Dear Clients,
It is Now Time for Annual Document Updates:
The FTC rule requires that franchise documents be updated at the end of each fiscal year, which in most cases is December 31. The registration states have the same requirement. This means that we need to incorporate changes that have taken place during the year, and also that we can update your documents to our latest trends, style and format. (We see things all year to be incorporated during the update.) We have contacted you to begin this process, which we should start now. After the update our attorney will provide a review of your documents, and you will be ready for the next year!
Franchise Success Stories:
We congratulate these development clients on their franchise sales success:
Housecalls Mower Repair, Ewing, New Jersey, sold 4 franchises
Buff & Coat, Eagan, Minnesota, now with 30 franchises!
Valley Goldmine, Gilbert, Arizona, 28 company and franchised locations
Yogis Grill, Mesa, Arizona, now up to 7 franchises sold
Salons by JC, San Antonio, Texas, 3 new franchisees in 2011!
Cactus Valley Pool Supply, Mesa, Arizona, now with 20 company and franchised locations
McDonald’s Data:
Frequently the subject of McDonald’s franchise fees, etc. comes up in discussion. Here is the data:
Number of franchised stores in the United States: 12,484
Number of franchised stores outside the United States: 14,155
Number of company owned stores: 6,370 (You can have company and franchised outlets)
Franchise fee: $45,000. Term of franchise: 20 years
Liquid cash requirement: $500,000
Owner/operator: All, no absentee ownership permitted
Total Investment: $1.07 to $1.89 million
Percent of franchisees owning more than one store: 86%
Total system revenues: $26.4 billion
It looks as if they are mostly selling new franchises to existing and successful franchisees.
And, their same store sales were up 7.4% in November. People criticize McDonald’s, but they continue to lead the way in their category.
FDD Item 19, Financial Performance Representations:
Recently we reviewed a FDD/Franchise Agreement of a competitor of one of our clients. Item 19 included about 30 pages of sales and income projections. The FTC (Federal Trade Commission) does allow projections, if they can be supported, but we see VERY FEW franchisors including projections in their FDD, and we advise our clients to stay away from them. Most of the time we find that franchisors are showing, in Item 19: Gross Revenues, Cost of Goods, and Gross Profit. The understanding is that they can then discuss the other expense elements, and perhaps provide some percentages. Ideally the potential franchisee constructs their own profit and loss statement from what is provided.
Latest Entry in Sub Wars: Pei Wei Offers Asian Sandwiches:
Pei Wei Asian Diner has debuted two new sandwiches to its menu. Pei Wei is the casual dining arm of Scottsdale, Arizona-based P.F. Chang's China Bistro. The new sandwiches just hit Pei Wei's menu and are inspired by submarine sandwiches found in Vietnam. Pei Wei is offering one pork and one chicken sub-type sandwich on its menu and is surveying customers on the new item. It is the first foray into sandwiches for Pei Wei. –The Phoenix Business Journal
Unemployed Turn to Franchises, as Traditional Jobs Fade
Bates Kennedy once went door to door from Virginia to Alabama to sell spare parts to textile mills. But when many of the looms quit spinning out yarn and the industry moved overseas around the turn of the century, the Greenville-based father of then-newborn twins decided it was time to look elsewhere for a stable job.“When your top two or three customers go bankrupt, it’s time to find something else,” Kennedy said.
In North Charleston, Anthony Brown wanted a job he could rely on as well. He worked at armored vehicle-maker
Force Protection in Ladson as an equipment trainer, but witnessed a cycle of layoffs during his five-year tenure. "I started to wonder if I might be next", Brown said.
Separately, the two left their jobs and found a living in the world of franchises. Bates Kennedy owns the Batteries Plus franchise in West Ashley, that now is offering thousands of light bulbs in addition to batteries. Brown selected 360 Clean, a Charleston-based janitorial service. --The (Charleston) Post and Courier
Some franchisors indicate that they are seeing more of this trend, and that it is fueling franchise sales. How about you? What are you doing to tap this potential market?
Here to Help You:
How can we help you? Have a question about some aspect of franchising? Sales and marketing questions? Want advertising recommendations? Feedback on franchisee relations? Need some work on your documents? Want to apply to a registration state? Would you like to access our broker group? Just let us know.
We hope that you had a successful year in 2011 and that you are planning for an even better year in 2012!
Sincerely
Your Franchise Consultant
