IFA FranBlog

A blog with news & views from the International Franchise Association, representing the over 825,000 franchise businesses across 300 business lines, providing for nearly 18 million jobs and generating over $2.1 trillion to the U.S. economy.

Mar 23

Franchise restaurants make a comeback

According to a recent article in the The Wall Street Journal, franchise restaurants are beginning to make a comeback and lenders are returning to business once again.  But many of the iconic brands that we are used to are freshening up their image, menus, and expanding into new territories.

Fast-casual dining is becoming more popular and restaurant chains “are now less likely to resemble their brand’s current image,” according to Wally Butkus, partner in Restaurant Research LLC.  McDonald’s in the Oakbrook Ill. area has transformed their stores from the red and white playgrounds into more adult-friendly seating, FOCUS Brands hired an architect to design new buildings with a smaller footprint and while Papa John’s was reluctant to spend the money necessary for a remodel, Don Graham vice president of development says, “once we heard feedback from their customers, they all came on board.”

During the recession, franchisors were less likely to spend the money to conduct remodels, but tired looking restaurants generate lower sales and companies now are getting more sophisticated. Major brands like Dunkin’ and Wendy’s have since launched major remodeling programs.   EVP for Techtnomic Darren Tristano knows, “fast-casual concepts are incredibly appealing because they generate high sales compared to investment.” 

As customers continue to become more value-conscious, companies across the board are making adjustments to a fast causal concept and increasing their emphasis on franchise growth. 

Read full article text here


Bloomberg’s Small Business Report with John Tucker reports that a rise in small business confidence and improved consumer demand is helping propel a gauge of franchise businesses higher.  The franchise business index, developed by IHS insight on behalf of IFA, increased by 0.3 percent in February which is the sixth consecutively monthly gain, reported Tucker.  The measure shows the economic environment for franchise businesses by examining employment indicators, personal consumption, small business optimism and credit availability of the industry.

John Tucker reports that in an industry with more than 735,000 franchise businesses last year, employing more than 7.9 million workers and bringing in $745 billion in sales, around 80% still say limited access to credit is holding them back.   

Click here to listen to John Tucker’s Small Business Report on IFA’s Franchise Business Index. 

Here are some other news clips covering the release of the FBI, which will be released each month going forward:

Posted by Jenna Weisbord, IFA Manager of Communications & Marketing



Mar 20

IFA urges lenders conference to bank on franchising

IFA Board Members and President & CEO Steve Caldeira headlined an unprecedented franchise lending panel at CBA LIVE, the annual conference of the Consumer Bankers Association (CBA), a meeting that drew over 1,000 of the nation’s retail banking leaders to Austin, Texas Monday in a sign of the improving outlook in the economy and the financial services sector.

The panel, titled “Engaging in Franchise Lending: Growing Bank Loans in 2012 Using a Proven Concept,” featured IFA Board Members Shelly Sun, CEO and Co-Founder of BrightStar Care, and Darrell Johnson, President & CEO of FRANdata, along with Lynetta Tipton Steed, Division Head of Business & Community Banking at Regions Financial Corporation, and Bank of America Line of Business Executive Joe DiNicola.

Caldeira discussed the IFA’s Credit Access Campaign, launched last April, which has now attracted the involvement of a diverse range of organizations from the Financial Services Roundtable and the Independent Community Bankers of America, to the Hispanic Alliance for Prosperity Institute and the National Association of Women Business Owners. 

“While the credit crunch has eased somewhat, franchising needs significantly more capital to return to strong growth and job creation,” Caldeira said. “We’re here to raise awareness about the advantages of franchising as a proven, scalable, lower-risk small business model, and the unique tools and turn-key solutions available to increase franchising lending and a healthy return on investment. Now is the time.”

Johnson described FRANdata’s Bank Credit Report, an in-depth financial analysis available to franchisors that translates complex data from the FTC-required Financial Disclosure Document (FDD) into a language lenders can readily understand, thereby facilitating the loan process. 

DiNicola described a new tool developed by the IFA, CBA and FRANdata called a “Franchise Lending Template” – a result of the IFA’s 2011 Small Business Lending Summit, that he said will help lenders understand franchise lending, spurring more investment. “We’re committed to it. We are here to help our colleagues understand the benefits of this particular business model and all the opportunity there,” DiNicola said. Lending executives attending the session included Greg Jaeger, SVP and Chief Credit Officer of U.S. Bank, along with executives from Union Bank, HSBC, PNC and others.

DiNicola, Steed, CBA Small Business Committee chairman and HSBC business banking chief Mark Luppi and others will attend IFA’s upcoming 2nd Small Business Lending Summit in Washington April 17, where franchise and finance leaders will gather to seek ways to expand access to credit. Acting chief of the Office of the Comptroller of the Currency (OCC) John Walsh, Acting FDIC Chairman Martin Gruenberg, SBA Administrator Karen Mills, and House Majority Whip Kevin McCarthy (R-Calif.) are scheduled to address the Summit.

For more information about the invitation-only event, please contact Beth Solomon at bsolomon@franchise.org.


CICI’s Pizza CEO on Managing Food Costs

Consumers are feeling the rise of fuel, food and travel and as commodity prices are generally on the rise, CiCi’s Pizza has been able to absorb many of those costs.  CEO Mike Shumsky talks with Neil Cavuto on Fox Business on how his company has been able to manage food costs. 

According to CEO Mike Shumsky, “the CiCi business model is a unique model where we value the consumer mind set.” Being able to absorb costs, like owning their own store delivery system, creating an in house purchasing function and doing advanced buying, allows CiCi’s Pizza to continue to keep their prices low and benefit their loyal customers. 

The equation for CiCi’s restaurants requires them to be efficient in managing commodity costs, and when you’re “in the business of feeding million” as Shumsky says, “the most important part is to a run a restaurant that provides value to customers.”

According to IFA’s December Franchise Business Economic Outlook Report, plans for new business are restrained by the tax and regulatory uncertainties, yet CiCi’s Pizza has been able to continue to show signs of growth and Shumsky claims that CiCi’s, like many restaurant chains, will only raise costs as “a last resort.”

“One thing to remember is that systems within the restaurant are pretty sophisticated and help us absorb those commodity costs as they come along,” according to Shumsky.  

To view the entire video clip click here.


Mar 19

Franchise moguls hit the slopes at UnConference

Franchise moguls hit Park City, Utah to meet the snowy kind and gather for the 4th-annual UnConference hosted by Fishman Public Relations, Fisher Zucker and Hot Dish Media to network and discuss issues facing franchising today. As the sun blazed down on the slopes, the franchise skiers were also reflecting a bright outlook: every franchise president, CEO, founder and chairman predicted growth for their companies in 2012.



Choice Hotels President & CEO Steve Joyce – and IFA 2nd Vice Chairman – said “12” will be a positive year. He said pressure on the construction industry has led to a lack of hotel supply – adding up to a promising outlook for hoteliers for the next four to five years. FOCUS Brands CEO, Roark Capital Managing Director and IFA 1st Vice Chairman Steve Romaniello echoed the optimism, saying that while commodity prices could mean hidden perils for the foodservice industry, financing is easier and customers are coming back. Maybe that’s why Roark’s Geoff Hill charged up the mountains to face the double-diamond slopes – the most difficult at Park City’s Canyons resort – leading a pack that included John Francis of PostNet, Brian Wheelis of Facebook (a first-time UnConferencer) and others. Bonzai!



IFA President & CEO Steve Caldeira said the IFA remains on high alert, given Washington, D.C.’s hostile legislative and regulatory environment. With health care mandates, aggressive union-backed labor regulations, and potential tax reform on the horizon, Caldeira said IFA’s renewed Government Relations & Public Policy team will be backed by a potent Political Action Committee. “We will have a $1 million PAC” for the 2012 election cycle, said Caldeira. It’s the first time in history IFA will hit this high mark, helped by the $10,000 raised in an UnAuction at the event hosted by IFA’s Director of Political Affairs and Grassroots Advocacy Erica Fitzsimmons.

In between slalom runs and snowboarding, “Undercover Boss” stars Joyce, FASTSIGNS CEO Catherine Monson (airing May 4), Budget Blinds CEO and Co-Founder Chad Hallock (airing April 13), Philly Pretzel Factory CEO and Co-Founder Dan Dizio (airing April 27) as well as BrightStar Care CEO and Co-Founder Shelly Sun joined show producer Tom Ham to discuss the rollercoaster ride of being featured on the CBS series in another UnConference UnPanel.



UnConference hosts Lane Fisher of Fisher Zucker, the franchise law firm, Brad Fishman of Fishman Public Relations, and Dawn Kane of Hot Dish Advertising founded the popular event four years ago to bring together industry leaders in a relaxed environment.
 
This year, the 175 attendees included over 70 franchise executives, 50 CEOs, 16 current or former IFA board members, four past IFA Chairs, two incoming Chairs, a juggler, a moonwalker and a pianist.


 
“Now, it’s your job to find them,” said Fisher, swishing off each day to face the snowy moguls with his wife Melissa and a wide range of franchise leaders. “And ski hard.”

“I’m excited,” said co-founder Fishman, a gold medal-level skier, even while leading the event’s late-night socializing. “This started out as an opportunity for us to have fun together and it slowly turned into something that a lot of people can enjoy and also get a lot of knowledge. They can spend time together and connect in a relaxed way. That’s why a lot of people like it.”

Posted by Beth Solomon, Vice President, Strategic Initiatives & Industry Relations


Mar 8

Snap-on CEO Talks Hiring on CNBC

According to ADP, the private sector employment increased by 216,000 last month which was not only the 25th consecutive monthly gain but also was a gain of about 1,000 above estimates.  To get jobs going companies need to continue to hire. Snap-On Tools CEO Nicholas Pinchuk appeared on CBNC’s On the Street to talk about how his company and his franchisees are creating jobs, and how across the board sales are up. 

“Last year we saw a 5-6% increase in the workforce, so I think you can clearly say we are hiring.  We reached pre recession levels in the fourth quarter of last year, and we are hiring in reaction to that,” Pinchuk said.  Pinchuk, who has been the CEO of Snap-On since 2007, manufactures 80% of what they sell in its American Plants and calls on 300,000 small businesses across the US.   Snap-on which is a global innovator, manufacturer and marketer of tools, has 10 manufacturing facilities in the around the US. 

“People in these jobs are very positive, with the most positivity starting at the grass roots level,” according to Pinchuk.  “There is a lot of opportunity for productivity among the owners and technicians of these small businesses.”  To view the complete interview on CNBCclick here.  


Lenders bet on franchising in Las Vegas

Speaking to a packed room of nearly 300 franchise leaders at the annual Franchise Times Franchise Finance Conference in Las Vegas, U.S. Bank SBA Division President Julie Huston said Tuesday the IFA’s Credit Access Campaign has been a “gamechanger,” positioning the industry for significant growth as banks begin to expand lending after three years of stagnation. “I would give the industry an A for the way you have addressed this problem.” Huston, whose franchise lending career has included working for GE Capital and CIT, said use of tools like FRANdata’s Bank Credit Report and BoeFly are enabling franchise lending to expand faster than other small business lending categories.

“There’s now growing pressure inside our organization to book loans,” Huston said, echoing reports from other lenders at the conference. The reason: sources of revenue for banks such as credit card swipe fees have shrunk. But Franchise America Finance CEO Ron Feldman said the story is nuanced. “Conventional lending is back,” he said, “but it’s only back for great operators.” 

Jeff Roseland of Wells Fargo, which recently joined the IFA for the first time, said the bank is developing a major franchise lending strategy. “There are a lot of lenders coming back to franchising,” said Franchise Times publisher Mary Jo Larson. “CIT is here, and others we haven’t seen in a while.” Other sponsors included Trinity Capital, Mt. Pleasant Capital Corp., Swift Capital, Capital Spring, and Merchant Cash & Capital.

Feldman said franchisors still need to be proactive in helping franchisees get financing. “Waive the franchise fee,” he suggested. “Anyone thought of that?”

“Also, you need a toolkit for your franchisee to take to the bank. Otherwise they’ll walk in with the  FDD. It’s 400 pages written by lawyers,” Feldman warned. “The bank will say no thank you.”

Posted by Beth Solomon, Vice President, Strategic Initiatives & Industry Relations


The National Defense Radio Show explores IFA’s VetFran Pavilion during Convention

The National Defense Radio Show was onsite during IFA’s Annual Convention last month in Orlando, exploring IFA’s new VetFran Pavilion.  IFA is concentrating its efforts on increasing job opportunities and programs available to Veterans, while building initiatives to get veterans into franchising at huge discounts.

Mary Thompson a Marine Corps Captain and now President of Mr. Rooter plumbing, knows she was lucky franchising found her and isn’t surprised that veterans make such good employers. “With a military background, veterans have been trained with discipline, leadership and have a strong work ethic.  Franchising allows veterans to excel in skills they have obtained from serving,” Mary told National Defense Radio while at IFA’s Convention.

More than 450 franchisors are offering their best discounts to veterans entering franchising through IFA’s VetFran program.  The UPS Store is adding to that by waiving the entire franchise fee to the first ten veterans.  Ted Price of The UPS Store says the company’s goal is to help veterans that are coming back to a bad economy integrate back into society.  “Veterans make great franchisees because they know how to follow a system and that’s really the heart of a franchise,” Ted told Randy, host of National Defense Radio show.

Also making its first appearance at IFA’s Convention was the Hero2Hired mobile job store truck, where SGM Bowser told National defense Radio their mission was simple, “to link employers to the job seekers.” 

With 1 out of every 7 jobs created by franchising, IFA has committed to hire and recruit 75,000 veterans and 5,000 wounded warriors by 2014 as part of IFA’s Enduring Opportunity campaign and the White House Joining Forces Initiative.  SSG Shilo Harris, a veteran himself, who stopped by the VetFran Pavilion is able to relate to the problems facing veterans that are coming home today and understands that “veterans have so much to offer and are able to utilize their skills learned in the military and IFA and franchising are giving veterans that chance to succeed and once again provide for their families.” 

For more information on IFA’s VetFran program or Operation Enduring Opportunity visit www.vetfran.com and to listen to the full interview click here.


Feb 29

IFA joins travel industry to make recommendations for National Travel and Tourism Strategy

The International Franchise Association today joined several other business groups in the Discover America Partnership asking the U.S. Department of Commerce to take more aggressive steps to boost the U.S.’s share of the international tourism market. IFA is a member of the partnership, with IFA President & CEO Steve Caldeira serving on the board of directors of the U.S. Travel Association, which runs the partnership on a day-to-day basis.  

“The travel sector, always opportunistic, has continued to generate new jobs even during these difficult economic times,” said comments submitted to the Commerce Department’s International Trade Administration. If the United States doesn’t get more aggressive in its outreach efforts, however, the nation risks a continued slide in its ability to attract international visitors just as world tourism ramps up.

"Travelers to the U.S. are significant customers for the nearly 825,000 franchised businesses in the U.S., including franchise business categories such as restaurants, hotels, retail products and services, business services and personal services," said Caldeira. "Boosting travel to the U.S. will create jobs and increase economic output in the $2.1 trillion franchise industry, so what is good for the travel industry, is good for the franchise industry." 

The comments come in response to President Obama’s recent executive order calling on his Cabinet to develop additional ideas, in partnership with the travel industry, to increase international inbound travel to the United States. These ideas will help form the National Strategy for Travel and Tourism. Specifically, the comments focus on:

  • Improving the visa process;
  • Expanding the Visa Waiver Program;
  • Supporting international travel promotion;
  • Improving the entry experience at our international airports;
  • Increasing student and youth travel to the U.S.;
  • Improving the air travel screening and security process;
  • Accelerating travel-related infrastructure projects;
  • Boosting visitation at national parks;
  • Improving capabilities to assist economic recovery following disasters; and others.

Worldwide travel will grow from 930 million visits to almost 1.3 billion by 2020, according to the World Travel and Tourism Council. The partnership called on U.S. government officials to set a goal of recapturing a 17 percent share of the global long-haul international travel market, up from 12 percent today. Sustaining the 17 percent share through 2020 would bring an extra 98 million travelers to the United States.

The comments focused on improving the visa process by making online consular services more user-friendly, implementing mobile interviews for visa applications, and opening additional visa offices in Brazil, China and India. 

The Discover America Partnership web site contains more information about the steps the travel industry is taking to boost tourism in the U.S. 

Posted by Matt Haller, IFA Sr. Director of Communications