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Author Joel Libava and I have been colleagues and friends for a few years through our relationship with Small Business Trends and its founder, Anita Campbell. Of course, living in Cleveland and seeing each other from time to time doesn’t hurt either.

I’ve watched Joel grow his Franchise King brand over the years. Naturally, I was thrilled when his publisher sent me a copy of his new book, Become a Franchise Owner! The Start-Up Guide to Lowering Risk, Making Money and Owning What You Do.

You don’t need to be a franchise owner to enjoy this book

Become a Franchise Owner is an interesting business book on several levels. First, it’s a living, breathing case study of how Joel Libava (@FranchiseKing on Twitter) took an area of business that he had experience in and is passionate about, and built a thriving brand around it, in just a few years.

Become a Franchise Owner

Next, it takes you behind the franchise curtain. The book does it in a way that not only educates you, but also provides intelligent guidelines and advice that will serve any business owner – not just someone interested in owning a franchise.

In a few short pages, Libava gives you context around the history of franchises. Here’s a tasty tidbit of trivia: franchising actually started in the Middle Ages when Medieval courts or lords started granting important individuals licenses to operate certain businesses.

Then he moves into the Colonial era noting that this is when franchising really started to take hold. “The local sovereign or lord would authorize individuals to hold markets or fairs, operate the local ferry, or hunt on his land. The concept expanded to the kings who would grant a franchise for all types of commercial activities including building roads and even brewing ale.” This eventually extended to entrepreneurs who took the risk of establishing colonies, and in return were granted protection of the Crown in exchange for paying taxes or royalties. So now you know the first connection between franchises and kings.

Even if you have no interest in owning a franchise, you’ll find many other creative ideas about developing partnerships and opportunities that don’t require the rigor that owning a franchise does.

Find out if franchising is right for you

Chapters 3 through 5 are devoted to finding out if franchising is right for you. Chapter 3 is titled “Take the Franchise Quiz,” but you won’t get to do that until you read the entire chapter and find the website URL that directs you to the quiz. (You’ll have to buy the book for that one. I already gave you the cool franchise history lesson; don’t push it).

Chapter 4 gives you an in-depth explanation of the franchising model; chapter 5 goes over the results of your quiz. By the time you get to chapter 6, you will not only know if franchising is a good business model for you, but you will also know more about franchising than most of the people who have ever bought a franchise knew at the time they bought it.

Insider secrets … and what no one wants to tell you

Joel "It's good to be King" Libava Let me make a confession. I have no interest in franchising … buying, creating or running one.

But I was riveted by Joel’s writing style and the plethora of insider experiences that he shares in this book. You’ll find excerpts of conversations with a sort of “look at the camera” commentary right in the middle of the story! While I can understand that some readers may find this distracting, I loved it.

A great example is the story of “Beth,” who came to one of Joel’s seminars and asked about how to sell her franchise because she didn’t like running it. After Joel asked her what she didn’t like about it, he interrupts the story with a sidebar. He says:

“This is probably a good time to share a couple of things about me: I don’t do a real good job with two important things…. The ‘Wait five seconds before you respond’ option… and not being able to stop from saying what’s on my mind…. So, back to Beth…”

As you read on, you discover that “Beth” doesn’t like selling. Yet she purchased a direct marketing franchise where she knew selling was required. She just didn’t think it would be that hard.

This is where Joel dispenses some valuable insight that seems obvious when you read it, but it’s uncanny how many people skip it:

Talk to existing and former franchisees as part of your research
Write a formal business plan
Have enough money in reserve to get through the lean years of startup

Practical things your mom would tell you if she knew about franchising

I now know and understand why people don’t start out working with a franchising advisor. They simply don’t want to do all the homework needed to make a smart decision. This is where Become a Franchise Owner really shines.

Each chapter leads you through the franchise decision-making process in a way that doesn’t burst your bubble or stomp all over your dream of becoming a business owner. It’s clear to me that Libava’s mission with this book is to actually make those business ownership dreams come true.

An even-handed tell-all about franchising

I’ve read books about franchising before, and one thing I’ve noticed is that they tend to support one line of thinking – their line. Become a Franchise Owner doesn’t do this. Libava tells it like it is even if it includes opinions that differ from his. Take this example of going to “Discovery Days.”

He says ” I don’t recommend traveling to the franchise company’s headquarters unless you’re at a point in the process in which you feel that you have a good handle on the franchise concept and that you’re convinced that it’s the right fit for you and you for it.” But then he goes on to point out how some members of his industry disagree. “They feel that if you’re invited to a Discovery Day, you should just go.”

Then Libava gets into a fantastic car-sales example that outlines exactly why franchisors want you at Discovery Day — and why you should not go until you’ve done all your research.

Don’t even think about a franchise without reading this book

If you or someone you know is unemployed or contemplating owning a franchise, then buy this book yesterday. It’s that good. Not only that, it’s really fun to read. You’ll find this book is a touchstone of truth in a franchising environment that is overwhelming at the very least.

And the rest of you business book junkies are going to love this book for its sheer educational and entertainment value. I feel at least a hundred times smarter about the world of franchising than I did before I read it.

Read Become a Franchise Owner and you’ll become a smarter business owner and a happier franchisee.

Become a Franchise Owner Gives Insider Secrets About Franchises

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The Top Franchise Trends for 2012

Dec 22nd

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There’s certainly no shortage of dynamic concepts to explore in franchising in 2012. Finding opportunities to get into a business of your own is the easy part. Finding a willing financial partner to help you invest in a franchise business is still a bit more challenging.

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For example, if you want to get involved in a franchise business that’s focused on renewable energy and maybe even sustainability, no problem; do a Google search of “green franchises.” Maybe you’re comfortable calling on customers and giving sales presentations; there are several opportunities (such as Sandler Training) available for you. Do you like food? (Silly question!) If you’ve always wanted to own your own restaurant, there are hundreds of unique food franchises, such as these gathered by Franchise Direct, to choose from.

Not all franchises require a commercial space; Pillar to Post and Mosquito Squad offer ways to be your own boss without having to negotiate a lease for the business. Another advantage of investing in a home-based franchise is that you can be up and running pretty fast. One more thing: Remember that your customers aren’t going to find you if you’re sitting at home. You’re going to have to do some serious networking. Your networking should always include being on the lookout for strategic referral partners, as John Jantsch suggests.

Some Things Haven’t Changed

In last year’s post on the top franchise trends, I wrote about the fact that small business lenders weren’t all that excited to lend money for franchise startups. As much as I don’t want to start going all negative here, it’s still true today; lenders aren’t lending enough, The New York Times reports, especially to small businesses.

I also wrote about the fact that homes had gone down in value: “Real estate is usually a major part of a franchise candidate’s net worth statement, and that’s now a problem. Home values are low, and in some cases, homes are underwater.” According to Carole Cohen, a Cleveland Realtor who’s really dialed into the market, “Home prices in our area are down 26 to 28 percent.” (Her income took a hit because of the low prices.) Carole works for a family-owned real estate company, but there are real estate franchises, too, as this Red Carpet report points out.

What Has Changed?

The franchise industry’s focus has changed. By “industry,” I really mean only one part of the industry, but it’s a big one: The International Franchise Association, which is an association that promotes franchising.

I’m still trying to decide whether the combination of social media, and the business transparency that tends to be associated with it, has turned the IFA into a more powerful industry force, or not. On one hand, some of the higher-ups from the IFA, like Matt Haller, the Sr. Director of Communications, are starting to get a bit more active on Twitter, and have started to write some blog posts. However, the growth of social media has evened the playing field in the franchise industry; now voices outside of the IFA–independent ones–can be heard loud and clear, too. The industry is changing, and anyone with an Internet connection can watch some of the changes that are happening in real time.

For 2012, the IFA has decided to focus on two areas in 2012; one is nothing new, but the other one…

1. Military Veterans

Veterans who are interested in possibly becoming franchise owners will undoubtedly run across the VetFran program. This program, founded in 1991, features 400-plus IFA member franchisors that offer training, mentoring and financial incentives to veterans interested in small business ownership and/or a career path in franchising. To date, approximately 2,000 veterans have become franchise business owners through this popular program.

I’ve personally assisted with our veterans, and have even been able to help a few of them become franchise owners. Today’s veterans have three things going for them when it comes to operating a franchise business. They are:

Finely-honed leadership skills
Personal discipline
Comfort with technology

I’m all for helping the men and women who’ve made major sacrifices to help us keep our freedom. Thousands of veterans are returning home from our wars, and need jobs and opportunities. For veterans who want to become business owners, franchising is certainly one path that they should look into.

Of course, they’re going to need small business loans in order to start these franchises, and that’s the part that worries me. That’s because a large number of veterans have had several tours of duty. It’s not like they’ve had a chance to build up their nest eggs. Hopefully, banks will come up with some creative loan programs to help veterans get into business for themselves.

2. Pro Athletes

There’s really only one reason that the IFA is courting professional athletes, and it’s pretty obvious; the athletes don’t need small business loans. Can you think of any other reason?

According to the Bureau of Labor Statistics, there were about 16,500 professional athletes and sports competitors who held jobs as of 2008. This includes every sport, including all of the athletes who aren’t ready for prime time yet (that is, the minor leagues).

The thought of having 16,000 wealthy prospective franchise owners eventually searching for business opportunities in the world of franchising is a nice one. After all, what franchise development director wouldn’t want to have a slew of highly qualified candidates like Magic Johnson requesting information about a particular franchise concept?

While I don’t see hundreds of former professional athletes clamoring to become franchisees, if enough of them do, it could be terrific publicity for the franchise industry. I just don’t see it as a game-changer. (That sporting reference was unintentional!)

2012 will be a very important year in franchising. If the U.S. economy continues to struggle, growth will continue to be sparse in the franchise industry. But if things finally do start to turn around, there’s a lot of pent-up demand for the great products and services that franchises provide to both consumers and businesses.

If lenders start making more loans available for people who want to start businesses, there’s a large pool of prospective franchisees sitting in the wings, waiting to take their shot at The American Dream.

The franchise community is ready and waiting to help them do just that.

Franchise Photo via Shutterstock

The Top Franchise Trends for 2012

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Pros and Cons of Buying A Franchise

Dec 9th

As with anything in life, there are pros and cons involved and it’s important to consider every aspect of them. In this piece, we’re going to take a look at the pros and cons of buying a franchise as a way of getting into your own business. So let’s get started.

Pros

Operating system:

This is the system developed by the franchisor that enables the business to be easily replicated by franchisees. This includes standard operating procedures and methods. By getting an already-established operating system, it means you don’t have to start from a blank sheet of paper creating everything yourself for your business. When I think of “systems” I think of McDonald’s. They’re the franchise industry standard.

Formal training program:

Good franchisors provide good training to franchisees. This usually includes classroom-style training at corporate headquarters. Franchisees are taught things like pre-opening procedures, daily operations, marketing techniques, hiring practices, software use, and more. There’s usually on-site training also, right at the new franchisee’s location.

Read more about franchisee training at Entrepreneur.com.

Specific marketing and advertising plan:

Part of the general business plan, the franchisor will have a proven, detailed plan that allows its franchisees to rapidly get to market with their products or services. Here’s what a franchise marketing plan looks like, courtesy of the folks at Palo Alto Software.

One new trend in franchise marketing involves automated solutions that are designed to help franchisees at the local level. Companies like Balihoo are leading the way with this new technology.

Product supply line / purchasing power:

When the franchisor buys products that the franchisees will use or sell, there’s a discount involved, because the franchisor is really purchasing these goods on behalf of a large number of franchisees. The franchisor has bulk buying power. This makes it tough for an independent business to compete on price with the franchisee. 7-Eleven (over 36,000 stores worldwide) is one franchisor that does this quite well.

Support staff:

Usually based at the franchisor’s corporate headquarters, the support staff can help franchisees with whatever problems they are experiencing. These support areas include, marketing, technology, sales, real estate, and operations. Some franchisors have field reps that go out to visit and assist franchisees at their locations.

Cons

Rules:

Part of the attraction of the franchise business model is of course, the system. For a system to work properly and effectively, the users of the system must follow it closely. The franchise operations manual contains pages and pages of rules that franchisee’s must follow.

For instance, if you’re a franchisee of Ace Hardware, there will be certain items that you must carry in your inventory. If you invest in a Seattle’s Best Coffee franchise, you’re going to have to be open certain days and times. You’ll also have to purchase and use the technology that the franchisor has chosen. Everything that you’ll need will be disclosed to you, before you sign the franchise contract.

Complex legal documents:

All franchisors that are registered in the United States must have a Franchise Disclosure Document (FDD). All franchise buyers must be presented with the FDD before they are permitted to purchase a franchise business. There are 23 items listed in this document, including specific information about the executives of the franchise, litigation, start-up costs, franchisee obligations, franchisor assistance, and information about site selection, territory restrictions, and more. The actual franchise contract is included in the document, and it’s written in fairly complicated legalese.

Reputation management:

Your local reputation is only as good as your franchisor’s. If the franchise brand runs into trouble, you will probably suffer at the local level. Case in point: a pretty distasteful video that two employees of a local Domino’s Pizza franchise filmed, was posted on YouTube in 2009. Things got so bad that the president of Domino’s decided to film an apology and put it up on YouTube, himself. Dominos franchisees were definitely affected by this negative publicity.

Limitations on product/service offerings:

If a franchisee owns a franchise like SignsNow, he or she is only allowed to sell signs, banners, and related sign materials. If the franchisee wants to add window cleaning services to the business, if it’s not in the franchise agreement, then it’s not going to be permitted.

* * * * *

When it comes time to decide on buying a franchise — or not buying a franchise — you will have to weigh these pros and cons. You know your tolerance level for things such as needing to follow rules … versus making your own rules. You also know whether you are the type of person who can create something from scratch, or whether you are more successful when systems and processes are already set up for you. You will need to think long and hard about what is right for YOU.

Pros and Cons of Buying A Franchise

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Will The Standard & Poor’s Downgrade Impact New Franchise Sales?

Aug 19th

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It just got a little tougher to predict the psyche of the current crop of would-be franchise owners, now that Standard & Poor’s has lowered its long-term sovereign credit rating on the United States of America from AAA to AA+.

In addition to lowering the U.S. credit rating, Standard & Poor’s stated, “We have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy.” Sounds like all the bickering that took place in Washington contributed to the downgrade, and there’s probably more of that to come.

Predicting the effects of an economic downturn on new franchise sales used to be a lot easier. If the downturn involved lots of unemployment, especially in middle management and executive areas, franchise interest increased. In addition, there was lots of interest (no pun intended) from lenders; they wanted to loan money to qualified franchise candidates.

Obviously, things are quite different this time around because of the small business lending situation, especially with startups. Although there’s been a little light at the end of the tunnel, lenders still aren’t that anxious to approve franchise startup loans, and that’s impacted new franchise sales. But franchisors aren’t giving up; some of them have taken matters into their own hands, and are intimately involved in the loan process from day one.

One such franchisor is Shelley Sun, one of most dynamic franchise professionals I’ve ever met. Shelley is CEO of Brightstar Franchising LLC, a Chicago-based senior services franchise. According to a recent article in the Wall Street Journal, fewer than 10 percent of BrightStar’s 177 franchisees were able to secure loans. This prompted Shelley to hire a financing specialist to assist franchisees with the loan process, and it’s worked; 75 percent of her franchisees are getting their small business loans approved. Other franchisors are starting to follow her lead, so if you know someone who’s been downsized who specializes in small business loans, there could be some opportunities for them in the franchise industry.

Franchisors are a pretty entrepreneurial bunch; I’m confident that they’ll continue to come up with innovative ways to sell new franchises, as long as there’s a captive audience. But it’s the “captive audience” part that concerns me.

The uncertainty that’s been created by Standard & Poor’s downgrade could make it a lot more difficult for the current crop of franchise candidates to pull the trigger and become franchise owners. They may actually decide to skip franchise business ownership altogether, and make the fear-based decision of jumping back into the job market.

In a scenario like that, not only will franchisors lose new franchise sales, but the franchise candidates who decided to re-enter the job market could find themselves in an incredibly competitive arena with people who have been out of work for months….even years.

Here are some suggestions for those interested in exploring franchise ownership options in uncertain times:

1. Put together a detailed net worth statement. You need to know exactly where you stand financially before you start looking at any franchises.

2. Involve your spouse, significant other or anyone else that will be affected by your decision to become a business owner; their insights will prove to be valuable.

3. Align your top skills with franchise opportunities that will allow you to use them for maximum benefit. For example, don’t invest in a franchise that requires the owner to make cold calls all day, fivve days a week, in order to get customers, if you’ve never been in sales.

4. Go slow. Explore the franchises you’re interested in at a slow but steady pace.

5. Become an expert at fact-gathering. Ignore anything you hear during your research that’s hearsay.

6. Engage the services of a competent franchise attorney when you get close to decision time; don’t hire a general practitioner

7. Try to work with an SBA Preferred Lender located in your community. They can help streamline the loan process

8. Be prepared. Investing in a startup franchise business is a long-term play; you’ll need to forego a paycheck for awhile, so make sure you’re in a position to do that. One more thing: In volatile times like these, you’ll want to make sure that you have some extra working capital available to weather any more economic storms, so make sure you figure that into your business plan.

9. Find a mentor. Focus on finding a very successful franchisee who is willing to be one phone call (or one email) away during your first few months as a franchise owner. You’ll save yourself a lot of aggravation. This should be in addition to any support that you’ll be receiving from your franchisor.

10. Go back. If you decide to move forward, one way to work through the nervousness you’re going to be feeling is by going back to the moment you made the decision to become a business owner, and try to re-live that moment. Something compelled you to do what you’re about to do. Is that “something” still there? If it is, you know what to do. If it isn’t, it may be time to move on to something else.

Even in volatile times, becoming a franchise owner is a viable option for those seeking change. If you’re thinking of exploring your options, doing so carefully and methodically will go a long way.

Will The Standard & Poor’s Downgrade Impact New Franchise Sales?

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Want to Franchise a Business? 5 Sacred Rules to Become the Next Great Franchise

Jan 20th

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I’ve recently been engaged to help sell a very successful national franchise company and been able to observe firsthand many reasons why a franchise company grows to $10 million in sales through 600 nationwide locations. Last year I also worked on the other end of the spectrum, helping two business owners locate the necessary capital and expertise to begin the journey of becoming the next great franchise company.

These two experiences have helped deepen my understanding of the five Sacred Rules that distinguish great franchise opportunities. I offer them here, in case you are considering converting your business into a franchise company.

Rule #1: Make your partners profitable.
This first rule sounds easy, but it often gets obscured by the economic pressures you will begin to feel preparing your financial projections. First and foremost, your concept must allow your franchisees to make a significant profit. The more the better.

Yes, a unique, exciting concept is helpful in attracting attention and selling franchises, but the business process and procedures, both operations and marketing, must give your future business partners (franchisees) the opportunity to be successful financially. The more successful they can be, the more successful your franchise company will become. If you maintain focus on this rule, many of your other challenges will become much smaller.

Rule #2: Have a great answer for the question, “What have you done for me lately?”
Creating ongoing value is critical for a successful franchise relationship. Once you have trained your franchisees and helped them establish their businesses, the value the franchisor contributes to their future success will diminish with time, at least conceptually. Are your recipes unique and always changing? Does your scheduling system make your franchisees more efficient and profitable? Is your marketing process effective and inexpensive? Is your budgeting software critical to profitable projects? Does your real estate department help find great locations? These and other questions are ones franchisees will ask.

While a strong franchise agreement will protect the franchisor, the objective is to create a win-win relationship, and to continually innovate to make your business, service, marketing and products better.

Rule #3: Quit or hire.
Keep in mind you are embarking on an entirely new business endeavor in which you have no practical experience: franchising. You are no longer running your business and training others how to do the same; you are the CEO of what you hope will become a successful national franchise company.

I’ve seen many companies fail and wind up entangled in the legal system because they never make the full commitment to their franchise company. Hiring a franchise development company to create marketing and sales documents and prepare your Federal Disclosure Document is enough to help you sell a couple of franchisees. But if you want to become a meaningful and successful company, you have to support your earliest partners and make sure they are successful.

Christian Faulconer, CEO of Franchise Foundry, offers some good advice here: Remember, if you decide to build a franchise system around your successful business, it’s like starting a second business. Selling your products or services to your customers will still require significant time and effort, but now you also have to find time to build the franchising infrastructure and market and sell your franchise opportunity. It can seem like you are running two separate businesses, and the demands can become overwhelming without the right partners.

Keeping your current full-time job as president of your business and then working in your startup franchise company almost never works out. Consultants don’t cut it, either. Make a commitment and either quit your job as president or hire someone to run the franchise business, but recognize you probably cannot be successful at both jobs at the same time.

Rule #4: Raise capital.
There are two reasons for this sacred requirement. First, it is a great reality check and screening mechanism. When you begin to talk with others, friends, customers and especially franchise consultants, you’ll hear only positive feedback. If you want to really hear the truth, ask for a check.

Consultants will tell you the idea is a sure success because they have a hammer and you are the nail. Friends want to support you and it is always easier to praise and encourage than provide constructive feedback. Your customers already love your service, so they are not the best ones to offer feedback on the viability of national expansion.

Kert Gennings is the COO of Boardwalk Fresh Burgers and Fries and has grown two large food-service franchise companies. He offers this thought: “Preparing a formal business plan for converting your company into a franchise company is a very enlightening exercise as it will help you crystallize your thinking. Once complete, use that document to raise the money you will surely need to have a fair chance at success. If you cannot raise the money, listen to what the marketplace is telling you. Not that you have a bad business, but that perhaps it is not ready for national expansion.”

Secondly, you will need the money you raise to help with marketing, sales, franchise support, registration in states that require it, and hiring a person to help run your old or new business (see point 3).

Rule #5: You must have a great selling process (selling is service and vice-versa).
You must have a process to sell your franchise to people you do not know. Ninety-five percent of your customers who tell you they are interested in becoming a franchisee will never write you a check. And even if all of them do, it is not enough to create a viable business. You need to sell to people you do not know. All successful sales are the natural outcome of a successful process. If you want a great example of an automated process, you can visit Process Peak.

Keep in mind, your initial franchisees will be early adopter personalities, risk takers. They will become franchisees because they like ground-floor opportunities and are easier to sell based on a concept and an opportunity. However, when you update your FDD, you are required to list your current franchisees (with contact info). Those people will become a critical part of your sales process weather you like it or not. The key to your long term-success is how happy you make those early franchisees, and if you are cutting corners to save money or because you are not committed to the idea of franchising your business, their negative comments to prospective franchisees will really hurt future sales.

Keep in mind that franchising is a heavily regulated industry. The IFA has developed a process for selling franchises called FranGuard. Your sales team should be familiar with that process and the steps you need to take to protect your system as you sell franchises.

Becoming the next great American franchise is a worthy goal, but there are many challenges along the way. Make sure you’ve done all of your research and identify partners who are truly vested in your future success.

Want to Franchise a Business? 5 Sacred Rules to Become the Next Great Franchise

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The Top Franchise Trends for 2011

Dec 22nd

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The business model of franchising has impacted our economy ever since the 1850s, when the first franchise business was created by the Singer Sewing Machine Company, and I’m very proud to be a part of this exciting industry.

As of this writing, there’s been a serious reversal to the statement above about how franchising affects our economy. Now, the economy is affecting the franchise industry, and that in itself is a major trend worth discussing.

First off, there’s the continuing lack of traditional small business startup funding. This makes it a lot harder for would-be franchise owners to become franchise owners. Some of the more resourceful prospective franchise owners are looking at alternative lending, and are succeeding at launching their franchises in this way.

Secondly, unemployment still remains high, and in 2011, no major gains in job creation are being forecast.

Traditionally, downsized middle managers and executive-level employees have been a popular target of most franchisors. This target group usually has a decent severance package that they’re able to survive on for a bit, and they’ve also typically been able to accumulate a decent amount of savings, adding to their net worth. (Franchisors always look at net worth statements, as they’re a major qualifier.)

Real estate is usually a major part of a franchise candidate’s net worth statement, and that’s now a problem. Home values are low, and in some cases, homes are “underwater.” (For instance, the housing market in Las Vegas is currently 80 percent underwater.)

So, what does this all mean?

This means that there are still going to be a good amount of downsized workers looking into franchise ownership, but there will be fewer who have the financial qualifications to get approved by the franchisor and the banks.

It’s too soon to tell if the franchisors will be adjusting their qualification criteria.

As for the banks, I have no reason to think that they will become more flexible in the short term, either.

The credit crunch has had a major impact on franchising, and even with several pushes by lobbying groups like the International Franchise Association to loosen credit up, the credit market is still not very loose.

Intrepid souls who are serious about becoming their own bosses will still find ways to buy franchises in 2011. But patience will be a needed virtue, as the process itself will continue to be a slow one.

The trend that I’m about to share with you is one that’s happening as a direct result of the credit crunch: the conversion franchise.

In a conversion franchise, an independent business, like a local convenience store, pays a franchise fee to become part of a franchise system, like 7-Eleven. Both parties benefit in this transaction:

The independent store owner gets instant brand recognition and buying power.
The franchisor gets an instant royalty stream.

Here are five popular conversion franchises courtesy of MSNBC’s Your Business and OPEN Forum by American Express.

In general, conversion franchises are easier to get financed because of the existing revenue stream of the independent store and the brand recognition/proven model of the franchisor. I expect this franchise trend to continue to increase in popularity.

There’s an upward trend in franchising that continues to surprise people both in and out of the industry.

In most cases, in a down economy (like we’ve been experiencing for the past two years), consumers tighten their belts and mostly avoid products and services that are considered luxuries. People tend to focus on their needs…not their wants.

Massage Envy is one franchise business in a fast-growing segment that’s really bucking the odds in a serious way. These membership-based facilities, located in high-traffic areas, offer everything from deep-tissue massage to massages that focus on pressure points. (There’s even something called “migraine therapy massage.”)

Not only are consumers opening their wallets to experience these spa-like services, but people who are looking to become their own bosses are buying franchises like Massage Envy, Massage Heights and others at a pretty rapid pace. (Even with an investment of $290k-$470k.)

Food-related franchises are very popular, and every year, new concepts and ideas are tried. 2011 will see the continued growth of a newer type of food franchises: mobile restaurant franchises.

Mobile restaurants are quite the trend in certain area of the country, and from an investment perspective, it’s a way for passionate foodies to get into business for themselves inexpensively (compared to opening up a 5,000-square-foot restaurant.)

One mobile restaurant concept, Sauca Foods, out of Washington DC, recently won the 1^st place prize in The Great Emerging Franchise Challenge. Vermont’s ZooHoos Eatery is another young mobile restaurant franchise, but with a “green” twist. I expect to see several new mobile food concepts entering the fray in 2011.

Speaking of “green,” 2011 will be a year in which more and more existing franchise concepts will start transforming some of their products and services into more environmentally friendly ones.

Subway, the world’s largest submarine sandwich franchisor, has started some green initiatives. They’ve begun serving salads in bowls made partly from recycled soda bottles and water bottles. They’ve even set up redistribution centers, which bundle all the things that franchisees use more efficiently, so that full truckloads (instead of partially full ones) can deliver those products. One truck, making one trip out of the redistribution center, equals less fuel being used.

Solar panel franchises have been around for a few years now, and they’ll continue to grow, albeit slowly. As more and more people start learning about the potential of solar power and how it can save them money (in the long run), franchises like Solar Universe and Lighthouse Solar will continue to be worth watching in 2011.

The biggest challenge for franchisors continues to be quality lead gathering. There’s certainly no shortage of franchise websites around, and they all have “request more information” forms pasted underneath the listings of franchises that are advertisers on their websites. It’s just that the sheer number of “leads” that franchise sales executives have to contact, vs. how many end up buying their franchises, is too wide of a gap.

More and more franchisors are using social media marketing than ever before, and this lead gathering technique should help the gap that I mentioned close a little more. Franchisors are quickly finding out that it takes time to build a successful social media campaign.

Franchisors are also learning that to be successful in the social media space, the use of specific social media tools that help manage campaigns are a must. Read what Jason Falls says about the importance of social media management tools for franchisors. We’ll continue to see the adoption of social media marketing in franchising for 2011.

If lenders actually start lending, and prospective franchise owners start to see their net worth increase, 2011 could be a better year than 2010 was. Here’s hoping!

The Top Franchise Trends for 2011

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Why Aren’t More Women Interested in Franchise Ownership?

Oct 28th

I’ve never really understood why men dominate general inquires about opportunities in franchise ownership.

Well, maybe I understand part of the reason: It’s the numbers.

According to a report by Catalyst, only 13.5 percent of Executive Officer positions at Fortune 500 companies were held by women, and less than one-fifth of companies have three or more women Executive Officers, while almost one-third of companies have none. (From 2009 Catalyst Census: Fortune 500 Women Executive Officers and Top Earners.) Read the Catalyst Research Report.

I’ll admit that I’m not a data-centric guy; I rely on my intuition more than raw data when it comes to making decisions. (It’s an issue that my wife and I have debated about rather energetically for almost 20 years now.)

I also use personal observations when making determinations and decisions about things. For instance, whenever I do presentations on franchise ownership for Execunet (an exclusive networking organization for executives and senior-level managers with salaries above $100,000), the percentage of women that are in attendance is always significantly more than 13.5 percent.

When it comes to actual franchise ownership by women, it’s around 25 percent, according to a research report compiled by Pricewaterhouse Coopers and the IFA, Franchised Business Ownership: By Minority and Gender Groups.

In the 10 years that I’ve counseled and advised prospective franchise owners, however, only about 20 percent of the inquiries that I receive come from women. I really wish the percentage was higher.

I have a very selfish reason for wanting to have a larger percentage of women to work with; they make my job easier. I think that it has to do with their egos.

Most of the women I’ve worked with don’t let their egos get in the way of their goals (like men sometimes do). I’ve found that once they’ve gotten comfortable with me and my consulting style and techniques, they follow my directions–they just do it. They share the facts that they’ve gathered in my weekly follow-up calls, and then I suggest the next steps they should be taking. This goes on for a few weeks, until it’s decision time.

I’m not saying that the women that I’ve worked with are following my directions in some type of weird, submissive way. What I am saying is that the women who’ve worked with me get down to business. They focus on getting the facts so they can get to the finish line quickly.

In his “The Franchising Handbook: The Complete Guide to Choosing a Franchise,” Ian Murray says a couple of important things about women as franchise owners:

Women are good at organizing, at coordinating activities and people efficiently. This means women franchisees will be naturally inclined to organize and coordinate their franchise opportunity more productively and profitably.
Women are good at prioritizing, at deciding which activities are more important than others. This particular skill works well in the franchising industry, when problems arise concerning planning, staffing, financing and people management.

So, not only do women really excel when it comes to franchise due diligence, they also have the skills needed to succeed as franchise owners.

In a Small Business Trends post, Rieva Lesonsky wrote, “According to The Guardian Life Index, a survey of American small business owners, women are most likely to start businesses because they’re unhappy with corporate life, and future job growth will be created primarily by women-owned small businesses.”

It sure seems like all the necessary ingredients are there for more women to start at least inquiring about franchise ownership. I wonder what it’s going to take for more of them to do so.

Do you have any ideas on how to make this happen?

Why Aren’t More Women Interested in Franchise Ownership?

View full post on Small Business News, Tips, Advice – Small Business Trends

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Could Your Company Be the Next Great Franchise Business?

Sep 30th

What does it take for a business to be franchisable? According to franchise attorney Harold Kestenbaum, coauthor of So You Want to Franchise Your Business, “a franchisable business is one that is profitable, has the ability to be replicated, and has a documented system that is easy for others to follow.”

I’ll add one other requirement: The business must have something that sets it apart from other, similar businesses.

Do you have a business like that?

Better yet, have you even been on the receiving end of a statement like this:

“You know, you should really think about turning your business into a franchise.”

If you’ve ever heard that suggestion, now’s your chance to go for it and enter The Great Emerging Franchise Challenge, where you’ll have an opportunity to win $50,000 worth of professional franchise services to get you started as a franchisor.

Contest creator Todd Taskey, an entrepreneur for more than 20 years as well as an investment banker and business finance advisor, has assembled a group of franchise professionals who have “been there and done that” to help you transform your company into the next great franchise.

Two weeks ago, I received a call from Todd in which he asked me if I’d don my robe and be one of the judges for this contest. I told him I’d be honored. (Anita Campbell, CEO of Small Business Trends, was also asked to be a judge.)

I asked Todd about his vision and goals for this contest. He told me, “I wanted a way to attract business owners to the idea of franchising as a way to fuel the growth of their company. I’ve worked with a few in the past and enjoyed the process very much.”

What would Todd like to see happen because of this contest? “We’d like to identify a few good ideas and give them great feedback on their business. Then, we’d like to identify one great idea and get them started. We’d also like to get more exposure in the business community for franchising as a viable mechanism to grow a successful business into a national brand.”

Todd hopes to continue growing The Great Emerging Franchise Challenge every year, increasing awareness of franchising even further.

If you’d like to learn more about The Great Emerging Franchise Challenge, including the rules, information about the rest of the judges, and specifics about the $50,000 in franchise development services that the winner will receive, visit the contest website.

Could Your Company Be the Next Great Franchise Business?

View full post on Small Business News, Tips, Advice – Small Business Trends

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Small Business News: Franchise Fantasies

Sep 30th

Starting a franchise is not for everyone, but among the possible paths to small business ownership it is certainly one route. There are many reasons a prospective small business owner might choose franchising and a number of factors that should go into a calculation of whether franchising is a viable fit for your entrepreneurial ambitions and what opportunity might be best for you. Join our colleague Joel Libava and other franchise experts in this important roundup for aspiring franchise owners with some additional general small business news and tips thrown in for good measure. Enjoy!

What do you want from your franchise?

Why do you want to start a franchise? In this first post in his three part series, Joel Libava looks at what may be one of the most common reasons (though perhaps surprising to some) why people might decide to quit their corporate job and buy a franchise. Would you believe being tired of traveling? There’s a link to another of Joel’s posts on the decision process and to a cost calculator to figure out what you’ve getting in to. Read on. The Franchise King

Does franchise ownership really bring freedom? Well, yes, it can, if you pick the right franchise opportunity. In this second post in Joel Libava’s series on popular reasons to buy a franchise we look at the rather obvious desire for freedom as a modivation for becoming your own boss. Joel’s advice? Make sure the franchise opportunity yopu choose is one that offers you the freedom you desire. The Franchise King

Will franchise ownership give you greater control? Well, it could. Welcome to the third in an ongoing series on popular reasons to choose a franchise bu8siness. Truthfully, the franchisor will still control a number of the things about your business but, of course, you’re still the boss. Read more about franchises in the rest Joel Libava’s franchise series coming soon on his blog. The Franchise King

More on franchising

Choosing the right franchise opportunity depends on a number of factors. If you’re looking for a franchise opportunity, be certain that the franchise you choose has the potential to be successful. Discuss the decision with others who have greater experience in the franchise industry and be sure to use these 15 tips for evaluating. Angel Business Advisors

Have you researched your franchise opportunity? No matter what small business you choose to launch, research is essentual. But this may be especially true of a franchise where you may have less flexibility to alter things if they begin to go amiss. In this post we look at some of the basics of research that must be done before taking the plunge. It is key to understand the opportunity before you take it to be sure it is truly the right opportunity for you. The Franchise Wizard

More small business news

Small business bill may still lend no help to small business owners. This may sound idiotic but critics of the legislation feel it may be true. Small business leaders complain that giving funds to banks in hopes they will lend more to small businesses is misguided at best, especially given the state of the economy. Prospective franchise owners in particular may have cause to worry if loaning isn’t loosened up. What do you think of the new small business bill? Air your thoughts below. Reuters

Is the government really in small business’s corner? We hear plenty of lip service from Washington about small businesses being the engine of the economy and the key to our economic recovery. But can small businesses truly survive in a regulatory climate that seems so clearly stacked against them? How can Washington lighten the burden on small businesses in general if they are to thrive and help the national a global economy return to prosperity? Small Business Trends

Entrepreneurship

Is there more to your business than the bottom line? You’ve heard before I’m sure about the tough economic times we’re in. Small businesses know all about staying lean and competitive. But Ken Kauffman writes this week about something that goes beyond the balance sheet when it comes to small businesses even in tough economic times. He calls it “entrepreneurial benevolence” and you may find that not only does it seperate small businesses from huge corporations but has some basic human value as well. CFO Wise

Does your city or town have a program like this? If not, why not? Bizdom U is one part entrepreneurial training course, one part business incubator and one part venture capital or angel investor group. If your community is serious about improving the local economy by not simply training people for a job but training them to create jobs, they should definitely investigate a program like this one. Open Forum Innovation