Franchising is all about branding
Consumers are drawn to the brands that offer products that satisfy their needs, fit their lifestyle, and excel in the areas they find most important. Franchise brands are growing rapidly and currently represent 40% of retail sales in the U.S.
Consumers everywhere face various choices about what to buy every day. In today’s crowded and ever-changing consumer marketplace, consumers are looking for more than just a quality product. They are in search of the differentiating factors between brands.
A strong brand image is priceless in such a competitive marketplace - consumers are naturally drawn to brands that repeatedly send a clearly defined, visual message, and back it up with consistency of the product or service.
The main value in franchising is the identity related to the brand. McDonald’s is the largest franchisor in the world with over 31,000 units. Due to consistency of product delivery and global advertising, McDonald’s has a major advantage over, say, Main Street Diner.
It is important to remember that since the brand’s value is more important than anything, including the service or the product, the customer’s loyalty is to the brand, NOT the individual franchisee. No consumer walks into a Dunkin Donuts franchise because they know the owner. They know Dunkin Donuts.
Yet it’s the franchisees that invest in the franchise and build distribution to support and build the brand. The synergy created by the contributions of the stakeholders to building the brand is the foundation of franchise success.
The AAFD Awards Cuppy’s Coffee Franchise with Contract Accreditation.
The American Association of Franchisees and Dealers (AAFD) announced today that Cuppy’s Coffee &
More, Inc. (Cuppy’s) has been added to the AAFD’s roster of companies earning AAFD Accredited Contract status. This special distinction is available to recognize new franchise systems, or new ownership and management teams, whose franchise agreements substantially conform to the AAFD Fair Franchising Standards, but that lack operating history to evaluate franchise relationships.
Cuppy’s is a specialty coffee drive thru franchise business that offers coffee, lattes, espresso and smoothie drinks. Cuppy’s is a new brand that is arising from the ashes of a much troubled brand known as Java Jo’z.
As part of its response to rebuff suggestions that its new ownership is still connected to Java Jo’z problems, Cuppy’s management has committed itself to a collaborative franchise culture that adopts high standards of mutual respect between franchisor and franchisees. Cuppy’s franchise agreement earned nearly perfect score of 99.5% conformity with the AAFD Fair Franchising Standards, the highest grade ever achieved.
Cuppy’s Coffee & More, Inc. is a Texas corporation wholly owned by Mr. Doug Hibbing and is headquartered in Fort Walton Beach, Florida. Medina Enterprises, Inc., an affiliated company which is owned by Mr. Robert Morgan, is the contractor for the system’s restaurants and other units, as well as a provider of office and staffing services to Cuppy’s. In May 2006, Medina acquired some of the Java Jo’z assets, including the Java Jo’z brand, which was later assigned to Cuppy’s.
The Java Jo’z brand was confronted with major issues regarding Trademark ownership, allegations of unfulfilled contracts and personal problems of its prior owner. Cuppy’s new management team assessed that the myriad of inherited problems required a radical approach to change. That approach involved re-branding, a fresh start on training and support, and most importantly a fresh start with its franchisee community.
Cuppy’s intends to build its new brand on a foundation of respect for the AAFD’s vision of Total Quality Franchising, and Cuppy’s management has committed itself to a collaborative franchise culture, and one that sets a new standard of mutual respect between franchisors and franchisees.
Doug Hibbing, the President of Cuppy’s Coffee is excited about the AAFD Accreditation, he states, “we are committed to support our franchisees, we have great products, and a great staff. Our primary goal at Cuppy’s is to build a business with a reputation for integrity; the AAFD Accreditation is a giant step in that direction.”
AAFD Chairman, Robert Purvin praised Cuppy’s Coffee for setting a new standard in fair franchising agreements, “Cuppy’s Coffee has demonstrated its commitment to fair franchising, the AAFD is delighted to welcome Cuppy’s Coffee to its list of Accredited Franchises.”
The story of Cuppy’s is a testament to the AAFD’s efforts to improve the franchising community and to reward Total Quality Franchising practices. The management team of Cuppy’s showed unprecedented willingness to accept the recommendations of the AAFD’s Fair Franchising Standards Committee.
What makes a franchise a good one?
A good franchise opportunity is not just about having a good idea! For a franchise to be good enough for you to invest in the franchisor has to prove that the model can be replicated. The franchisor has to demonstrate that it possesses the financial resources in a balance sheet and surrounds itself with the human resources necessary to develop the infrastructure to ensure growth of the brand.
A good franchise system will:
- Deliver a product/service that is in demand.
- Have a passion and dedication to the business!
- Offer distinct advantages over the competition - USP’s that will ensure franchisees are competitive within the sector.
- Provide a proven/piloted concept prior to franchising and as a result should have historical figures or track record to demonstrate the success of the business model.
- Operate successful company owned stores.
- Provide the framework for a profitable and sustainable business.
- Offer a fair and balanced franchise agreement.
- Identify a protected territory for the franchisee.
- Clearly state beforehand what support is provided to franchisees to help get them started i.e. assistance with premises selection, lease negotiation etc.
- Develop a comprehensive training program that is long enough for franchisees to learn the business.
- Publish comprehensive operations manuals.
- Trademark the Brand.
- Demonstrate their commitment to the ongoing development of their franchisees and franchisee profitability.
- Provide ongoing research and development in order to ensure the growth of the brand.
- Commit to providing a dedicated support infrastructure to support franchisees in the development of their business.
The Dagwood Sandwich comes to life!
Dagwood’s sandwich-making skills are legendary and have made his name synonymous with outrageous sandwiches. Wikipedia defines “the Dagwood sandwich” thick multi-layered sandwich made up of a wide variety of meats, cheeses, and condiments. It was named after Dagwood Bumstead, a character in the comic strip Blondie who frequently made enormous sandwiches. The comic strip was written by Chic Young.
Chic Young died in 1973, and his son, Dean, took over the strip, making every thought of Dagwood’s one of his own. And, over the past 30 years, Dean Young couldn’t stop thinking about opening a sandwich shop for Dagwood. He’s collected and created thousands of recipes over the years.
Now Dagwood’s Sandwich Shoppes have become a reality, the result of a partnership between Dean Young, who brings his creative genius to the arrangement, and International Marketing Systems (IMS), which has 17 years’ experience creating communications and franchisee-support programs for large retail companies and restaurant chains. IMS has worked with leading fast-food companies and with Disney University in Orlando, which runs one of the leading training programs to instill a corporate culture in thousands of employees. Its fast-food clients have included Popeyes Chicken and Biscuits, Wendy’s, White Castle and Subway.
Fans of “Blondie” need not be concerned that their daily dose of humor will be affected when Dagwood moves from making sandwiches in the comics to running sandwich shops. Young plans to keep producing the “Blondie” strip, which is syndicated by King Features, and appears in more than 2,300 newspapers around the country and around the world, and reaches an estimated 280 million readers every day. And he has been grooming his daughter, Dana Coston, to take over the strip when he decides to spend more time in his role as Dagwood’s alter ego – making new sandwiches.
When fans come to the restaurants, they will encounter Dagwood, Blondie and their comic strip friends. While Dagwood’s will be an entertaining experience, first and foremost it will be about excellent food. “Fans may come in the first time to see Dagwood’s new shop, but they’ll come back again and again because of the food,” Young said.
Recent Same Store Sales Rundown
Ryan of The Franchise Pundit recently posted same store sales for the first quarter of 2007 of some the country’s major food franchises:
Weather seemed to be the common culprit cited by management explaining why same-store sales fell during the first part of 2007.
- Panera Bread: During the four-week period, company-owned bakery-café sales declined 1 percent and franchise-operated stores’ sales increased 0.2 percent.
- Frisch’s: Same-store sales declined 0.8 percent at Big Boy outlets, while Frisch’s Golden Corral restaurants posted a same store sales decline of 5.8 percent
- Mexican Restaurant’s, Inc. (Mexican Restaurants, Inc. currently has 80 company operated restaurants, 19 franchise restaurants and one licensed restaurant. We operate 6 different concepts, which include Casa Ole, Crazy Jose’s, Monterey’s Tex Mex Cafe, Monterey’s Little Mexico, Tortuga Mexican Kitchen and La Senorita. While a large majority of our restaurants are located in Texas, we also operate restaurants in Oklahoma, Louisiana, and Michigan.)
- For fiscal year 2006, total system same-restaurant sales decreased 1.2%, Company-owned same-restaurant sales decreased 0.9% and franchise-owned same-restaurant sales decreased 1.9% from fiscal year 2005.
- Popeye’s Chicken & Biscuits:Total domestic same-store sales increased 1.6 percent compared to 3.3 percent in the prior year, and total global same-store sales increased 1.1 percent compared to 2.6 percent in the prior year. Company-operated same- store sales increased 9.0 percent, primarily driven by the re-opening of the New Orleans restaurants which were impacted by Hurricane Katrina.
- Carl’s Jr. Company operated same-store sales increased 4.9%, the seventh consecutive year of positive same-store sales for the brand.
- Hardee’s trailing 13 period average unit volume of $916,000 at the end of fiscal 2007 is a $42,000 increase over the level reported at the end of last fiscal year and the highest average unit volume for Hardee’s since 1995.
- Hardee’s was also able to leverage its strong same-store sales to reduce restaurant operating costs. Hardee’s restaurant operating costs for the year were 81.9% of Company operated restaurant revenue, a 260 basis point improvement over the prior year and the best performance Hardee’s has posted in this decade. Lower food commodity costs and the leveraging of fixed and semifixed costs as a result of our higher same-store sales were the primary drivers behind Hardee’s performance. Like Carl’s Jr., Hardee’s achieved this year-over-year improvement despite the absence of favorable worker’s compensation adjustments compared to the prior year.
Is the world ready for an organic pizza franchise?
Pizza Fusion thinks so. And so do the franchisees who opened the first Pizza Fusion franchise in Ft. Lauderdale last month.
Pizza Fusion was founded by college buddies Michael Gordon and Vaughan Lazar in February of 2006. With a menu of all-natural and organic gourmet pizzas, sandwiches, wraps, salads, desserts, beers, wines and more, Pizza Fusion is marketing to health and environmentally conscious consumers. According to the company, “By promoting the organic movement and practicing an eco-friendly approach in all operations of the company, Pizza Fusion is ‘Saving the Earth, One Pizza at a Time’.”
The grand opening took place Saturday, March 24, with over 600 guests showing up to celebrate the grand opening of the first organic pizza franchise (as far as we know).
The new franchisees are Michael Block, and Jeffrey and Sandra Yagoda. Michael Block is currently director of CoreGear, an outdoor sportswear company, and serves on the board of Voices For Children, a foundation that provides support and financial assistance to abused and neglected children. Prior to that he was a top executive for Hasbro, the world’s second largest maker of games and toys.
First Quarter Franchise Growth Outpaces Last Year
FranData a company that provides information about franchising announced that 2007 began with a lot of new franchises. There were 87 new franchise concepts identified during the 1st Quarter of 2007, which is nearly twice as many as were identified in the same period in 2006. The first quarter report saw new franchises in 57 different sectors - Coffee and Tea, Pizza, and Fitness/Amusement Centers seeing the multiple new brands.
FranData stated in its email “Of the 2,600 franchise brands that we see actively franchising, more than half of them could be characterized as “young” — that is, franchising for 10 years or less.”
FranData went on to say, “As a supplier trying to market to franchising, this is good news. Younger systems have more needs and fewer preferred vendor relationships already established.”
iSold It announces that it has troubles in an open letter to franchisees
David Crocker, Sr. Vice President of Marketing and Business Development for iSold It, LLC has posted on Blue MauMau an open letter to iSold it franchisees from Chief Executive Officer Ken Sully.
The iSold It franchise opportunity has been named “Hotter than Hot” and the “Best New Franchise for 2007″ by a leading national magazine. However, a letter currently circulating the Internet indicates this American Dream may have become an entrepreneurial nightmare.
Mr. Crocker stated, “In the letter, it says that we are considering litigation, reorganization or liquidation.” Regarding a time frame to declare bankruptcy, he commented, “I cannot comment on when any liquidation might occur.” When asked whether the eBay drop off store model works, he said, “The model works for some and doesn’t work for others. There are stores that are profitable.”
D’Angelo’s Celebrates its 40th Anniversary today with FREE Steak!
D’Angelo Grilled Sandwiches, New England’s favorite sandwich shop franchise, will celebrate its 40th anniversary with a free Steak and Cheese Sampling event today, Monday, April 9 from noon - 2 p.m. at all participating D’Angelo franchises throughout New England. In addition, D’Angelo will also donate a portion of One Pound Steak and Cheese sales that day to Easter Seals and The Genesis Fund programs.
Founded in 1967, as “MA Riva’s Sub Shop” in Dedham, Massachusetts, the company changed its name to Angelo, then to D’Angelo, for “Delicious” sandwiches. D’Angelo has served as a pioneer in lunch offerings, making it possible for guests on-the-go to enjoy fresh salads and sub sandwiches made to order. The D’Angelo brand was founded on a simple, honest philosophy: “Put the best quality meats, cheese and toppings in the freshest breads and serve it friendly and fast.” For the past 40 years, D’Angelo has built its reputation on its Steak and Cheese sandwich, which is its signature and top-selling menu item. D’Angelo sells more than 4.5 million steak sandwiches annually and unlike its competitors, D’Angelo Grilled Sandwich.
Franchise Risk Tolerance
In a sense, franchising is a method of business expansion whose primary benefit is risk minimization. In all human endeavor there is involved a learning process. This learning process requires going through a series of trial and error encounters wherein knowledge is gained by trying and failing, trying and failing again and again and eventually trying and succeeding.
This process is generally called the learning curve. In the context of franchising, the ideal situation is that the franchisor has gone through the learning curve and has learned the secrets of success for the specific business.
This is fundamentally why one would buy a franchise, to minimize risk and give one the best possible chance to succeed. The challenge to the prospective franchisee is that no two franchises are alike, and just because a company is using franchising to expand does not automatically mean that the business model is proven and profitable.
Franchising succeeds when each party derives a mutual benefit from the relationship. Franchisor, and Franchisee, must both derive financial benefit. If profitability is not shared, that franchise system is doomed for failure. If there is a mutually beneficial relationship then rapid growth and establishment of the brand is inevitable.
Risk is minimized only when the franchise system has proven the ability to generate a ROI and profits to a high percentage of its franchisees.
Often the so called “hottest” franchises out there are ones that the “newest” and there has no been enough time and experience for the model to be proven. The concept of risk minimization in franchising is implied, it is not proven for every franchise system.
It’s very important to determine the level of risk you are able to tolerate. If you wish to minimize the risk totally then you should be investigating franchise opportunities with a long track record of success in an industry that is not affected by advances in technology or the internet.
If you willing to accept more risk then you can consider some of the newer emerging concepts that offer you the ability to establish yourself early in the marketplace.
Ultimately there is always risk, the important questions is how much risk can you tolerate and how much risk is present in the franchise opportunity you are investigating.
Jim Coen, Mr. Franchise
I have learned franchising from the ground up. I’ve been a franchisee for a bad franchisor. I’ve worked for good franchisors and I’ve worked for marginal franchisors. I’ve helped many franchisees succeed.
I provide a consulting process that saves you time and money in your franchise search and provides you with the tools to make the right choice for you and your family.
Call: 617-469-3002
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