can work in 2008, you just have to know what your financial situation is, and where you are investing. As with any decision take your time, do your homework, and have the confidence that you can succeed.

Franchising is a business model where a franchisee gets the permission start a branch that uses the name and methods of the franchisor in exchange for royalty fees. It differs a bit from starting your own business due to the fact that you are using the proven business strategy of an established company. An article by the Financial Times concluded that sales by franchises in the United States – if translated into gross national product – would rank in as the world’s 7th biggest economy.

1. Franchise Examples

- McDonald’s

- Kentucky Fried Chicken

- Wendy’s

- Burger King

- Swiss Chalet

- Food chains

2. Want To Be Royalty?

These large chains do not actually invest in new branches or outlets; they have interested franchisors to invest for them. In return they keep the income and instead pay back royalties on food sales (or other royalty schemes, depending on the franchise). Franchises are an appealing business to invest in because they already have an established business model that has been proven to be successful. So, it follows that investing in such businesses have a greater chance of success. Plus, you have the backing, training, and expertise of the franchise at your disposal.

If you are considering buying into such a business, you should consider the background of the franchise. This is in addition to the questions regarding the fees, organization, and support.

- Have many franchise owners gone through the branch you are planning to buy?

- Observe the way business in conducted at these branches

- Pay special attention to the customers and, if possible, interview them

- Do this with every branch you plan to buy or are considering to buy

3. Things to Consider

Some prospective owners look at the buying price of a franchise when considering buying into them. Unfortunately, they forget to factor in other expenses such as employee salaries and operating expenses. These factors are crucial in knowing if you can really make a profit out of the business. This problem is further compounded if the business requires more employees or if the business needs more managers. If you don’t consider these expenses, you might find yourself over your head in the budget department as the actual buying price plus salaries, operating expenses, and even debts could easily double your expected budget.

Don’t just jump into a franchise business; do an inventory of your goals and your strengths when considering which franchise you want to purchase. You might be considering buying into a fast food franchise when you do not have any interest in the food business. In some way, that could be suicide. Stick to your forte and use your strengths to your advantage.

4. Budget

Always, always work within budget. Remember you are either buying into an existing franchise or starting a new branch. It wouldn’t do well to start in debt. An accountant would come in handy when considering a franchise. Have them look at the numbers and analyze how the particular business is going. These professionals have experience in assessing and evaluating how that business is going. If they raise the red flag, you may want to reconsider buying into the business.

5. To Each His Own

Franchises do not suit everyone, however, they do present a relatively intriguing business prospect. As with any potential investment, make sure you do your homework diligently. Investigate with all your might. It is your hard earned money at stake here. If you do your job right, well, you may have a potential gold mine in your hands. Do not be complacent once you purchase a franchise. If you exerted effort when you still did not own the branch, you may have to exert more afterwards.

One of the toughest parts of choosing a home based business can be deciding which one is the right fit for your goals and skills. There are so many great options available that good research can often take weeks, months, or years before a person ever even gets to the point of purchasing a franchise. If that’s where you find yourself, interested in starting one of the many internet franchises available but unsure which to go with, then here is a shortened list of what may be the top 5 choices at your fingertips.

1. WSI Internet

This is possibly the single most impressive name in internet marketing consultation. This year, Entrepreneur Magazine deemed WSI Internet the #1 internet and technology franchise for the seventh straight year, something that few, if any other businesses can credit themselves with. Called the “white collar franchise,” WSI Internet serves the web marketing needs of small and mid-sized businesses around the country with a wide variety of marketing strategies. With a proven system for acquiring new clients while keeping long-standing business relationships intact, this franchise is designed to fit the franchisees needs by either remaining a home business or expanding into a larger, management operation with an office location. Whatever your business goals, WSI Internet has a means to get there.

2. Human Resources Rx

Specializing in providing human resources services to smaller businesses unable to do so for themselves, this work from home franchise is a step ahead of other consulting businesses because they provide 2 different ways to earn your living under their name. The first is the most straightforward: utilizing their full array of training and support resources to build a client base of small and mid-size businesses for whom you serve as their outsourced HR department. If, however, a franchisee wishes to take the business model a step further, the second option is becoming a master franchisee, bringing in and overseeing other franchisees in your exclusive area and profiting from their successes. Either way, the business is solid and in high demand.

3. Vehicle Tracking Solutions

One of the very few business opportunities in their field, Vehicle Tracking Solutions franchisees sell, install, and repair GPS tracking devices for use in various business vehicles, as well as all the associated software and hardware. Surprisingly, only 7% of the 20 million US business vehicles are equipped with tracking mechanisms, which means that the room for growth is beyond virtually any other industry. What’s more, Vehicle Tracking Solutions franchisees have 2 different streams of income. Regardless of how well a franchisee is doing at bringing in new clients at any given time, there is always revenue coming in from existing clients who pay for continued access to the Vehicle Tracking Solutions network services that keep their equipment useful. For a good salesman, this is the right business in the right market.

4. Air Advantage

Wireless internet is available everywhere these days: residential homes, schools, coffee shops, libraries, and even some busses. The only places left without wireless connectivity are farms and rural towns, but this franchise is poised and ready to change that. The only franchising business to be addressing the need for internet connection in rural America, Air Advantage has developed both a way to link farmers to the web wirelessly as well as a way to sell that service. Franchisees are given all the tools and ongoing support necessary to help the largest demographic of US citizens not currently online and make a profit doing it. It’s no wonder this business has won the US Chamber of Commerce Blue Ribbon 2 years in a row.

5. Virtuoso Music

Finally, this work at home franchise is just a solid business that can be started up virtually anywhere, because people everywhere love music, but not everyone can play an instrument. With the excellent training that this franchisor provides, franchisees are given everything necessary to find students seeking musical training as well as the local professionals who can teach them and put the two together. But they also do so much more; working with local schools and other public locations to arrange performances, recitals, festivals, and other events. In many ways, Virtuoso Music franchisees have the distinct privilege of working for the benefit of the community, with a musical slant, and making a living from it. Not many people are so lucky.

There are many opportunities to work from home in today’s market, and these are some of the best. If any stand out as being the right choice for you, dig around for further information. You may find that it’s not just one of the best, but more specifically, the best for you.