Timely Credit Help for Franchisees Now Available

With credit tight or nonexistent everywhere, pessimistic franchisee concern about financing has become a contagious viewpoint. But tough times have been known to generate innovative approaches in all industries and realms of economic enterprise. One of the more interesting recent innovations that would've been unthinkable a year ago is the willingness of franchises to offer credit help or loans to franchisees. If you---like many another franchise owner---are caught in a tight spot, you might want to think about approaching your mother ship for help like that below. And there's no reason why you can't send them the whole article.

Peter Casey, Franchising Consultant

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Lifeline for Franchisees 

More Franchisers Help Franchisees Ride Out Credit Crunch With Financing, Waivers or Assistance Getting Outside Loans.

Most franchisers don't help franchisees out with financing, but more exceptions are emerging in today's tight credit market. Great Clips Inc., a Minneapolis-based hair-salon chain, says it has secured $14 million in loans for expansions, acquisitions, debt consolidation and refinancing for new and current franchisees.

The franchiser obtained the money from lenders InSource Capital Services Inc. of Sherman Oaks, Calif., and IRH Capital LLC, Deerfield, Ill., "in the wake of all the turmoil and fear out there," says Rob Goggins, Great Clips' vice president of franchise development.

Mr. Goggins says the franchiser was able to get the financing partly because of franchisees' low default rate on previous loans. Much of the money is still available, the company says.

To attract investors to a new hotel-motel prototype, Red Roof Inn, a unit of RRI Inc., is extending a $50,000 credit against various costs, capping marketing and reservation fees and waiving royalties for seven years. The waiver, which starts when the franchisee signs up, could average $45,000 a year or so, estimates Joe Wheeling, the company's CEO.

For the franchisers who have long offered financial assistance of some kind, the measures are taking on greater importance these days as a lot of outside lending dries up and personal assets shrink.

Toronto-based Proshred Security, which provides document-shredding services, finances the initial $35,000 fee on at least one franchise when selling a multifranchise territory to an individual.

The franchiser typically attracts people with high net worths, who usually don't need such financing. But more such franchisees have recently sought the loans, which carry an interest rate of prime plus 2%.

"Their resources have diminished," says Proshred President John Prittie, citing business owners' shrunken asset portfolios and 401(k)s. Coverall Cleaning Concepts lends up to $6,800 of its initial franchise fee, which, depending on the franchise's size, ranges from $10,750 to $32,200. "About 80% of our franchisees take advantage" of that financing, says Kevin Derella, a senior vice president at the Boca Raton, Fla., company, whose 9,000 franchisees provide cleaning services.

Real-estate franchiser RE/MAX International Inc. will finance as much as 50% of its initial fees, which vary from $12,000 to $25,000, depending on the market. But only a small percentage of franchisees tap that money, because "we can be extremely selective in making sure we have a really strong client," says Tim Burns, director of franchise sales.

Multiconcept franchiser ServiceMaster is unusual among franchisers in that it has an in-house bank, ServiceMaster Acceptance Co., to lend money to current franchisees for working capital, equipment and vehicles.

The company also will lend as much as 80% of initial franchise fees and start-up equipment costs. Those fees and costs could range between $27,000 and $87,000, depending on its franchises -- ServiceMaster Clean, a commercial cleaning business; Furniture Medic, on-site furniture repair; Merry Maids maid service; and AmeriSpec home inspections.

"Often, we'll charge interest only in the first year, as a way of helping new franchisees get started," says David Messenger, vice president of market expansion for the Memphis-based company, a unit of private-equity firm Clayton, Dubilier & Rice Inc.

One franchising giant, meantime, still carries enough clout to help business owners get outside financing from banks and other lenders. McDonald’s Corp. has more than 50 institutions on its lenders list, including Chase McDonald's Finance, an arm of J.P. Morgan Chase & Co. that deals exclusively with McDonald's franchisees.

The money is still available, although it might take longer to process loan applications and the cost may be "a bit higher," says McDonald's Chief Executive Jim Skinner.  

Misleading Franchising Myths Laid to Rest

There's a wealth of franchising MISinformation floating around out there. Every would-be franchisee has to wade through a swamp of myths to get to the solid ground of truth. There isn't a franchise owner that hasn't made the journey. But once you've slogged through that swamp----once you've learned for yourself that better than half of what you've heard is nonsense sprung from the minds of those without any hands-on franchise business experience----you'll be amazed at how eager you'll be to get started. We can't dispel every franchise fairy tale you'll hear along the way to opening a franchise business, but we can shed some light on the subject by bringing to this blog every worthwhile story we find about misleading franchising fears. Below is one of the best articles we’ve seen in a long time.

Peter Casey, Franchising Consultant

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Exploding Five Myths About Franchising

by John P. Hayes, Ph.D.

Maybe you've thought about buying a franchise but you never seriously considered it because someone told you it's too risky, it's not a good idea, it's for rich people, or it's for people other than you...Unfortunately, there's a lot of information about franchising and much of it is wrong. Perhaps the information below will help you think differently about investing in your own franchise.

* The franchisor will make you do everything their way. They'll take away all your freedom. What does that mean, exactly? It would be interesting to call a successful franchisee and ask him or her, "Does your franchisor ever allow you to make a decision on your own?" If you think franchisors make all the decisions for franchisees then you will be surprised by their answer. Yes, the franchisor will force the franchisees to conform to standard operating procedures. The franchisor will control what you sell, what you say, what you wear, how, when and where you operate the business. It's all part of branding, which is part of marketing, which is what makes money! But franchisors do not take away their franchisees' rights to make all decisions. There are plenty of decisions every day to be made at the franchisee level. Just ask successful franchisees. Many wish there were fewer decisions to make!



* The franchisor charges huge fee so you're just making them rich and not yourself. Really? Are there no wealthy franchisees anywhere? Yes, every franchisor requires you to pay fees, including ongoing royalties. And if they're not fair, why do people agree to pay them? Franchising is a business and a franchisor must make a profit. However, franchisors also need profitable franchisees. Otherwise, who's going to pay those fees? Unsuccessful franchisees don't last long. It's just silly to say that the fees make the franchisor rich but not the franchisee. When it's done right, franchising is successful for both the franchisor and the franchisees.

* You can't sell a franchise. You don't own it. Once you buy it, you're stuck with it. Who comes up with this nonsense? Of course you own it. You will sign a contract that gives you ownership to a license to operate a specific business. You will not own the trademark, the brand, the operating system, or anything else. Your license grants you the opportunity to build a successful business using the franchisor's marks, training and support. And unless your franchise agreement says you can't sell it, assign it, or transfer it, you certainly can. I've never seen a franchise agreement that prohibits the franchisee from selling, or what's commonly called transferring the franchise. You can also make a profit when you sell-- thousands of franchises have done so in the last 50 years!

* If you're successful the franchisor will take the business away from you, or they will compete with you. And franchisors will do that because . . . it makes sense for them to shoot themselves in the foot? Or they like to go to court and defend themselves against lawsuits? Franchisors and franchisees sign contracts that spell out their legal relationships. Sometimes the relationships are violated by both franchisor and franchisee. But people that consistently violate franchise contracts don't remain in business very long. A franchisor lives and dies by its reputation. You can find out about scoundrels in advance of investing with them and avoid them!

* The franchisor will just take your money and run. They won't teach you anything or help you set up a successful business. Then why would you give them your money in the first place? There's homework to be done before you invest in a franchise. Disclosure laws require franchisors to share information with you before you invest. If you do your homework you can find the right franchise opportunity.

Franchising is not perfect. It is not always successful. Some franchise companies fail. However, when a franchise goes bad, it's usually the fault of the people involved and not the fault of the concept. Franchising works. It's the safest way for people to start a business. It may not be right for you, but don't be fooled by these myths.

Franchising’s Most Frequently Asked Questions

If you’re considering buying a franchise, you’ve probably got some pretty general questions you’ll want answered before you take the plunge. Franchise Gator (franchisegator.com), one of the best sites on the Web, offers articles on franchising that answer questions like the ones below. Of course, not every franchising question you might have can be answered completely—at least not without specifying a franchising niche industry or, in some cases, even the company you’re considering—but the questions below can help you fine-tune your understanding. They can also help you formulate questions you might not have otherwise thought to ask, or narrow down more specific questions you’ll want to ask a given franchise company.

Peter Casey, Franchise Consultant

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How Much Money Can I Make

The Secrets to Finding Out Franchise ROI Potential

When investigating a franchise opportunity one of the most difficult pieces of information to get from the franchisor is how much money you might make. This may be frustrating because you are not going to invest in a business until you have a good idea of what you can earn. In most cases the franchisor is not being purposely difficult. The Federal Trade Commission (F.T.C.) and many states have stringent regulations as to how franchisors can provide this information to prospective franchisees. However, there are ways to get this essential information.

Why is the government regulating franchisors?                                                   


In 1979 Congress passed legislation authorizing the F.T.C. to regulate the franchise industry to protect the public from a franchisor making fraudulent earnings claims. A number of states also passed similar legislation. The current F.T.C. and state rules do not forbid a franchise company from supplying information about the earnings that can be achieved in their business. They do, however, regulate how this information can be given to a prospective franchisee. 

A franchise that wants to provide earnings claims must put it in writing in their FDD (Franchise Disclosure Document).  Also, it is essential for the franchisor to make sure that the data provided is accurate and not misleading and they need to clearly label any assumptions or qualifications on the data provided. 

Assuming they meet the legal requirements, a franchisor is free to provide whatever earnings information they want to a perspective franchisee in terms of sales, expenses, cash flow and income. 

Why don’t all franchisors provide this information?


It sounds relatively simple but there are still many franchisors that don’t provide earnings claims. There are two likely reasons: First, producing an earnings claim does involve effort and expense for the franchisor.  Second, the results may not be attractive enough to assist in the recruiting of new franchisees.  

Where else can you find this information?


If a franchise does not provide an earnings claim in their FDD, the best source of information to find out how much money you might make is the existing franchisees of the system. Call them and ask. Item 20 of the FDD provides a list of current and former franchisees along with their contact information. You will be talking to many franchisees anyway as part of your due diligence so make sure you also cover the subject of the averages and ranges for earnings in the system. By gathering actual performance statistics, you will have a realistic starting point in determining how much you can expect to make in a similar business.

What’s a reasonable level of earnings for a franchise business?


Once you have earnings data, your next question will be whether the probable earnings represent a good return on your investment.

Remember that when you invest in a franchise, you are investing both your time/talent and your money. Therefore, you should reasonably expect a greater return than you would for a passive investment of money only.

If a good return for a passive investment is 10% to 15% per year, you will want to see a greater return in a franchise opportunity. After all, the time you put into your new business should yield you a return at least equal to the return on the money you invest, maybe not the first year but certainly down the road.

A second important point to consider is that a higher franchise investment does not necessarily mean a higher rate of return. While this seems contrary to common knowledge, there are plenty of low to mid-range investment franchises that provide great return on investments. Don’t limit yourself only to high-investment franchises when seeking that business with a high ROI.

How much money you will make as a franchisee depends on many factors ─ from the structure of the franchise (e.g. retail versus service), to how long your franchise has been operational, to how well you understand and embrace the system, to your enthusiasm for the business and how it will help you realize your dream. But, with a little research, you can get enough information to decide if this opportunity makes financial sense for you.

If You Have a Passion for Business, a Strong Desire to Help, and the Will to Succeed, here's a Business Worth Considering Investigating Closely

Despite all the economic doom and gloom, there are new businesses just starting out as well as mature businesses that will make it through to better times. And therein lies an opportunity for anyone who wants to help. Being a coach of any kind demands a wide variety of talents, not the least of which is the ability to show people how to improve what they're doing, how to measure the effectiveness or progress of what they're doing, and how to recognize when they need to change course in what they’re doing. What’s required is native “people skills.” The drive to put them to good use. A desire to teach the kind of methods and strategies that help others help themselves. If that sounds like you, take a look at the kind of business you can have with an ActionCOACH franchise---along with the training you need to make it fly.

Peter Casey, Franchise Consultant

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ActionCOACH Provides Valuable Mentoring Source

ActionCOACH is the world’s number one business and executive coaching firm, with more than 1,000 offices in 26 countries. As part of an ActionCOACH franchise, consultants provide a valuable mentoring service to clients. For three years running, Entrepreneur magazine has rated ActionCOACH one of the Top 20 Home Based Franchise Businesses. 

By supplying a pair of fresh eyes to evaluate the current structure of a business, ActionCOACH consultants help business owners and CEOS improve and maintain the health of their companies. Business Coaches show each individual client how to excel by focusing on the four core aspects of his or her business: time, team, money, and systems.

And while Franchise owners can easily learn the details of fixing and managing a business from ActionCOACH, each ActionCoach Business Coach develops his own career by continuing to learn from each client he tutors. Over time, this expands an ActionCOACH’s understanding and experience of a variety of business and business problems.

In short, being an ActionCoach Coach is a never-ending process of learning more and gaining deeper insight to business operations; a process that benefits each successive client.

All it takes is dedication and commitment to get started, ActionCOACH provides the training on how to run your franchise, the details of fixing and managing a business, and how to deal with your clients.

Contact us today at actioncoach.com to learn more about available franchise opportunities in your area and how your can become a Business Coach.

Thinking Strategically Crucial Recession Survival Skill for Business Owners

The Chinese symbol for “crisis” also stands for “opportunity.” With that first word creeping in to the economic news more and more, it’s worth remembering that the second word goes with it. A lot of cutting-edge creative thinking comes out of hard times, often leading to extraordinary innovation and possibilities for growth. That’s why we took notice of the recent article below. It heralds how one franchise’s service or product might help franchisees in another franchise niche stay profitable. Not only stay profitable, but gain a mindset and skills that will apply to sound business development long after the recession ends. Whatever franchise you already operate or may be contemplating, give some thought to what other franchises offer----and how a partnership similar to the one below might generate solid benefits for both.

Peter Casey, Financial Consultant

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Children's Fitness Franchise Offers Business Coaching and Accountability Process to Franchisees 

March 20, 2009 // Franchising.com // CINCINNATI - The Growth Coach, one of the fastest-growing business coaching franchises in North America with a presence in more than 170 markets throughout North America, has announced a nationwide coaching partnership with The Little Gym International, a global franchise which promotes a fun and non-competitive environment where children develop vital motor skills while also learning self-confidence and social skills.

Armed with The Growth Coach's signature group coaching process, The Little Gym franchisees are given the structure, discipline and process to improve three essential components: their business, themselves as owners and the quality of their personal life. In short, franchisees are educated to think and act like strategic business owners, especially important traits during any economic downturn. 

With more than 300 locations operating in 20 countries, The Little Gym offers programs which not only help children develop physically, but also intellectually, emotionally and socially. The programs are strictly non-competitive, focusing on creating fun, positive experiences with the goal of giving children the confidence they need for a lifetime of success. 

"Through The Growth Coach's guaranteed Strategic Mindset^® coaching process, The Little Gym franchisees are introduced to effective mindsets, strategies and practices and then offered on-going accountability which converts these aspects into permanent habits," said The Growth Coach president and founder, Daniel Murphy. He added, "The Growth Coach is rapidly becoming the leading, go-to coaching authority to serve entire franchise systems, from large to small, mature to emerging." 

Some of the franchise industry's biggest names have already turned to The Growth Coach for its business coaching and accountability services. The Little Gym joins an all-star roster including Handyman Matters, Fresh Coat, Home Helpers, Caring Transitions, Fish Window Cleaning, and Signs by Tomorrow, to name a few. The Growth Coach offers business coaching and accountability services to these franchises via affordable group workshops or The Coaching Club a one-on-one coaching program delivered by phone and e-mail. 

As with many franchise executives, Bob Hicks, The Little Gym's senior vice president of franchise support, is always looking for innovative resources, such as business coaching, to help franchise owners achieve greater success. "We have always provided our franchisees with one of the most robust and progressive training and support systems in the franchise industry," Hicks said. "The Group Coaching format is very affordable for both our owners and The Little Gym. This win-win offering has helped our franchisees achieve greater success, personal balance and satisfaction as business owners."

About The Growth Coach

Founded in 2002, The Growth Coach is the only pure business coaching franchise system with the single purpose of helping to drive success and balance the lives of business owners. The company's goal is to help clients gain greater focus and leverage so they can work less, earn more, build greater business value and enjoy more fulfilling lives. In addition to serving entire franchise systems, clients include small business owners, individual franchisees, the self-employed, sales and service professionals, and managers from businesses of all sizes. The Growth Coach is located in more than 170 markets across North America.

About The Little Gym International

The Little Gym concept was developed 30 years ago by Robin Wes, a kinesiologist and educator who conceived the idea of using gymnastics to help children develop motor skills. The Little Gym promotes a fun and non-competitive environment where children develop vital motor skills while also learning self-confidence and social skills. The concept has blossomed into a global company serving more than 150,000 children each year between the ages of four months and 12 years old at more than 300 locations in 20 countries.

FREE Video on How Franchisees can Survive Recession

No one so far has said it’s going to be easy getting through the current economic climate, but savvy franchisees who know how to apply expert advice will certainly make it to better times. One way to be among the successful is to learn the techniques and strategies specifically tailored for franchise owners, regardless of the franchise niche they’re in. MarketingSage, long a leader in marketing consulting for a variety of industries, offers a FREE online video with tips on areas of your business that can be re-positioned to make the most out of these soft business times. Targeted to the technology industry, the video nonetheless offers a wealth of valuable insight to franchisees of every category.  

Peter Casey, Financial Consultant

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MarketingSage Introduces Video as a Sales Tool for Franchisees 



March 23, 2009 - March 23, 2009, Pleasanton, California, USA – MarketingSage, a provider of integrated marketing services to businesses and marketing franchise opportunities to qualified entrepreneurs, today announced the availability of online video as a sales tool for franchisees and as a service which can be offered by franchisees. To illustrate the medium, MarketingSage produced and released a free online video entitled “Marketing Planning – Surviving the 2009 Recession.”

“Like our other sales tools the video delivers practical how-to advice to potential clients as a way of introducing MarketingSage as a service provider,” said David Lamont, CEO at MarketingSage Corp. “In this case we tailored the advice to the technology industry.”

The use of online video as a marketing tool is growing rapidly. In 2008, the gross media spend on video grew 36% to $2.12 billion. Double-digit increases in video ad expenditures are expected through 2010*.

“Video doesn’t have to be slick to succeed as a sales tool,” continued Lamont. “As with all marketing material, the key to sales success is delivering the right message to your audience at the right time.”

The “Marketing Planning – Surviving the 2009 Recession” video can be viewed without charge or registration at: www.marketingsage.com/plan09

About MarketingSage

MarketingSage (www.marketingsage.com) is a US-based contracted marketing team that helps other marketers and business executives increase revenue by cost-effectively generating sales leads, building brands, launching products and developing sales channels. MarketingSage is more effective than typical agencies because its associates are highly motivated business owners (franchisees) with years of experience in their clients’ industry. Associates are trained, equipped and supported in their delivery of best-practice marketing programs. MarketingSage was founded in 2001 and serves national and international clients.

Keeping the Sun Out and the Rain Off Generates Rapid Shade Business Growth

The economic downturn may well effect a lot of businesses, but as long as the building of new, refitted, or renovated structures goes on (and especially with renovation now in a boom market) there will be a thriving demand for shades. Walkways, hotels, restaurants, office and apartment buildings, shopping malls, resorts, and car dealerships, car washes, and car parks all need this amenity to provide customers and potential customers a positive experience. With championship golfer Greg Norman at the helm of this profitable franchise enterprise, SKYshades is destined to be a winner in the world of construction industry franchise opportunities.

Peter Casey, Financial Consultant

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SKYShades Franchisee Nears $1 Million in 2009 Sales with Latest Shade Structure Deal



March 24, 2009 - Longwood, Fla – Even in tough economic times the tension-membrane shade structure industry continues to boom as SKYShades’ Southwest Florida franchisee nears $1 million in sales for 2009 with its latest contract at the Sarasota Yacht Club.

Working alongside a team of architects and designers, Dale Campion, Naples-based franchise owner of SKYShades of Southwest Florida, secured the contract to build numerous shades, including a barrel roof structure, covered walkway, cabanas and a 5,000 square foot sail shade structure on the club property. The 22,000 square foot building, designed by DSDG Inc. of Sarasota, will incorporate high standards for energy efficiency and utilize sustainable resources and building materials.

“Using SKYShades was a perfect fit for the project because of its utilitarian structure and aesthetic appeal,” said Thomas C. Denslow, A.I.A. of DSDG Inc., lead architect of the project. “I love the look of the fabric roofs, and with the large sail structure echoing the yachts in the harbor, it all comes together.”

After three successful years of operation in the U.S. – in which the leading tension membrane shade company generated $2 million in revenue in 2006 alone operating from its Orlando headquarters – SKYShades announced plans in mid-2007 to expand its reach across North America, gaining eight franchises in the U.S., Puerto Rico and the Bahamas.

“SKYShades franchisees are each supported with the skills and expertise of the very best in the business, which one couldn’t have access to anywhere else,” said Joe McKenna, executive vice president of SKYShades. “The SKYShades structures incorporated into the Sarasota Yacht Club plan were designed through a joint effort from our engineers, our franchisee, and all of the architect partners involved.”

About SKYShades

Founded in Australia and recognized as a world leader in creating tension-membrane shade fabric structures, Longwood, Florida-based SKYShades is using cutting-edge technology to reduce sun exposure and develop clean green energy sources. The company is the first in its industry to offer franchise opportunities, and through a partnership with Konarka Technologies is incorporating thin film solar energy cells into its shade structures. SKYShades’ visually attractive structures create an identity and offer an attractive and less expensive alternative to brick and mortar shading in applications from resorts, playgrounds and schools to malls and recreation spaces. For more information, visit www.skyshades.com.