Category Archives: Franchise News

Top 50 Multiple-Unit Franchise Brands Unveiled

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The recent Franchise Business Report reveals that owning more than one franchise leaves investors with greater satisfaction compared to a single franchise. Today, franchise brokering is nearly as popular as stock brokering due to the huge gains posted by the franchise opportunity to investors.

The research conducted by Franchise Business Review utilizes satisfaction ratings of over 6,600 franchisees who own more than one franchise unit from over 300 companies which are open for franchising. The report is conducted to name the best brands for multi franchise unit ownership.

To gather data for the report, all active franchisees of North American franchise companies were invited to a free satisfaction survey. Franchisees ranked their franchise based on these areas: core values, franchisee community, financial opportunity, general satisfaction, leadership, operations, product development and training and support. Information from franchisees owning 3 units or more were utilized to complete the report and determine the top multi-ownership franchise brands.

Franchise Business Review’s president, Michelle Rowan, stated that it is not surprising for multiple-unit franchisees to have greater satisfaction since owning more than one unit is more profitable and profitability can have a huge effect on satisfaction. He continued that the surprising data was that multi-unit franchise owners gave a higher ranking for their system in every question in all categories.

Auntie Anne’s, 1-800-GOT-JUNK, and CertaPro Painters are among the top franchises named in the Franchise Business Review report. The complete list of the Top 50 Franchises for Multiple-Unit Ownership can be found in http://www.FranchiseBusinessReview.com.

Multi-ownership franchise opportunity is popular in food franchisees due to the economies of scale. Just recently, multi-unit franchise brokering for all kinds of franchises has gained popularity due to the convenience in managing the franchise and the revenue earning potential of owning 3 or more franchise units.

Franchise brokering for multi-unit ownership is surely going to be the new investment trend owing to the fact that ownership of multiple units for the same brand is a sensible investment move though it poses a higher risk. Hence, Rowan suggests that greater diligence in researching multi-unit ownership is necessary to make sure that the culture has the right fit and that the brand can support the investor.

The report by Franchise Business review enlightens prospective franchisees in learning more about the franchise opportunity. It also takes a look at the features that makes a franchise a great option for multiple-ownership. All 50 featured franchises have a strong history of growth and support for the success of franchisees who own multiple units.

Credit Access Levels in Hospitality Franchises and Food Service Continue to Improve

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Franchising and franchise opportunities are still recovering after the recession as reflected in the 2011-2012 franchise financing rates. A recent index from International Franchise Association & BoeFly revealed that lending to franchises showed a 3.18% gain between March 2011 and March 2012.

People who want to start a franchise need to know what industries are showing above-average growth.

BoeFly co-president Mike Rozman stated that hospitality and food service industries have been demonstrating growth even with the financial crisis and are expected to grow further in the months to come.

Individuals interested in these industries can choose whether to own a restaurant or a hotel, whichever suits them.

Street Directory noted that entrepreneurial spirit and the willingness to stay within the restrictions of the established business model are needed to have a successful franchise in food service.

Some of the business-minded people will appreciate the franchise restrictions and utilize them to help their franchise business however others may not like the idea of following someone else’s regulations. After all, most people choose to open or run a business to be their own boss.

Some individuals are attracted to the food service industry and dream of creating unique menus and cultivating an ultimate diner ambience. Franchising is less likely to be suited for these individuals since it follows a standard model and leaves no room for personal creativity. Street Directory stated that buying a franchise means entering an established business with proven record of success. Franchisees have the responsibility to run the enterprise as effectively as possible while adhering to its guidelines and regulations.

According to the Hotel News Resource statistics, less than 40% of US hotels were brand-name enterprise 20 years ago. Currently, around 80% of the US hotels are either branded or brand-affiliated.

The franchise financing growth observed in the food service and hospitality industries suggests that the trend is expected to continue. Robert E. Braun, hotel lawyer of JMBM Global Hospitality Group indicated that there are cases when hotel franchisors help in the funding of a project by providing credit enhancements or loans. Franchisors are more likely to get their money back however this is not the case with franchise financing acquired from other venues, which puts the franchisee and the franchise more at risk.

It is important to do a thorough research on the various hotel franchising options before planning to buy a business franchise to avoid committing major mistakes.

When it comes to franchise lending, the year has been practically static. Individuals interested in starting a franchise in the hospitality and food service industries will be glad to know that the industries have been experiencing above average credit access levels. As an entrepreneur, try to research more on these sectors to avoid quitting halfway just because you felt that you weren’t suitable for such franchise after all.

Franchisors and Franchisees Worrying about Fiscal Cliff

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While franchise opportunities have served as an outstanding median for ordinary folks to own and run businesses with or without entrepreneurial experience, the shadow cast over franchising by the budgetary fiscal cliff deal is causing a stir amongst both franchisors and current franchisees.

Companies selling franchises for sale across the US claim that growth at their hotels, restaurants, retail shops, and other small businesses are likely to be impacted by tax hikes, as well as the more expensive health care rules.

According to the International Franchise Association’s economic outlook survey for 2013 – which was released before the Democrats and Republicans finalized their dealings — business growth for this year is bound to slow down even if the Congress and White House manage to come to an agreement on spending cuts and tax hikes.

“Franchise companies are poised for growth, but many of us are standing by, waiting to see what our economic policy is going to be in this country,” said Steve Joyce, president and CEO of Choice Hotels International.

“We want to grow. We want to hire. But how can you be a responsible business leader and make decisions if you don’t know what the rules are going to be?”

Joyce’s statement was made before the fiscal deal was finally settled, and unfortunately, the deal ended up disproportionate, as it entailed more taxes levied on the wealthy and middle classes, and no government spending restraint.

Despite the fact that franchisors would like nothing more to accelerate their growth plans, current economy problems are making that a little more difficult than it ought to be.

“We could be growing much faster, creating more new jobs and businesses, if Washington addressed the tax, spending and regulatory uncertainty plaguing the small business community in a meaningful way,” said Steve Caldeira, president and CEO of the IFA.

Caldeira explained that excessive government spending is causing a strain on the economy, and if the country’s leaders fail to address this issue (because they so far haven’t), their growth rates will be impeded for the start of this year.

This larger strain placed on Americans could either make them more open or closed to plausibility of improving living conditions through franchise opportunities. Studies show that the number of franchises of sale that are actually purchased are likely to decrease slightly this 2013.

Blaze Pizza Fires Up Franchising

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Blaze Pizza, established just last August 2012, debuts this year into selling franchise opportunities for its fast-fired, custom-built “artisanal” pizzas. The first Blaze Pizza franchisees will be developed in theLos Angelesarea under an agreement with Sajha LLC, and one of these outlets is scheduled to open this spring of 2013.

Based inIrvine,California, Blaze Pizza is the brainchild of the couple Elise and Rick Wetzel, the same minds behind the Wetzel’s Pretzels franchise. Members of the restaurant chain’s executive team were also part of the development of the Buffalo Wild Wings and Chipotle franchises for sale.

The concept of their pizza venture revolves around pizzas baked in two minutes with the customers choosing the ingredients they want. An assembly-line approach enables patrons to customize a signature pizza or to create an original of their own. The customers can choose from an assortment of fresh, artisanal toppings, most of which can be picked at no extra charge. Then, each of the customer’s orders is “fast-fired” in an open-hearth, blazing-hot oven that can bake a standard eleven-inch, personalized pizza in less than two minutes.

Special dough recipe

An executive chef, BradfordKent, developed a special recipe for the dough exclusively used in Blaze Pizza. Customers with specific dietary needs are likewise offered choices of gluten-free dough and vegan cheese. The restaurant’s menu also includes signature salads, beer and wine, lemonades, and homemade pies for dessert. There’s also an option for customers to prepare their own salad, choosing the greens, homemade dressings and toppings that they want.

Company-owned outlets in Irvine and Pasadena served as the springboard for the Blaze Pizza franchise. Its Irvine location operates as a subway-style pizzeria near the University of California campus. Registered in thirty-four states for franchising, the restaurant chain plans to grow its franchise footprint this year to a total of fifteen locations. Its priority target markets for expansion include not only San Francisco and Los Angeles but also New York,Chicago,Denver,Miami, and Boston.

The Sajha LLC which is developing the three Blaze Pizza franchise stores in Southern Californiais headed by Sandeep Bhakta and Kamal Patel. Their team has over twelve years of experience in operating nationwide franchises; among these are Which Wich Sandwiches and Cold Stone Creamery. Bhakta, chief executive officer of Sajha, said that they were impressed by the quality of the Blaze Pizza concept’s execution and by the depth of experience of its corporate team.

Fresh Pita Pits Franchise Expands Phoenix Presence

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The Idaho-based Pita Pit is poised to test its mettle anew on how to start a business in Phoenix this 2013. Ranged against competitive fast-casual restaurant franchises, Pita Pit is set to open several outlets for its sandwiches in Phoenix early this year. An Arizona couple, Todd and Blanca Runyan, is at the forefront of this bid, having signed a franchise agreement to bring to the Valley 11 Pita Pit locations.

One outlet is scheduled to open early this year on Mill Avenue in Tempe. In December, the couple opened a Pita Pit outlet in Yuma and is now training their eyes on the Phoenix area. If their plans pan out in the Phoenix market, Todd Runyan said they expect to open from two to four Pita Pits outlets a year in the area for the next several years and eventually exceed their initial target of 11 locations. Once those 11 outlets are operating, the couple hopes to do more, and 22 different locations are already being scouted, he added.

Each of Pita Pit’s Phoenix location will have 15 to 20 employees. The other brand players in the local fast-casual sandwich franchises for sale include Jimmy John’s Gourmet Sandwiches and Subway. Pita Pit differentiates itself from competitors by using pita bread on its sandwiches. The healthful feature of the Pita Pit sandwich is one of the major factors which drew the couple to the franchise. This is healthier food, really good, and portable, Todd Runyan said, adding that it is a little bit on the lighter side but is still filling.

Pita Pit’s vice president of franchise development, Corey Bowman, confirms this observation, saying that the key differentiator of his company’s product is its healthful feature. Besides this selling proposition, Pita Pit allows customers ample choice on how to customize or build the sandwich to their own liking, Bowman said on the strength of his company’s franchise for sale.

Prior to the Runyans’ franchise agreement, Pita Pit already has a presence in the Phoenix market. A separate franchisee operates a location in north Phoenix on Happy Valley Road. Another in operation on Tempe’s Mill Avenue has been closed but will soon reopen as the first Valley location for the Runyans.

Other fast-casual restaurants which have recently sprung up in the Phoenix market include Chicago-based Potbelly Sandwich Shop, Delaware-based Capriotti’s, Pennsylvania-based Saladworks, and Wisconsin-based Cousins Subs. Likewise, San Diego-based Fresh Healthy Vending which sells franchises on health-snack vending machines, has begun expanding its presence in Phoenix.

How 2012 Will Shape 2013 Franchises

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The year 2012 was filled with events in the franchise industry that will contribute much in steering its path in 2013 and further into the future. Likewise, there were also milestones set last year that allow some glimpses on the track that the industry will take as its players explore the many franchise opportunities available in the market. Here are some of these developments:

Forward-looking tie-up:

Edible Arrangements forged a strategic partnership with the private equity firm Catterton Partners which mainly provides equity capital to consumer companies. Serving small to middle consumer market companies, Catterton also has an investment stake in Bloomin’ Brands whose portfolio of brand franchises for sale includes Bonefish Grill, Outback Steakhouse, and Noodles & Company.

Executive movements:

Jonathan Fitzpatrick took over as president and CEO of Driven Brands, Inc., replacing Ken Walker. Based inNorth Carolina, Driven Brands is the parent company of Maaco Collision Repair & Auto Painting andMeinekeCarCareCenters. The leadership change followed the purchase of Harvest Partners of the majority stake in Driven Brands under a recapitalization transaction.

Stuart Mathis was appointed president and CEO of Quiznos, replacing Greg McDonald who spent fourteen years at the helm of the company. Mathis was formerly UPS Store chain’s president, and he also spent some time as a franchising executive for Dominos Pizza.

Expo shifts to new venue:

The largest franchise expo in theU.S., the International Franchise Expo, was held at theJacobJavitsCenterinNew York City, in June, breaking the twenty-year tradition of having the event inWashington,D.C.

Equity restructuring:

The initial public offering (IPO) of CKE Inc. was postponed because of “market conditions.” Based inCalifornia, this company owns Hardee’s and Carl’s Junior. The private equity company Apollo Management took the company private two years ago for just below $700 million. Public shareholders would have held just 24 percent of CKE had the IPO pushed through.

Panera Bread undertook a new $600-million share repurchase program. This scheme replaced a $600-million three-year buyback program launched in 2009, of which more than 50 percent remain untapped.

Atlanta-based Roark Capital Group bought Massage Envy from another private equity company, Sentinel Capital Partners, which had acquired the fast-growing wellness franchise just 33 months back. Besides Massage Envy, Roark’s portfolio of franchise companies now includes Bosley’s Pet Food Plus, Arby’s, Corner Bakery, FASTSIGNS, FOCUS Brands, Money Mailer, McAllister’s Deli, Primrose Schools, and Wingstop.

Looking Back at the 2012 Franchise Year

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The franchise industry has its ups and downs in 2012. While there were major hurdles during they year, franchise opportunities remained rewarding for those who successfully navigated tight credit, high unemployment rates, calamitous weather, legal and regulatory challenges, and political uncertainties. Some of the events that helped shape the year for those whose fortunes are tied to franchises for sale include the following:

The debt restructuring for Quiznos: This financially distressed sandwich chain relinquished over 70 percent of its ownership stake to one of its major lenders, Avenue Capital Group. All creditors of Quiznos approved the debt-for-equity deal, thus enabling the company to avoid a Chapter 11 bankruptcy filing and to reduce by about $170 million its total $870 million debt obligations.

Snap-on Tools tops Forbes list: The “Top 20 Franchises for the Buck” ranking of Forbes magazine installed Snap-on Tools as its No. 1 pick. The criteria for the choice are average initial investment, total outlets, closure rate, U.S. outlet growth in the last three years, and training hours spent in relation to start-up costs. The magazine evaluated data from 110 established franchise brands. Others in the honor roll from second to fifth, respectively, are 7-Eleven, Aaron’s, Panera Bread, and ServPro. Dunkin’ Donuts, previously No. 1 in the list, slid to 13th place.

Coverall slapped $3-million in damages: A Massachusetts federal district court ruled that the franchisees of Coverall, a Florida-based commercial cleaning services franchisor, are classified as employees not independent contractors. Under the court ruling, the misclassified franchisees could collect treble in damages representing workers’ compensation, franchise fees, other work-related insurance premiums, and attorney’s fees dating back to 2006. Another Massachusetts federal judge later used the Coverall decision as a precedent in imposing liability on another janitorial franchise, Jani-King, for the misclassification of employees as franchisees.

JOBS law signed: President Obama signed the Jumpstart Our Business Startups (JOBS) Act. Existing and prospective franchisees are expected to benefit from this new law through enhanced credit access. Among other things, JOBS allows crowd-funding and lifts the advertising ban on private securities offerings to wealthy prospective investors.

Obamacare upheld: Salient provisions of the Affordable Care Act (Obamacare) was upheld by the U.S. Supreme Court. The International Franchising Association (IFA) immediately decried this decision as analogous to the Mayan calendar doomsday scenario as far as the fate U.S. franchising industry is concerned.

Burger King’s backdoor listing: The fast food franchise, taken private in 2010, became a publicly traded firm but shied away from Wall Street’s traditional initial public offering. Instead, Burger King entered a special merger with an affiliate of an investment company based in U.K. which is already listed in the London Stock Exchange.

Service Industry Franchises Performing Well

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Higher employment and the recession have slowed existing home sales and have also spurred the surge of franchises especially in the service sector, which deals on fixing things.

From the Main St. to Wall St., recession-proof property owners and businesses needing skilled workers to construct saleable buildings have been benefitting from laid-off employees looking for job security.

Marketing and operations VP of Texas-based company The Dwyer Group, Doug Dixon stated that the new franchisees will probably increase between 25-30% in the current year compared to last year.

Dwyer, with 1,500 franchises scattered in 10 countries and 16 in the Massachusetts area earned a total of $77.5 million revenues in the previous year.  The company operates 7 franchise types – 4 in the area of Central Massachusetts, 2 Mr. Rooters, 1 Mr. Appliance, and 1 Mr. Electric.  Purchased by private equity corporations led by New York-based TZP Group LLC in 2010, its estimated value is $150 million.

The third quarter report of the International Franchise Association showed that the U.S. is home to 736,114 franchises, which employ over 8 million individuals.  The association indicated that the current year will see a rise in the number of franchise opportunities at approximately 1.5%, following last year’s decline.  Employment will then increase by 2.1%.

The Forbes magazine listed the 10 fast-growing franchises during recession and the list included McDonald’s, Dunkin’ Donuts, Subway, and Liberty Tax Service among others.

Kyle Ritchie from Worcester is the general manager of Mr. Rooter and Mr. Electric, two franchises owned by Dwyer.  The president is Stephen Ritchie, a plumber, and Kyle’s father.  They purchased the Mr. Rooter franchise last 2002.  Last year, they purchase the Mr. Electric franchise to widen their services.

Layoffs triggered the Dwyer growth with many of the unemployed individuals choosing to start franchises rather than looking for new employment and experiencing another layoff.

According to Mr. Dixon, home service franchise opportunities were unaffected by the recession.  There are many franchises available however home repairs still rank higher than retailing businesses related to purchases.

The list of Dwyer franchisees include electricians, landscapers, and plumbers who prefer a business of their own or do not enjoy working alone.

After doing demographic studies on the number of dwellings occupied by owners and the number of veterans, Dwyer has Worcester as the location with the vital growth.  Mr. Dixon stated that unlike in retailing businesses, house ownership is essential in the service industry because renters do not usually concern themselves with getting things fixed.  Worcester’s home ownership is above average.

Mr. Dixon indicated that veterans make ideal franchisees.

He stated that franchises and veterans go well as people who used to be in the service are into following rules, processes, and procedures, similar to an ideal franchisee.  Franchisees who know how to follow the processes are more likely to do well.

Franchisees receive tailored support in various areas including finances, management, marketing, and technology.  Mr. Dixon mentioned that franchise businesses experience higher success rate compared to independent stores as revealed by a number of studies.

Franchisees however are required to pay revenues to franchisers.

According to Mr. Dixon, individuals need to weigh the difference in cost between starting independent store versus getting such support from franchisers.  He stated that as franchiser, Dwyer continues to exhibit growth, which helps in selling franchises.

Aside from providing cost-related support, Dwyer also provides other services like brand name recognition, call center, social media access, and demographic analyses.

Famous Dave’s Secures 21 New Franchise Contracts

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The barbeque chain based in Minnetonka will have its 18 new branches in most of the southern part of California.  Moreover one new venue will be opened in Yakima Washington, Missouri, Independence, Michigan, and Lansing Cities.  Famous Dave’s success is a good motivation to those who are planning to buy a business or searching for franchises for sale.

Famous Dave’s Spokeswoman told the Twin Cities Business about the opening of all its new restaurants in two years with most of them becoming operational by next year.

Opening more Famous Dave’s branches in California will increase its presence in the state, adding more to its 14 restaurants that opened in January.

John Gilbert, CEO of Famous Dave’s stated that the signing will give them a perfect start in their aim of having 50 new venues in the next couple of years.  He added that having more deals will make the growth potential of Famous Dave’s look impressive.  With impressive growth record, more individuals will be attracted to buy a business franchise of Famous Dave’s.

The Famous Dave’s has 132 franchises in 53 locations.  At present, its geographic footprint spans one province in Canada and 33 states.  In July, Famous Dave’s first international venue was opened in Winnipeg.  According to Brett Larrabee, the director of franchise sales and development, the Winnipeg location has exceeded all of their expectations, providing the enterprise its highest sales ever.

The revenue of the company in the latest fiscal year, which ended in January, had a 4% growth or about $154.8 million.  However its current net income was down by 22.9% compared to the previous year.

Its quarter sales, which ended in September 30, amounted to $39.9 million, 2.6% higher from the same period a year ago.  However the net income amounted to $845,000, which was 46% lower from the similar quarter a year ago.  According to Famous Dave’s, its 3rd quarter earnings have been badly affected by its timing on direct-mail marketing and media spending, which occurred on the 4th quarter of the prior year.  The margin pressure brought by the benefit, commodity, and labor costs were also cited as contributing factors.

Last month, Gilbert became the company’s CEO, replacing the former CEO Christopher O’Donnell who became the President and COO.

When the C-suite transition was announced, Aric Nissen, the company’s Marketing VP told the Twin Cities Business that Gilbert and O’Donnell are unique people possessing excellent skills while working with the company’s board together.  He stated that O’Donnell’s strength will be in operation while Gilbert will give attention on the company growth and franchises for sale, emphasizing on brand management and marketing.

Papa John’s Announces 200 Franchise Agreements for North America in 2012

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On Tuesday, November 20, Papa John’s announced its plan to sign more franchise agreements for North America.  More than 200 franchise opportunities will be developed, create jobs, and make money for some 5,000 future employees over the next few years.  John Schnatter, Chairman, CEO, and founder, said in an interview that their aim is to continue opening up more restaurants that will help the economy.

Papa John’s is the third world’s largest pizza company.  Papa John’s International’s home base is located at Louisville, Kentucky.  For eleven years, customers have consistently rated this pizza chain as No. 1 when it comes to customer satisfaction according to the American Customer Satisfaction Index (ACSI).

Three months earlier the company has already given information about their continuing Papa John’s Franchise Development Incentive Program, which offers zero franchise fee ( $25,000 in value) and waived royalty for 18 months.  The program also includes $50,000 worth of restaurant appliances and equipment for stores that will open in 2013.  The equipment includes two Middleby-Marshal ovens.  The franchise program also provides $3,000 in food credit with PJ Food Service.  This is the establishment that controls and operates food distribution and produce fresh dough for Papa John’s. This special incentive will be available to restaurants that will open 30 days ahead of their schedule.

The incentive program is generally available in the U.S. for qualifying franchisees who will start to operate on or before the 29th of December 2013.  Full details of the program will be made available to applicants upon completion and review of the Franchise Application.

Schnatter revealed that 50% of the franchise agreements are new to the idea of franchise opportunities and are just opening their very first Papa John’s.   An average Papa John’s franchisee owns about three to five restaurants.  Right now Papa John’s is not just all about how to make money from their fabulous pizzas but they’re focused into developing their franchise for small business owners.