Infographic: Franchising in America


Link: Infographic: Franchising in America

Synonymous with the enterprising American spirit, franchising’s phenomenal growth is a testament to the power of personal ambition. Franchising can be a richly rewarding pursuit, but it’s vital to understand the inner workings of—and outside influences on—this innovative industry. Franchising in America, an informative infographic developed by MDG Advertising, illustrates the road to economic recovery, spots the top trends and keys to new growth, charts the common challenges franchising faces today, and adds insight for the future.

Despite challenges, bankers upbeat about lending to franchise businesses


As part of IFA’s ongoing campaign to get America lending again – to franchising – IFA leaders spent the past three days strengthening relationships with the nation’s top small business lenders during the National Association of Government Guaranteed Lenders SBA Technical Conference in Atlanta.

At the recent IFA Small Business Summit in Washington, one of the key takeaways was a renewed commitment by franchise businesses and lenders to forge stronger and deeper communications channels and to develop a better understanding of the challenges and opportunities facing lenders and franchise businesses.

From left, IFA Credit Access Committee Chairman Bill Hall (International Dairy Queen multi-unit franchisee) and NAGGL President & CEO Tony Wilkinson

“These new relationships not only enhance communication with key groups in the lending community, but speak to the value franchise businesses will receive through the IFA,” said Karen Spencer, CEO of Fran Systems, a franchise industry consultant.

Richard Bradshaw, Senior Vice President and Head of SBA lending at TD Bank, the fourth-largest deposit bank in North America, with over 2,000 branches, said he welcomes IFA’s involvement and approach to engaging directly with small business lenders through NAGGL.

“The tie-in with IFA was excellent, especially talking with some of the IFA members,” said Bradshaw. “The networking makes that next call so much easier. I’m very excited about some of the introductions and will be following up.”

The primary goal of IFA’s campaign is to get lenders more comfortable with lending to franchising. Educating them on the virtues of franchise businesses versus non-franchised businesses is central to that goal. 

“The thing that I like about the franchise business is that because of the FDD [financial disclosure document] you get so much information, said Bradshaw. “I’m not sure the banks realize that. Because of the FDD you have a ton of information as to how that store should perform.”

For their part, many banks had not previously considered franchise lending a specialty segment of their small business lending divisions.

“Bankers are here looking for new markets in which to make loans, and it was very encouraging to see the partnership between NAGGL and the IFA,” according to John Kimball, Senior Vice President and Manager of SBA Lending at Park Midway Bank in St. Paul, Minnesota.

As part of the partnership between the IFA and NAGGL, new communications and prospecting tools are in the works to help streamline the lending approval process between lenders, franchisors and new franchisees.

“New resources such as internet-based referral services are going to provide community banks with enhanced access to helping the franchise industry,” said Kimball.

The IFA projects that without improved communication and lending to franchise businesses in 2011, 80,000 jobs will not be created and more than 8,000 franchise establishments will not be opened. 

IFA speakers at the event included IFA Credit Access Committee Chairman Bill Hall, Second Vice Chairman Steve Romaniello, Multi-unit franchisee Aziz Hashim, IFA Educational Foundation President John Reynolds and FRANdata President & CEO Darrell Johnson. 

Lenore Krentz, Chief Financial Officer of franchisor FOCUS Brands, said she appreciated the efforts of NAGGL and the IFA to make sure franchise leaders met the lenders at the conference, including the use of bright-orange name tags for franchises and navy blue for the lenders.

“I looked for the blue tags,” she said. “I was there a short a time but made connections with three groups that there is potential to do business with. I think that’s impressive.”

From left, Aziz Hashim (multi-unit franchisee, Popeye’s, Checkers Drive-In Restaurants/Rally’s, Subway and Moe’s Southwest Grill), Tom Burke (Wells Fargo Small Business Lending), Eddie Tuvin, (Cohen & Company), Phil Wilkins (multi-unit franchisee, Smashburger) and John Reynolds, IFA Educational Foundation. 

Posted by Matt Haller, IFA Director of Communications

Denver Franchise Executives Share Views – What’s Changing? What’s Challenging?


Senior franchise executives gathered at PostNet headquarters in Denver April 13 for the latest in IFA’s series of CEO roundtables taking place throughout the country. Attendees discussed the economic outlook for franchising, including IFA’s efforts to bring together franchisors, franchisees, lenders and policymakers to begin a campaign to loosen credit, which began with this month’s Small Business Lending Summit.

Click below the jump for details on each of the specific topic areas discussed below.

Discussion topics included

  • 2011 Franchise Business Economic Outlook
  • Franchise Business Leader Survey Highlights
  • Credit Access #1 Issue
  • IFA Small Business Lending Summit Update & Next Steps
  • Overview of Key Federal and State Issues
  • OnTrack–Benchmarking for Franchisors–IFA’s newest member service

Changes and Challenges

  • Franchise Sales/Pipeline
  • How Franchisors Are Adapting to “New Normal”
  • What’s Working and Not in Lead Generation
  • Is Franchising the Right Strategy?
  • Co-op Advertising Campaign–Best Time To Own A Franchise

John Reynolds gave highlights of the 2011 Economic Outlook report produced for the IFA Educational Foundation by PwC, predicting 2.5 percent growth in establishments and jobs, and 4.7 percent growth in economic output.  The report also gave an outlook by business lines with higher output growth in automotive, commercial/residential services, and personal services.

Reynolds summarized highlights of two IFA member surveys conducted in November of 2010 and March of 2011 that showed no improvement in credit access picture for franchisors and franchisees. 

Charlie Melancon, IFA’s Senior Vice President for Government Relations & Public Policy, reported on early success by IFA in push to expand the SBA loan program, increase loan limits and extend 90 percent guarantee–efforts which resulted in increased capital flow to small businesses in late 2010 and early part of 2011. Melancon stated while this was a “lifeline” to small franchise businesses, it was clearly not enough.   

Melancon gave highlights of the lending shortfall of 20 percent on franchise small businesses, and results of the lending report prepared by FRANdata for IFA.  

Melancon reported on the IFA Small Business Lending Summit on April 7 which brought together nearly 200 franchise executives, lenders, and policymakers to find solutions to increase capital flow to franchise businesses.  Among outcomes of the summit-a Working Group was formed to continue engagement  between the franchising and lending communities, develop a national franchise loan registry to streamline the loan process for franchisors, franchisees, and participating lenders, and provide ongoing education programs for lenders–about franchising–and for franchisors and franchisees–about how to be better prepared in dealing with lenders. For a full report,  including a white paper, “Linking Franchise Success with, Economic, Growth and Net Job Creation,” go to

Melancon updated members on federal and state priorities including efforts to repeal the health care reform law, taxes, the Veterans Own Franchises Act, swipe fee reform and menu labeling.  For a full report on IFA’s top legislative issues, visit the Government Relations tab at

Brian Spindel, CFE, PostNet President & CEO, who also chairs IFA’s Benchmarking Task Force, reported on the successful launch of OnTrack–a free online benchmarking tool for IFA members and gave a brief demonstration of OnTrack’s features and functions.  He reported that more than 120 IFA members have signed up for OnTrack since the IFA annual convention in February.  For sign-up information, visit

Franchise Sales/Pipeline and Challenges – What’s Working and Not?

Franchisors reported that franchise leads and sales were still very flat with only small improvements in recent months due to credit access, economic uncertainty and low consumer confidence.  Many expressed challenges such as relying on past lead generation techniques–Internet/portals, trade shows, advertising, etc.–were not working and were not cost effective. 

Franchise executives discussed whether brokers were a better strategy because when managed properly they can deliver higher quality leads.  There was a lot of discussion about whether a dedicated inhouse, highly incentivized sales team was a better approach than relying on brokers.  Several franchisors stated they were using brokers because they just needed to get some traction going.   One franchisor said he has spent a lot of time optimizing the company’s website and re-targetting visitors through using cookies.  All franchisors agreed that they were spending more time and effort on pre-qualifying and helping to prepare franchise prospects to get financing. 

Is Franchising the Right Strategy? 

As franchisors are being asked to provide loan guarantees, provide leasing programs, and provide direct financial assistance to franchise prospects and existing franchisees, several franchisors asked if putting more capital in company stores and less effort to franchise development might be a better strategy during times of restricted capital. Many franchisors said they were increasingly focusing on re-structuring and re-vitalizing existing network and unit economics, and less on franchise sales for new units. Several franchisors said that stronger unit economics will attract better, more sophisticated and higher quality franchisees in the long run.  One franchisor said he was considering not refiling the company’s FDDs due to the cost and focusing more on the short-term to strengthen existing franchisees. 

Co-op Advertising Campaign–best time to own a franchise 

Discussion then turned to a brainstorming session on ways that IFA members could develop a co-op advertisng program to combat the negative media reports about the economy–by promoting the idea that there’s never been a better time to own a franchise business.   The advertising campaign would promote the benefits of owning a franchise, being affiliated with strong brands, and being part of a system versus going it on your own.   Using social media and doing multi-channel messaging could be used to support a co-op campaign.  A co-op campaign could also link back to the IFA Web site where people could learn more about franchising and how to go into business for themselves, but not by themselves. Several franchisors said that such a campaign could also address the other side of the credit access issue by demonstrating, to potential franchisees and investors, the positive attributes of franchising and the lower risk profile of many franchise businesses.  

This is a summary, please add your comments and questions.

Posted by John Reynolds, President, IFA Educational Foundation

Franchise legal issues front and center this month


Link: Franchise legal issues front and center this month

The latest legal challenges facing franchised businesses today, in addition to important networking time with your peers, will be front and center next month at the IFA Legal Symposium in Washington, D.C., May 15-17. The symposium is the only franchise legal program that gives you an all access pass to top franchise law practitioners and franchise business leaders sharing their knowledge about the hottest topics in franchise law.

As the Symposium approaches, franchise professionals can gain additional insight into legal issues impacting franchise business with the 2nd Annual Franchise Legal Series, starting Thursday, April 14, on the Franchise Today radio program

Franchise Today, an online radio program hosted by CEO and Founder of franchisEssentials, Paul Segreto and franchise industry veteran Joe Caruso, will begin a seven-part series including discussions with leading franchise industry legal experts:

Lane Fisher, Partner at FisherZucker LLC;
Jonathan Redgrave, Attorney and Partner at Redgrave LLP;
Lee Plave, Owner and Co-founding Partner at Plave Koch PLC;
Warren Lee Lewis, Shareholder-Franchising & Licensing at Akerman Senterfitt;
Leslie Curran, Franchise Attorney at Plave Koch PLC;
Adam Siegelheim, Attorney at Stark & Stark;
Michael Webster, Owner and Franchisee Attorney at The Law Office of Michael Webster

Posted by Matt Haller, IFA Director of Communications

Franchising could be job growth fuel – Jeff Rosensweig, Atlanta-Journal Constitution


Link: Franchising could be job growth fuel – Jeff Rosensweig, Atlanta-Journal Constitution

In his monthly column in the Atlanta Journal-Constitution, Jeffrey Rosensweig, professor of international finance and the director of the Global Perspectives program at Emory University’s Goizueta Business School, describes the power of franchising and the importance of figuring out solutions to the credit crisis, as clearly and concisely as anyone ever has. Here’s a preview…

In real estate, the key factors are “location, location, location.” In discussions about the national, state and local economy, the focus now is “jobs, jobs, jobs.”

As we look for ways to shift the recovery into higher gear, lawmakers, regulators and business leaders could take a closer look at an American business model that shows job-creation promise: franchising.

Franchising, including the indirect jobs it creates in its suppliers, currently accounts for roughly one in eight jobs in America. But this unique business model, as American as baseball and Baskin-Robbins, could lead to the creation of millions of new U.S. jobs in the next years — if we take steps to make sure it happens. Read more.

Posted by Matt Haller, IFA Director of Communications