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Our first issue of 2007 includes: Tips for growing and protecting your business, a bundle of suggestions for motivating employees and a creative strategy for finding franchise candidates.

Ed Teixeira, Publisher - Carol Moccia, Editor

FREE FRANCHISING YOUR BUSINESS SEMINAR! Scheduled for February in NY/NJ area. For details e- mail ed@franchiseknowhow.com

When it comes to building a franchise system, a great deal of attention is typically directed towards adding new franchise locations. In new franchise companies, this approach is a requirement at the early stages of growth.

In addition to the on-going need to add new franchise locations, there comes a time when a franchisor should also focus attention on growing unit franchise sales. The time to introduce this strategy will vary depending upon the complexity of the franchise operation. For some franchisors it could be at 30 units for others, 100 units. Certain mature franchisors should consider implementing this strategy as well.

The benefits from increasing unit franchise sales include:

1. Enhanced franchisee profitability
2. Including select franchisees in the process will improve franchise relations
3. Add more balance to the franchise system by not relying solely upon new franchise locations for royalties
4. The focus on increasing franchisee sales can assist in the sale of new franchises
5. Opportunity to obtain buy-in from franchisees
6. Mutual benefits for both franchisor and franchisee

Strategies for increasing unit franchise revenues include:

1. Establish a marketing committee or task force to include successful and representative franchisees
2. Develop a marketing plan to include responsibilities and objectives
3. Utilize the group to conduct in-depth selected competitive analysis
4. Evaluate the effectiveness of the existing website with the objective of gaining more customer traffic
5. Solicit suggestions for new products and/or services from franchisees
6. Identify pilot locations for new products/services to measure results and establish credibility
7. Utilize sales contests and other incentives to generate system wide interest
8. Have a theme, slogan or other vehicle to create awareness and enthusiasm for new products/services

These are some suggestions for getting a marketing effort underway to increase franchise sales.The important point, is that many franchisors may need to direct more attention to increasing franchise sales.

" Cheers to a new year and another chance for us to get it right." ~Oprah Winfrey

For more on this dynamic marketing tool click here

Franchisors do an excellent job making sure that their Franchisees follow the policies and procedures of the franchise operation. They do less than an excellent job making sure they are protected by the Franchisee's insurance policy. Proper limits of property coverage, and proper limits and types of indemnification from the Franchisee to the Franchisor, can go a long way towards preventing problems before they begin.

All would agree that the Franchisee should insure their business property adequately. Whether it is contents or leasehold improvements, franchisees have to calculate the replacement cost of all the business items and insure the full replacement value. I subscribe to the policy that franchisees should insure for full replacement cost, but take as high a deductible as they can afford, to reduce the cost of insurance. When a franchisee client has a property loss, we should be less concerned that they have to pay a $1000 or $2500 deductible and more concerned that their insurance limit be adequate enough to cover a total loss. On the liability front; however, the Franchisor can be brought into a lawsuit if the Franchisee (and the Franchisee's insurer) does not add the proper endorsements to the liability section of the Franchisee's insurance policy. All Franchisees should include an endorsement, naming the Franchisor as Additional Insured, on their Business Insurance Policy. There should also be a Hold Harmless Agreement drafted into the grant of franchise agreement. These documents will protect you, as the Franchisor, from lawsuits arising out of the Franchisee's operations.

Assuming that these documents do exist, the Franchisor must also determine how much liability coverage they want their Franchisees to carry. My experience in advising multiple franchise organizations is that most Franchisors should require a minimum of $1,000,000 per occurrence under the primary Package Policy and a $1,000,000 Umbrella Policy, although some require more. That is a decision you, as the Franchisor should make in consultation with your franchise consultant, attorney and insurance professional. We recommend at least a $1,000,000 Umbrella Policy because it offers somewhat broader “drop down” coverage than the primary Package Policy does.

BE SURE YOU KNOW WHAT COVERAGE YOUR FRANCHISEES HAVE.

You should always have a person/department responsible for receiving annual Certificates of Insurance from each of your Franchisees. You should require that the Franchisee’s agent or insurance company upon policy renewal automatically send these certificates to you. You should always review the certificates to make certain that the limits are in line with your insurance requirements, and that you are listed as Additional Insured.

MAKE IT EASY ON YOURSELF and YOUR FRANCHISEES

Working with an insurance agent who understands your franchise concept, your Franchisee's insurance needs, is licensed to write insurance in the states where you operate, and has access to the appropriate insurance markets, will make it easier for all concerned. Reach out to the insurance agent early on in the franchising process, so the insurance program is ready when you are. Be aware that your prospects are coming to you because you offer your expertise in a “turnkey” format. An insurance agent, with a familiarity of franchising, can do the same for you as respects insurance. They know the markets, they know the processes and they are licensed in multiple states. A franchise savvy insurance agent can standardize the process, standardize the coverage’s and make your life easier, regarding franchisee insurance is concerned. They will also negotiate a more favorable rate structure for your franchisees.

Should you have any questions regarding these issues, please email AGiaccone@intermarketINS.com. Intermarket specializes in developing and managing insurance programs for Franchisors and their Franchisees.

Anthony Giaccone, President Intermarket Insurance Agency 205 E Main Street Ste 3-4 Huntington, NY 11743 www.intermarketins.com AGiaccone

" I find that the harder I work, the more luck I seem to have." ~Thomas Jefferson

In this article from Inc. Com you'll find lots of ways for motivating employees. An assortment of tips for franchisors, franchisees and anyone else responsible for managing and leading people.

For Motivational Tips Click Here

Business Week Book Reviews

To Read This Article Click Here

Franchisors market their franchise opportunity a number of ways. They may market utilizing print media, Internet franchise portals, or by using regional sales managers. However, few franchisors target franchise candidates by approaching employees in a franchise specific industry, including industries that their successful franchisees came from. These industries, which I define as vertical markets can include any of 100 industrial classifications. These include disparate groups such as advertising, marketing, woodworking, architecture, wire, apparel and welding, and everything in between. For ideas and research, we utilize SRDS (Standard Rate Data Service) Business Publications Source Book, which is published quarterly, and lists trade publications by industry.

Don’t confuse vertical marketing with conversion franchising, such as the lawn care franchisor that targets independent landscape contractors, or an advertising specialty franchisor who looks to convert mom and pop firms in their same industry. Also vertical marketing does not include ethnic, gender, or other identifiable consumer traits for target marketing. These are some of the other marketing ideas to be tested, but that topic deserves a separate article. Finally, the vertical marketing strategy may not be needed or appropriate for certain low cost or popular franchises which have proven that “anyone” can be successful in their concept.

Some of the main benefits from utilizing target marketing by industry are:

1. Industry surveys are often published showing salary ranges by job classifications. With this information, you can target specific job titles to determine if these positions fit your financial profile
2. Conversions are high, especially if during validation, candidates can speak with with franchisees who have a similar background
3. They can become your best performing franchisees since they share traits with others you have in your system

Once you have established one or more target verticals, you should model the actions of other suppliers or advertisers in that market to be successful. This could take the form of :

1. Promoting your franchise in an industry trade publication ( usually distributed free to active members of the trade ), either editorial coverage, paid advertising in the classified or job section
2. Attending or exhibiting at an industry conference or trade show. Some are annual and can be national or regional
3. Becoming a member of the trade association and/or sponsoring an event or function
4. Reading or supporting popular industry blogs
5. Acquiring a mailing list from a trade association and mailing or e-mailing to members

I include “reading” a trade magazine or “attending” a trade conference because these activities, while time consuming, bring you closer to the market and may give you ideas. For example, reading the trades could make you aware of specific companies in the market who are struggling and whose employees may be targets for your franchise. You might also meet an industry-specific HR person, recruiter, or consultant open to trading information with you.

In the next issue: Examples of franchisors successfully using these methods.

Scott Stein is VP of Zermatt Associates in Union, NJ. Zermatt is an independent franchise broker group which utilizes creative solutions to assist national and regional franchisors in marketing franchises. He can be reached at 908-206-1285 or sstein55@yahoo.com

" Whenever I climb I am followed by a dog called "Ego" ~ Friedrich Nietzsche

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