Franchise community starts video blog

The franchise industry seems to have unlimited potential. More and more starting entrepreneurs consider starting up a franchise and many business formulas have been turned into franchises over the last couple of years. Over the last year (2006) the franchise industry in the United States was responsible for nearly 10% of the nation’s private-sector economy.

To stay in touch with the current events on the internet, franchise community Franchise Circle.com has set up a video blog for franchisees and franchisors (Franchisor.tv). The site is set up to compete with the traditional online advertising since online video usage has exploded lately. Registered users can upload videos from their camcorder or mobile phone and store their (promotional) videos on franchisor.tv.

Eventhough Franchise Circle.com has proven itself as a professional networking site for the franchise community, I can’t really see how franchisors or franchisees should benefit from a video blog but maybe that’s just me. Have a look for yourself on franchisor.tv and tell me what’s your opinion.

Burgers and Bodybuilding

For quit some time now, fast food chain McDonald’s has been in targeted by nutritionists and health experts blaming the chain for (childhood) obesity in the USA. The 2003 documentary ‘Supersize Me’ by Morgan Spurlock featured experts that declared the obesity in the United States an epidemic. The documentary also shows how young minds become addicted to the good times they have while visiting a McDonald’s. McDonalds is known for it’s ‘Happy Meals’ and ‘Playplaces’ which attract young children to its restaurants. After the documentary McDonalds has countered critics by offering healthier foods like salads and apple slices but the fast food chain is still reluctant to switch to a healthier cooking oil.

Now McDonald's again faces threats to its image from a movie version of the 2001 Eric Schlosser book Fast Food Nation. Eric Schlosser is one of the leading figures in the USA in the battle against the obesity epidemic. This time McDonald’s took countermeasures to defend its image by setting up ‘R Gyms’ in seven of its restaurants. ‘R Gyms’ are high-tech mini-gyms for children that reward the kids with flashy videos if they do an exercise. The ‘R Gyms’ will replace the 5.500 Playplaces nationwide. The gyms are equipped with:

- Video bikes. The stationary bikes are hooked to video games kids can only play while peddling.
- Electronic hoops. The mini-basketball court gives electronic feedback like cheers and broadcasts "Great Shot!" when a kid makes a basket.
- Climbing equipment. Think rocks of moulded plastic. Monkey bars. And some have climbing ropes.
- Video dance pads. Kids dance on electronic pads that signal video screens to show the moves.

Will the gyms really help McDonalds build a health image or is it just a temporary solution to deflect the critic they will receive from Eric Schlosser new movie? Maybe it is already too late for McDonalds to get its name associated with health and exercise. Let me know what you think.

Tips for success in franchising

Looking for topics to comment about in this weblog I come across many articles in which franchising experts give their view on what defines a successful franchise. This, of course, is useful information for anybody that’s thinking about becoming a franchisee. So over the next couple of weeks I’m trying to create a list of tips on how to become successful in franchising. Here’s what I have so far:

• Good personal relationship between franchisor and franchisee
• Flow of ideas between franchisor and franchisee
• When franchising abroad, adapt to the local customs, laws and taste
• Franchisees should set financial and ‘quality of life’ (non-financial) goals
• Franchisees should create a detailed business plan to attract potential investors
• Franchisees should be aware of all of the costs of a franchise (franchise fee, advertising fee, office rent, staff wages, etc)
• Before starting a franchise, talk to other franchisees of the same franchisor

Leave a comment if you have a useful addition to this list or if you disagree with any of tips already listed. I hope it will result in a list of quality tips for potential franchisees. I will re-post the final list at the end of January.

Passion in franchising

It seems obvious that if you’re starting your own business you’d pick a line of work that you feel passionate about. It probably isn’t easy to find an artist crunching numbers in an accountant’s office or a vegetarian working at a fast-food restaurant. In most cases it is much easier to get up in the morning if you’re working in a line of business that you feel strongly about.

For many small business owners it is required that they are passionate about market environment they operate in, considering the long hours, high risk and low income. However for franchisees it isn’t always necessary to find a franchise in a field of their interests. Isn’t it true that most franchisees spend the bulk of their time with standard management operations that are pretty much the same for every service or product? So it could be that franchisees are better off just being passionate about franchising in general rather than in a specific product, service or line of business. If you are choosing a franchise entirely based on your passions you could end up running a business that doesn’t match your skills or experiences. Or is it impossible to successfully operate a franchise that is not close to your heart? The question I’m trying to raise is:

Does a franchisee need to be passionate about the product or service to be successful?

Leave a comment and tell me what’s your opinion.

(picture from bigfoto.com)

Why (not) franchise?

As I was reading some articles on the internet about franchising I came across two very opposing points of view on franchising.

The first article was written by the British Franchise Association (BFA) based on a franchise survey BFA conducted in 2005. The article lists 10 reasons for anybody that is starting a business why you SHOULD get into franchising. The second article is written by Michigan-based attorney and expert on small business law: Fred S. Steingold. In his book ‘The Complete Guide to Buying a Business’ Steingold gives 10 reasons why you SHOULDN’T get into franchising. The two articles pretty much cancel each other out. I’ve made a list of some of the most contradicting arguments:

British Franchise Association (BFA)	Fred S. Steingold
Proven success Franchising has been proven to be one of the safest ways of starting a new business compared to other business start-ups. 88 per cent of franchisees reported profitability.	High start-up costs In addition to the non-refundable initial franchise fee, there are also usually high start-up costs associated with furnishing a franchise
Safety Franchises operate under an already-established brand that has been developed and proven in the marketplace.	Limited independence Most franchisors impose price, appearance, and design standards on franchisees, limiting the ways they can operate the franchise.
Strategy in place The franchisor has a marketing, sales and advertising strategy to promote the franchise network.	Advertising fees Many franchisees are obligated to make regular contributions to the franchisor’s advertising fund, without any guarantee the contribution is being used for their specific franchise.
Reselling the franchise Franchising gives you the opportunity to build a profitable business that can be resold, if you choose to.	Restrictions on post-term competition Due to noncompetition clauses built into almost every franchise agreement, franchisees are not allowed to become independent business owners in a similar business after termination of the franchise agreement.
Support A good franchise will offer you a proven business format with initial and continuing support. Franchisors often have field support staff to help franchisees	Lack of legal recourse As a franchisee, there is little legal recourse that you can take if you are wronged by the franchisor. In the USA less than 6% of the franchise-related complaints are being investigated.

Both parties (BFA and Steingold) have fine arguments to support their case but I think it’s smart to keep in mind where they’re coming from; The British Franchise Association (BFA) benefits from a growing number of franchisees and Mr. Steingold (attorney & business expert) seems to be more of an objective observer. Therefore I tend to agree more with Mr. Steinfold than with the BFA on this issue. Tell me, what do you think?

Introduction

Welcome to my weblog!!

My name is Thomas Nomden, I’m 23 years old and I’m a student Small Business & Retail Management at the Hanzehogeschool in Groningen. To find out more, have a look at my profile.

This blog will feature some articles, facts and opinions about Franchising. I hope to raise as much discussion as possible about this topic. The blog will mainly feature articles about developments and current events in the world of franchising. So leave your comments, suggestion and remarks as this blog intends to find out what your perspective on franchising is.