Dour Economy Doesn’t Sour East Coast Wings & Grill Growth

A seemingly endless lackluster economic climate hasn’t soured growth prospects for East Coast Wings & Grill, which was just approved $7.5 million to provide start-up funding for franchisees entering the system and expansion funding for existing franchisees.  Created by Franchise America Finance and The Bancorp Bank, a subsidiary of The Bancorp Inc., the lending program is the first of its kind.

The franchise’s CEO envisions that the infusion of capital will enable the opening of 12 to 15 stores annually for the next five years, dotting the Southeast with the franchise’s trademark buffalo wings.  “The successful completion of a financing program in this difficult market is a testament to the strength of our business model and an important step in the company’s continued growth,” said Sam Ballas, CFE, CEO of East Coast Wings & Grill.  By the end of this year, Ballas plans to expand 22-unit East Coast Wings & Grill beyond its home state, opening units in South Carolina and Texas.

The lender enthusiastically welcomed its first emerging chain.  “We are very excited to add East Coast Wings & Grill to our lending program as our first ‘emerging’ brand,” said Ronald Feldman, CFE, CEO of Franchise America Finance. “The unit level economics and adoption of industry best practices by management helped us make our decision to offer franchisee financing.”

“Our national program offers the smoothest, most time-sensitive loan approval process available today,” said Nancy Broudo, vice president of franchisee lending of The Bancorp Bank.  The Bancorp Bank has allocated more than $300 million for small-business franchisees and licensees since the program’s inception. “This access to capitalization will enable qualified franchisees to build their business, their industry and an employment base to create jobs.”

The franchise also recently completed its 35th consecutive quarter of same-store sales increases.

The economy can’t zap the zest of East Coast Wings & Grill’s growth trajectory.

 

First Debate Exposes Rift Between Romney, Obama Tax Plans

President Barack Obama and Republican presidential nominee and former Massachusetts Governor Mitt Romney met in a head-to-head debate for the first time last night at the University of Denver, kicking off a series of three presidential debates in the weeks leading up to the November 6 election.  Gov. Romney appeared energetic and motivated on stage, aggressively challenging the President’s economic record and attempting to rise above the criticism that has grown more intense in the past two weeks.  On the other hand, by most accounts, President Obama delivered an underwhelming performance.  Although analysts and commentators quickly and emphatically declared Romney the Round 1 winner for both his polished arguments and delivery, it was the exposure of the rift between the candidates’ tax plans that commanded the most attention during the 90-minute ideological clash.

All Big Bird jokes aside, the tax discussion took on a serious and contentious tone, which culminated in the candidates overpowering moderator Jim Lehrer to get in a few extra minutes debating the topic.  Although President Obama attempted to characterize Gov. Romney’s tax plan as a $5 trillion tax break for upper-income individuals, Romney firmly reiterated that his tax plan would increase revenues by increasing economic activity through lower tax rates for small businesses and the lower class.  The President’s plan, Gov. Romney pointed out, threatens to raise taxes on small business owners that file their business taxes on their personal returns, punishing the entrepreneurs that are the engine of the American economy.

CNN Money published an article today explaining how the President’s tax plan, while attempting to tax upper-income Americans, has the unintended consequence of the tax hike for two of the upper-income brackets.  Since more than 80 percent of franchise businesses file their business income on their personal income tax return, Obama’s proposal has the potential to raise taxes on franchise small business owners that are already burdened by tax uncertainty.

For more information on differences between the Obama and Romney platforms and their implications for franchising, click here.  You can also submit feedback and questions to IFA through our mobile app, “Franchising Votes”, or at advocacy@franchise.org.

 

Steve Lynn: In Franchising, Growth “Is a Marathon, Not a Sprint”

Steve Lynn, CFE, now a principal in Reconstruction Partners, recently shared with IFA advice for franchisors seeking qualified candidates, especially in light of the 23 million unemployed Americans, some of whom might consider a career in franchising.  Lynn is one of the speakers for IFA’s Fall Franchise Business Network Meeting, Oct. 10 on “CEO Forum:  Strategies for Successful Franchising in 2013 and Beyond,” hosted by Baker Donelson.  Register online or by e-mail to rsvp@bakerdonelson.com by Oct. 4.

“The fundamental concept of franchising is for the franchisor to choose partners rather than selling franchises.  Growth comes first from existing partners provided you have something that produces a return in balance with the risk. The business model must work.  New people are then attracted by great unit economics and the spirit of partnering.”

Lynn continued, “We operate within environments where a great deal is outside of our control. Is the economy growing or not and has the lending spigot been turned on or off for small-business development? Therefore, as franchisors we must resist with every ounce of strength the temptation to focus on short-term performance measures and stay true to what has and will work for us over a sustained period of time. It is a marathon not a sprint.”

On the subject of identifying prospective and qualified franchisees, Lynn offers that, “We do no one a favor by compromising our criteria for prospective franchisees in such ways as accepting undercapitalized prospects. The long-term solution during good times or bad, is for franchisors proactively to build a following of potential franchisee equity partners who are passionate about the brand and match them up with the highly skilled and readily available pool of potential leaders/operators out there who are undercapitalized, underemployed, etc.”

Steve Lynn, CFE, has served as IFA chairman (1993), is former CEO of Sonic Restaurants and Shoney’s Restaurants and past chairman of Back Yard Burgers.

 

 

ADP Reports September Jobs Gains

 

 

Employer Services company ADP released its September estimate for job growth numbers today, and showed an increase in employment of 162,000 jobs, beating expectations.  Small business continues to be the driving force in the jobs recovery, adding half of the jobs in September.  Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York, stated that “Hiring at startup and small firms will continue to be the key to the sustainability of the labor market recovery going forward.”  ADP’s number is an important predictor of the Labor Department’s statistics, which will be released on Friday.

IHS Global Insight recently prepared a study for IFA on the economic outlook of franchising, and forecasted employment growth in the franchising industry slightly outpacing that of the whole economy.  They noted, however, that job growth remains tepid and that access to credit is still a major obstacle to to the expansion of franchising.  Read more about the study here.  Job creation is sure to be a central focus of tonight’s presidential debate, which will cover domestic policy.  You can read more about today’s jobs numbers here.

10 Questions for Nancy Weingartner

 

 

Nancy Weingartner is the well-known Executive Editor of Franchise Times, the industry’s leading trade publication. Growing up around the US and Asia as the daughter of an Air Force officer, Weingartner graduated with a bachelor’s degree in English from the University of California, launching a career in journalism and public relations. More recently, she has spearheaded Franchise Times’ leadership of franchise trade missions as well as the organization’s international coverage. While Nancy is used to holding the tape recorder, IFA turned the microphone on her after her recent return from the Latin America trade mission co-hosted by the U.S Commercial Service, Franchise Times, and the International Franchise Association. 

Why do you like going on trade missions?

You have a sense you’re doing something worthwhile—helping bring jobs and the U.S. culture to the rest of the world. But seeing each country’s own culture and landscape firsthand, plus hanging out with personality-laden franchise sales executives is well worth jet lag  long hours and missed deadlines at home.

What country is your favorite in terms of a trade mission experience, and why?

The easy answer is all of them. But because India was my first foray into trade missions, it affected me the most. I was stunned by the juxtaposition of the extreme poverty and wealth, with a sliver of middle-class in between. The pros on the trip saw opportunity; I had to struggle not to see obstacles. But by the end of the trip, I started seeing it through their eyes.

How would you characterize the value of the U.S. Commercial Service to international franchising?

I have become their biggest evangelist. Everyone I’ve met with the Service is dedicated and ready to move molehills and the occasional mountain for franchisors. And their in-country staff is well connected to the local business community.

As executive editor of Franchise Times, what is your favorite part of the job?

The people I write about, and traveling—whether it’s overseas or to Miami.

When did you discover that you were a writer?

In college I was a typesetter for the local newspaper. I asked if I could write a story and it ended up as the lead story on the front page. I was hooked.

How much do you travel?

It varies, but it probably works out to a trip a month—but not so often that I have a suitcase pre-packed or can easily locate my universal plug adapter.

Do you have a favorite story that you have written for Franchise Times? Why is it your favorite?

That’s like asking which child is my favorite. I’ll say the same thing I tell my three kids when they ask: You are. But stories that come to mind are the Dunn Bros Kenyan coffee plantation trip and visit to Kibera, the worst slum in Africa; all the trade missions; and hanging out with KISS’ Gene Simmons was definitely an experience.

Which franchise brand do you patronize the most?

Right now I’m hooked on Jimmy John’s subs. No. 5, no sauce, no onions.

For those outside the industry, what do you think is the least known fact or aspect about franchising?

Most locations of a national brand are independently owned and operated by local business people.

What do you think are the prospects for franchising’s international growth?

I think the sky is the limit. According to our 2012 Top 200 ranking, the number of international units for those 200 companies grew 112.9% in the 12 years we’ve been tracking. Significantly more than their domestic growth.

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