Monthly Archives: January 2013

Burger King and Beboca Forming new Joint Venture for Central America

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There are lots of ways for owners of retailing businesses to make money far beyond the amounts they’re enjoying at the moment. Methods to achieve this may range anywhere from improving operating efficiency of current outlets to opening branches in select regions.

Burger King Worldwide Inc. implemented a similar strategy to that of the latter, but took things to the next level by launching a joint-venture with long-time franchisee Beboca Ltd. Through a deal that was intended to help the fast-food chain expand their territorial coverage in Central America.

What’s interesting here is the fact that the companies will be operating these new outlets under a new name: BK Centro America. Beboca will take on the role as the master franchisee and developer for the proposed 178 restaurants in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.

As of today, Miami-based Burger King is the second largest fast-food chain in the world with over 12,600 branches in total.  Meanwhile, Beboca currently owns 48 restaurants and Costa Rica and Panama. Both partners will be working to develop and promote the newly established entity destined for Central America.

The reason why this partnership was struck and the particular location was chosen lies within the area’s growing middle class. This has led to an increase in demand for products from fast-food establishments, which has also presented an exceptional opportunity for the partners to supply the demand and profit off it at the same time.

“Central America’s middle class continues to expand rapidly and this partnership will enhance our ability to grow aggressively and ensure we are the preferred choice among consumers in the region,” says Jose Tomas, Burger King’s current president of Latin America and the Caribbean.

Nevertheless, Burger King and Beboca aren’t the only ones looking to capitalize on this growing market. According to sources, Denny’s Corporations and Brinkler International Inc. are also shifting their focus to developing their own restaurant retailing businesses within the region as well.

Tomas will be joining the board the new joint-venture along with Jonathan Weisleder, its finance and business director for Latin America and the Caribbean.

Legitimate franchisors such as Burger King represent outstanding opportunities for businessmen and non-entrepreneurs to make money in consistently large amounts over a long period of time. Although such businesses are comparatively pricey to acquire as compared to other franchises, popular fast-food restaurants give a steady and large return on investment.

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.

China’s Luxury Market Evolving at Alarming Rate

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Anyone who wants to learn how to start a business can start by thinking of what products are currently in demand at the moment, how long that demand will last, and how to supply that particular consumer need or want in an efficient and cost-effective manner.

Those aiming to acquire certain franchises for sale will be interested to know that there’s an ongoing purchasing trend happening with the Chinese consumer market right now. Based on statistics released by personal luxury brands – including Prada, Gucci, Dior and Burberry – a large portion of their revenues generated is currently being driven by Chinese consumers.

Prada recently announced a 30 percent year-on-year increase in net income during 2012’s third quarter, with sales in China increasing by a whopping 33 percent during the same period. Moreover, roughly 50 percent of the company’s sales to the Chinese are raked in from stores residing from outside the country.

Observers believe say that the fashion house’s impressive figures clearly denote the Chinese’s ever-growing refined tastes, and their need to satisfy this insatiable desire through the purchase of luxury goods.

Boston Consulting Group estimates that the Chinese will have spent $41.5 trillion dollars on such merchandise by the end of the decade. This organization also predicts that the country’s annual $2 trillion expenditures witnessed in 2010 will jump to $6 trillion by 2020.

“The Chinese consumer has a profound belief that they deserve luxury products now. They had fifty years with so little, and now, many can afford to buy luxury goods,” says Francois Pinault, CEO of the French luxury producer and retailer PPR (originally known as Pinault-Printemps-Redoute.)

“Their growth in demand is rooted in an expression of individualism in the way you dress. It is a way to differentiate yourself from friends and neighbors. Chinese consumers buy to treat themselves. This China market has evolved faster than any other market in the world.”

In China – as well as other locations across the world – luxury franchises for sale offer their owners an excellent opportunity to capitalize on this trend of significantly increasing demand for premier commodities.

Those within the early stages of learning how to start a business may be interested in knowing that experts are predicting this trend to continue for a diverse range of lux items and services, including, clothing, accessories, watches, home goods, wine, health care and education.

Fast Food Can Be Healthy and Tastes Good

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Several franchises for sale which have recently emerged are exploring a new market niche: fast food offerings that are not only healthy but also taste delicious. And here they are and what they offer:

O’Naturals

The prime mover of this company is its founder and chairman, Gary Hirshberg, who is also president and CEO of Stonyfield Farm, a yogurt manufacturer. O’Naturals was established along the same philosophy that Stonyfield yogurts are being made, that is of solely using natural and organic ingredients. The ingredients in O’Naturals’ menu contain no preservatives or additives. They also don’t have artificial sweeteners, flavors, and coloring. In-store nutritional information is provided in all of O’Naturals fast food offerings.

Furthermore, selections for customers on restricted diets, e.g., gluten-free, dairy-free, low-carb, etc., are also highlighted. Patrons are informed on what their food contains as all of the ingredients for each menu are listed on cards at the line. The items in the O’Naturals’ menu include build-you-own-sandwich/salad, featured tossed salads/ flatbread, sandwiches, flatbread pizzas, a selection of Asian noodles, soups, natural fountain soda, and Stonyfield Farm organic smoothies. O’Naturals currently operates four company-owned stores inNew England. Two franchise opportunities are being finalized outside this region.

Salad Creations

This is one fast food franchise venture that has really taken off. Salad Creations already has nine locations inFlorida,Virginia,Ohio,Rhode Island, andMexico. One of these is company-owned store the rest are franchised stores. In these outlets, customers can create their own salad from a choice of over 40 ingredients consisting of farm fresh fruits, vegetables, newly sliced meats, cheeses, and more than 15 homemade salad dressings. Each customer’s order is prepared by specially trained salad chefs who can help customize the servings to each individual’s preference.

Blendz

Customization of salads or smoothies is also the growth driver for outlets under the Blendz Franchise System, Inc. The company’s founder, president and CEO, Matt Phipps says that they don’t claim their food as healthy but healthier, allowing customers the option to make it as healthy as they want. The choices in Blendz menu include not only create-your-own-salad with 15 different toppings and dressings each day, and choices of greens. Also in the list are featured salads, gourmet soups, fresh squeezed juices, and grilled Panini. Blendz has four company-owned locations and one franchised outlet. Another corporate store and two franchisees are also under development.

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.

Important Key Points to Consider When Reading Franchise Financial Statements

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There’s a wide range of franchise opportunities prospective franchisees can choose from. If an individual is interested in automotive franchises, he or she will be happy to know that there’s a diversity of these business types to choose from here.

But before getting overly anxious when purchasing any sort of establishment, it’s imperative to carefully analyze the franchisor’s financial statements prior to making a purchasing decision. That being said, lawyers who specialize in reviewing these types of documents advise future entrepreneurs to determine the value of the company’s assets.

If the statement reflects few assets, or displays assets as “good will” or “value of franchises”, questioning the franchisor should be done immediately, as these terms typically represent no tangible value. That means if the corporation were to display a net worth of two million dollars, it could actually be worth several thousand dollars in reality if the majority of these assets happened to be intangible.

Second important point that should be reviewed is the franchisor’s profit and loss statements. If the group displays a loss or insignificant profit, it could be an indicator that the company isn’t investing enough into the business. Paying close attention to the expenses is important as well, mainly because there have been numerous instances wherein a substantial percentage of profits generated are used to should officer salaries.

Third aspect of the statement to review includes the notes which indicate the nature of certain transactions. Digging in deep to look for loans going on between the franchisor and its franchisees would be helpful. Moreover, folks are advised to be cautious when dealing with franchisors who owe large amounts to their founders as well.

Large loans taken on by the franchisor may be a sign that the company is currently in financial instability, especially when the due date of these borrowed amounts are drawing near. Franchisor commitments should also be carefully examined, especially the ones regarding contracts with suppliers, as well as long-term leases.

Caution should always be observed when it comes to capitalizing on any of the many franchise opportunities today. Some dealers of automotive franchises may have a few skeletons in their closets that they’re hoping their prospects don’t find out. This could lead to a world of financial trouble or headaches on the franchisee’s end when things suddenly take a turn for the worse.

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.

Franchise Opportunities in Naperville, Illinois

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Why bother learning how to start a business – that’s statistically doomed to fail – when buying a franchise instead would be a much safer and profitable investment? Franchisors (many, not all) have developed foolproof systems of operation for franchisees to follow in order to run their businesses in the most efficient, stress-free way imaginable; all the while ensuring that profits are maintained and gradually increased.

A diversity of these companies has created franchise opportunities for locals of Naperville, IL to start their very own enterprise today. Not only can such commercial establishments help people with little to no entrepreneurial know-how generate impressive streams of revenue over a long period of time, but they’ll also give them the chance to be something many of them have always been dreaming about: becoming their own bosses.

Franchises being offered in Naperville are designed to compete in various industries. Moreover, a large percentage of these franchisors are well-established brands that people across the country can easily identify, thereby giving a considerable advantage to their prospective future franchisees.

Experts feel that a couple of franchises that could prove to be lucrative businesses are Menchies and Title Boxing Gym. The former has established a solid customer base at the West Coast, and is currently expanding to the East today. An advantage that comes with this trendy yogurt shop is its affordability, making it one of those franchise opportunities ideal for those working with limited budgets.

Title Boxing Gym — as its name obviously suggests – offers consumers a diversity of services, amongst which includes its famous group fitness workout concept. Establishing this type of business today would make for a wise investment, as thousands within Naperville have likely included “getting a better physique” as part of their New Year’s Resolutions.

However, not much know about the current offerings being made by these corporations, and only find out when available territory has either become excessively saturated, or completely unavailable. That being said, it’s important to start doing research on the franchisors with only a few outlets – preferably around 30 to 50 — open within the area today.

Although franchise opportunities ideally allow its franchisees to skip out on the burdens of learning how to start a business from scratch, not all franchisors are guaranteed to succeed. Doing a background check on prospect franchisors, as well as their current franchisees, prior to making a purchasing decision is vital.

Franchising Basics Explained

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It is a wise move for those who want to buy a business franchise to avail of the services of a competent franchise attorney and a financial adviser. But even prior to seeking such services, prospective franchise buyers should already be knowledgeable on the basics that are involved in operating franchised outlets. Many of these fundamentals are covered by information covering some frequently asked questions on franchises for sale. Among these FAQs are:

Q. Where can franchise opportunities be found?

A.  Franchises are advertised in many ways. There are franchise directories which can be accessed on the Internet. Others can be found in traditional magazines and publications on franchising. Through these listings, prospective franchisees can initially gauge the business that is best suited to their talents, skills, or abilities.

Q. What is the Franchise Disclosure Document (FDD) and why is it important?

A.  The FDD enables a prospective franchisee to analyze the franchise and the franchisor. It is a legal document that the Federal Trade Commission (FTC) requires the franchisor to furnish to franchisees. This document must be furnished to the franchisee applicant at least 10 days before the franchise agreement is signed.

Q. What government agencies, besides the FTC, regulate the franchising business?

A.  Although franchises’ offerings and sales are generally regulated by the FTC, 14 state governments also regulate franchising in areas under their jurisdictions. Additional franchise regulations and oversight are sometimes imposed in these 14 states in order to extend an extra protection layer to prospective franchisees. These states areCalifornia,Illinois,Indiana,Maryland,Michigan,Minnesota,New York,North Dakota,South Dakota,Oregon,Rhode Island,Virginia,Washington,Wisconsin, andHawaii.

Q. Can prospective franchisees ask about potential earnings from franchisors?

A.  Information on how much money a franchisee can potentially earn may be found in the FDD. Franchisors’ disclosure about franchisees’ sales or earnings is not allowed unless that information is provided via the FDD. It’s been estimated that this information is provided in about 25% of the franchisors’ FDDs.

Q. Can this information on potential earnings be sourced elsewhere?

A.  Current franchisees are the best source for this information. Although detailed information may not be provided, what they can provide are ranges of sales or earnings that a franchise applicant can use as a basis to work with. These data are useful in financial projections at varying sales levels.

Q. Can financing offers be expected from franchisors?

A.  The possibility of receiving a financing offer from most franchisors is remote. The best thing that they can do is arrange for third-party financing.