Franchise Blog

The National Minority Franchising Initiative (NMFI) has compiled its annual list of the “50 Top Franchises for Minorities.” The results were featured in the November 5^th issue of USA TODAY in the Franchising Today section. A copy of the article with the list can be found here. For a list of the companies only, please click here.

The NMFI selected 50 franchisors from hundreds of companies requesting evaluation for inclusion in the article. There was no cost to participate in the survey. The only constraint was that franchisors had to have in excess of 50 operating units. Each participating franchisor was required to submit its most recent Franchise Disclosure Document (FDD) and the marketing package that is sent to prospective franchisees, as well as a completed questionnaire. The questionnaire noted the number (both absolute and as a percentage of the total number) of operating units owned by minorities, as well as the number of minorities in senior management that earned over $60,000 per year. (For a copy of the questionnaire, click here.)

“We are extremely pleased to see that, in short ten years, minority representation has increased remarkably in the franchising industry,” said NMFI Founder Rob Bond. “Whereas minorities may have accounted for only 5 or 6% of total franchisees in 2000, the consensus is that today they account for well in excess of 15%. This is quite a remarkable testament not only to the industry’s reaching out to minorities, but to the underlying values and entrepreneurial talents that minorities contribute.”

For a more complete list of franchise systems that wish to increase their minority representation, please go to www.MinorityFranchising.com. The site lists over 500 companies committed to recruiting and supporting minorities, as well as resources that are essential to the evaluation process. The site represents an effective and cost-efficient tool for franchisors to increase minority representation within their systems. The National Minority Franchising Initiative (NMFI) was a program launched by World Franchising Network (WFN) in 2000 to level the playing field and meet the needs of a largely under-represented market

The World Franchising Network, which manages the www.MinorityFranchising.com website, also has 15 other websites focusing on franchising.

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The National Minority Franchising Initiative (NMFI) has compiled its third annual list of “50 Top Franchises for Minorities.” The results of this survey were featured in the October 2, 2009 issue of USA Today in the Franchising Today section. A copy of the article and list can be found here. For a listing of the companies only, please click here.

The NMFI selected 50 franchisors from hundreds of companies requesting evaluation for inclusion in the article. There was no cost to participate in the survey. The only constraint was that franchisors had to have in excess of 50 operating units. Each participating franchisor was required to submit its most recent Franchise Disclosure Document (FDD) and the marketing package that is sent to prospective franchisees, as well as a completed questionnaire. The questionnaire noted the number (both absolute and as a percentage of the total number) of operating units owned by minorities, as well as the number of minorities in senior management that earned over $60,000 per year. (The questionnaire can be found here.)

“We are extremely pleased to see that, even in this poor economy, so many franchisors still have an active interest in attracting more minority franchisees,” said NMFI Co-Founder Rob Bond. “Given this huge underserved market, there is still a great deal of work that has to be done to bring minorities up to parity with the market.”

For a more complete list of franchise systems that wish to increase their minority representation, please go to www.MinorityFranchising.com. The site lists over 500 companies committed to recruiting and supporting minorities, as well as resources that are essential to the evaluation process.

The NMFI also publishes an annual list of the “Top 25 Franchises for Hispanics” for PODER magazine using a similar analysis. Next year’s “Top 25” survey will be conducted in February 2010 and the article will be published in April. Franchisors will be contacted in February to see if they wish to participate. There is no cost to participate; the only requirement is the submission of the completed questionnaire and the most recent FDD.

The National Minority Franchising Initiative (NMFI) was created in 2000 to level the playing field and meet the needs of a largely under-represented market. The multi-faceted NMFI program, which involves the www.MinorityFranchising.com website, the Minority Franchise Guide publication and franchise-related events throughout the country, represents an effective and cost-efficient tool for franchisors to increase minority representation within their systems.

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The World Franchising Network is pleased to announce its selection of companies for its annual list of Top 100 Franchises. The results have been published in Bond’s Top 100 Franchises (3rd Edition), which is now available for purchase here. A list of the companies selected for inclusion can be found here. The publication includes a three-page write-up on each company. The complementary website www.100TopFranchises.com links visitors to each franchisor’s detailed profile on www.WorldFranchising.com and, ultimately, to the on-line write-up. Unlike most other annual “Top Franchise” articles and websites, this publication provides some meaningful background material on the franchisors selected.

The World Franchising Network develops the list based on a rigorous analysis of several factors, including historical performance, brand identification, franchisee satisfaction, training, on-going support, financial stability and other key variables. With over 3,500 franchises out there, selection is a great honor to those companies selected and should be a significant assist to prospective franchisees as they start their search process.

“We are extremely pleased with the industry-leading franchisors that we have chosen for this year’s Bond’s Top 100 Franchises. While selection in no way reduces the need for exhaustive due diligence on the part of the investor, it is, nevertheless, a logical starting point in their search for a solid and supportive franchise system” said Rob Bond, president of the World Franchising Network and a 20-year veteran of the franchising industry.

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The National Minority Franchising Initiative (NMFI) has compiled its annual list of the Top 25 Franchises for Hispanics. The results were published in the April issue of PODER (“ability” or “power” in Spanish) Magazine, the successor to Hispanic Enterprise. A copy of the article and list can be found here. For a listing of the companies only, please click here.

The NMFI develops the list based on a rigorous analysis of several factors, including historical performance, brand identification, franchisee satisfaction, training, on-going support and financial stability. Another important determinant is the percentage of existing franchises that are Hispanic-owned, as well as the number of Hispanics in the franchisor’s top levels of management.

“Based on the results of this year’s survey, we are extremely pleased to notice both the increase in the number of Hispanic-owned franchisees, as well as the increased Hispanic representation among the top management. There is no question that the franchising community is increasingly aware of the economic power and underlying talents within the Latino community. Over time, Latinos will realize their full potential and the playing field will indeed be level. Hopefully, that day is not far off,” notes NMFI Co-Founder Rob Bond.

For a more complete list of franchise systems that wish to increase their Hispanic and other minority representation, please go to www.MinorityFranchising.com. The site lists over 500 companies committed to recruiting and supporting minorities, as well as resources that are essential to the evaluation process.

The NMFI also publishes an annual list of the 50 Top Franchises for Minorities for USA Today using a similar analysis. (That questionnaire can be found here.) The questionnaire notes, among other things, the number of minority franchisees currently in the system, the proportion of minority executives in senior management and whether the franchisor makes efforts to actively recruit minority franchisees. This year’s survey will be conducted in June 2009 and the article will be published in October. Franchisors will be contacted in June to see if they wish to participate. There is no cost to participate; the only requirement is the submission of the completed questionnaire and the most recent Franchise Disclosure Document.

The National Minority Franchising Initiative (NMFI) was created in 2000 to level the playing field and meet the needs of a largely under-represented market. The multi-faceted NMFI program, which involves the www.MinorityFranchising.com website, the annual Minority Franchise Guide publication and franchise-related events throughout the country, represents an effective and cost-efficient tool for franchisors to increase minority representation within their systems.

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The following is a guest post by Scott Kern, with Franchise Law Source.

Credit is tight. Prospective franchisees are finding it difficult to secure loans. Even the Small Business Administration Section 7 Guaranteed Loan is hard to come by in this environment. Despite the government’s guarantee of the largest part of the loan lenders are still holding back on financing franchise start ups.

First, are franchises being sold? And second, what are prospective franchisees doing to solve this financing problem?

The answer to the first question is yes, franchises are being sold. The number of prospective franchisees looking to work for themselves is only growing in these difficult times. Some people need to find a new way to make a living out of necessity. Thousands have been laid off. Others simply look at the way companies treat people and realize they need to take responsibility for their own destiny. Yes, franchise deals are still taking place.

The answer to the second question is that franchise buyers are finding alternative sources of finances. Bank loans are not the only way to finance a franchise business. People are borrowing more from within their own circle of influence. Your friends, family and business associates – maybe even a former employer – are surprisingly able and willing lenders. In fact, private loans can often be secured on better terms than you could get from a bank. Second, prospective franchisees are taking on partners. A limited liability company structure gives you the opportunity to bring in multiple partners, some of whom may be actively involved and some of whom may be silent investors.

Another significant change that I am seeing is that very qualified prospective franchisees are opting for lower capital investment franchises. A prospective franchisee with $300,000 to invest a year ago might have borrowed another $300,000 and opened a restaurant requiring an initial investment of $450,000-500,000, keeping a reserve for working capital and contingencies. Today that same prospective franchisee is looking at a mobile maintenance franchise with an initial investment of only, say, $200,000.

This trend of qualified franchisees taking interest in smaller franchise offerings is a boon to the franchisor that has kept its initial investment costs down.

Yes, franchises are being sold today. These deals just require more creative planning and financing than they once did.

We represent buyers in the due diligence investigation of franchise investment opportunities and review and negotiation of the franchise disclosure document and the franchise agreement. We are actually not seeing a decline in the number of deals coming through our door. The deals are just a little different than they were before.

Scott Kern practices franchise law nationwide. Mr. Kern’s franchise industry practice is a broad mix of work for franchisors. He also represents franchisees in the review and execution of franchise agreements. Before starting his own firm, Scott ran the Carvel ice cream shop franchise chain with over 400 locations. Visit www.FranchiseLawSource.com for more information.

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Terry Dunn wrote a good post on his franchise blog about how franchising seems to be a safer bet than starting your own business during these tough economic times.

Depending upon your source of information, we are headed into a recession or a depression or even a catastrophic cessation of all business activities. By any definition, things do not look promising and we are looking at a new economic landscape. The question arises as to how that will affect franchising. People will tell you that franchising is counter-cyclical, that it continues to thrive during a downturn in the general economy.

Terry then shows us a bunch of statistics showing that buying a franchise is indeed safer than starting a business on your own. I do have to slightly disagree with these numbers. Actually, it’s not that I disagree with them but these stats are from the 70’s and the 90’s and I don’t think they are relevant at all anymore.

These statistics consistently support the notion that franchised businesses are more growth oriented and survive at a higher rate than non-franchised businesses. For instance, a US Department of Commerce study is quoted on more than one site as showing that from 1971 to 1997, less than 5% of franchised businesses close each year, while those same websites cite a US SBA Study looking at the period 1978 to 1998, which found that 62% of non-franchised businesses close within the first 6 years of their opening.

Numbers speak for themselves, but is it relevant? I doubt it.

As Terry says it, “the question remains whether the current economic environment is so toxic that any business venture, be it franchised or self-invented, will find it impossible to thrive.”

What do you think?

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When buying a franchise, one of the greatest tools you have at your disposal is the ability to contact current franchisees. Not contacting them and investigating their opinion of the franchisor thoroughly would be a big mistake. When you contact a current franchisee, you get the opinion and outlook of someone who is in the same position that you will be in, should you decide to accept the franchise agreement. For this reason, their advice and input is more valuable than any other you might get. If you have concerns about what the franchisor is like, whether or not their claims are true, how many hours you might work, or how the business is run, a current franchisee may be able to help you make a more informed decision about buying a franchise.

Often, the franchisor will introduce you to a few franchisees, and even take you on a tour to see their locations and to talk with them. These meetings can be helpful, but you have to do extra work to really get the most out of learning from current franchisees. It is a good idea to go back to those franchisees after the tour to ask them any questions you did not feel comfortable asking in front of the franchisor, or to get any answers they might not have wanted to disclose in front of the franchisor. However, keep in mind that even if you are alone with these franchisees, they may not give you a full picture of the franchise as a whole. Some franchisees are paid to solicit new ones, and if the franchisees you speak to were given money, they may not be entirely truthful. Read more »

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You have to always aim at having a better franchise business operation by seeking to improve your methods and making them as efficient as possible especially at the level of your outlets. This is important in all businesses in modern times but especially in a franchising organization. The ultimate secret that will enable you to both streamline your operations and eliminate any possible weaknesses in a franchising Company is doing constant evaluation and asking all the right questions. Below is an example of such a question and its answer :

What are your thoughts on streamlining as well as eliminating existing weaknesses? Read more »

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If you thought that the only finances you need to come up with in order to set-up your franchise business are the initial franchise fees, you thought wrong. In order to set up your dream business, there are many other finances to think of.

Understand that the initial franchise fee is simply the money you put forward to obtain trademarks and rights you need to run your business. Don’t imagine that there are no other costs required to get the business off the ground. This of course is besides the fact that part of your profits will be taken by the franchising company in the form of royalties. In fact, to get a good idea about the various expenses that are expected to be fulfilled by you, take a look at the Uniform Franchise Offering Circular (UFOC), or the Franchise Disclosure Document (FDD) as it is now called. Read more »

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A quick post to let everyone know that the World Franchising team is currently compiling information about a large amount of franchise companies for the third Edition of Bond’s Top 100 Franchises.

How does that work? Well, we evaluate companies on the basis of historical performance, brand equity, market dynamics, franchisee satisfaction, the level of initial training and on-going support, financial stability and other key factors.

Each of the Top 100 Franchise companies selected will be featured in the book Bond’s Top Franchises, which will be published in December 2008, as well as on the dedicated website www.100TopFranchises.com.

If you are a franchisor or a franchisee and want your franchise to be considered, please call me at (760) 479-5790, or you can email me at “seb /at/ worldfranchising /dot/ com.

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