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2nd edition in our “Coach, Mentor & Grow®” video series for Franchisors

Here’s the 2nd edition in our “Coach, Mentor & Grow®” video series for Franchisors. The panel at the NY FBN/IFA meeting covered the topic of “Franchising and Private Equity- How to Position your Company” Panelist Oz Bengur, Lisa Oak, Grant Marcks and Roger Lipton. Hosted by David Azrin Esq.

If you’d like to receive the entire 1-hour session please contact us at [email protected]

Watch the video: https://www.linkedin.com/in/gary-occhiogrosso/detail/recent-activity/shares/

KEEPING A LEGACY BRAND RELEVANT

Lee’s Hoagie House, the Pennsylvania-based chain that has defined Philadelphia’s traditional sandwiches, the hoagie, and the cheesesteak, for over 60 years, has relaunched its long-established regional brand with a streamlined in-store layout and national franchise offering.

According to CEO Allan Lewin, “Through our franchise efforts, consumers across the country can now enjoy an authentic ‘taste of Philly,’ and experience the pride of place that Lee’s hoagies and cheesesteaks invoke.

Keeping a Legacy Brand Relevant
PHILADELPHIA (PRWEB) JUNE 15, 2018

LEE’S® HOAGIE HOUSE REBRANDS FOR IT’S NEXT 60 YEARS
Lee’s® Hoagie House, the Pennsylvania-based chain that has defined Philadelphia’s traditional sandwiches, the hoagie, and the cheesesteak, for over 60 years, has relaunched its long-established regional brand with a streamlined in-store layout and national franchise offering.

IN-STORE REDESIGN
Among Lee’s® Hoagie House’s planned in-store upgrades are a new floorplan and a redesign of the Lee’s® Hoagie House retail space. Lee’s® Hoagie House contracted with Mark Metzgar, CEO of Cornerstone Consulting to manage the engineering and architectural redesign. “Our experience working with other successful franchises helped Lee’s® Hoagie House redefine their store concept to improve the customer experience, differentiate from the competition and better monetize their menu,” Metzgar adds. “We wanted the new layout and design to streamline operations at the same time showcasing the authentic Philadelphia legacy of the Lee’s® brand.

The new, industrial-meets-rustic look from offers distressed wood, exposed brick, overhead ductwork, cement floors, pendant lighting and large front facing windows. Bold graphics and easy-order digital displays add to the modern vibe. Each location will also honor its Philadelphia heritage with colorful murals and historic posters depicting classic Philly moments. The inviting design and thoughtful floorplan add ambiance and efficiency with a more streamlined throughput for customer ordering, fulfillment, and enjoyment.

TURNKEY SYSTEMS
Meeting the same quality standards nationwide necessitated new thinking on the part of the Lee’s operational team, as well. To guarantee the consistent quality of Lee’s® Hoagie House signature fresh made bread, LHH Franchise Group partnered with Liscio’s Bakery of New Jersey. Franchisees can now maintain the taste and integrity of Lee’s Hoagie House’s distinctive sandwich bread, by finishing it fresh on site from par-baked rolls and loaves.

INCREASED EMPHASIS ON NATIONAL FRANCHISES
Lee’s Hoagie House has teamed with franchise industry expert, Gary Occhiogrosso, the founder of Franchise Growth Solutions, LLC, to expand the turnkey Lee’s® Hoagie House fast casual QSR (quick service restaurant) business model from 17 locations in 2018 to 25 locations by 2020. Lee’s® Hoagie House franchises are currently available in PA, NJ, NY, DE, and along the East Coast.

Mr. Occhiogrosso has over 30 years’ experience in franchise development and sales and was integral to the success of nationally recognized brands including Ranch *1, Desert Moon Fresh Mexican Grille, SkinnyPizza, Acai Express and those found under the multi-brand franchisor, TRUFOODS, LLC.

Lee’s® Hoagie House also requires its franchisees to attend Hoagie University, an intensive internal training program on opening and operating a successful franchise business. During the three-week course, franchisees learn about store operations, recruitment and development of staff, customer service best practices, marketing and sales techniques, and basic administrative oversight. Following the training, franchisees receive weekly coaching and support.

A PHILADELPHIA FAVORITE
A staple in generations of Philadelphian’s diets, Lee’s® Hoagie House offers a complete menu of 6, 9 and 18 inch custom made hoagies (a regional term for a hero, grinder or submarine sandwich), Philly and chicken cheesesteaks, hot sandwiches, wraps, salads, as well as chicken wings and chicken fingers.

The Lee’s® Hoagie House concept was created in 1953 by Lee Seitchek, expanded locally in 1977, franchised regionally in 2014, and will expand their franchise effort nationally in 2018. By enlarging the franchise footprint, consumers across the country will able to get the same quality, consistency, and service of the original Lee’s Hoagie House at any franchised location in the U.S. The fast-casual restaurant concept is currently in 17 locations across 4 states.

Once hourly employees at Lee’s, today, LHH Franchise Group co-founders, Allan Lewin and John Connell, are committed to leveraging Lee’s® Hoagie House from a beloved regional brand into a nationally recognized brand. “In order to take the franchising of Lee’s® Hoagie House national, we have created a strong business plan for the franchises to follow.” Says Lewin. “In 2018, the Lee’s ® Hoagie House franchise holder will have the strength of a long-time, proven concept and also benefit from new operational upgrades, a redesigned store layout, and consultative advice from one of the country’s top franchising experts.”

ABOUT LEE’S® HOAGIE HOUSE
Lee’s Hoagie House was founded in 1953 by Lee Seitchek with a menu based around the “Official Sandwich of Philadelphia”, the hoagie served on fresh-baked bread. Today, Lee’s® Hoagie House offers a variety of sandwiches, salads, and wings, including the original Philly Cheesesteak. Lee’s began expanding regionally in the late 1970’s and franchising in 2014, based on the popularity of its concept. Lee’s® Hoagie House currently has 17 owned and operated locations in Philadelphia, New Jersey, North Carolina and South Carolina. A national franchise plan was put in place in 2018.

According to CEO Allan Lewin, “Although the flavor profile of Lee’s® Hoagie House’s is synonymous with the Philadelphia region, through our franchise efforts, consumers across the country can now enjoy an authentic ‘taste of Philly,’ and experience the pride of place that Lee’s hoagies and cheesesteaks invoke.

ABOUT FRANCHISE GROWTH SOLUTIONS, LLC
Franchise Growth Solutions, LLC is a strategic planning, franchise development and sales organization offering franchise sales, brand concept and development, strategic planning, real estate and architectural development, vendor management, lead generation, and advertising, marketing, and PR including social media. Franchise Growth Solutions’ proven “Coach, Mentor & Grow®” system puts both franchisors and potential franchisees on the fast track to growth. Membership in Franchise Growth Solutions’ client portfolio is by recommendation only.

For information:
CONTACT: Gary Occhiogrosso
Franchise Growth Solutions
917.991.2465
[email protected]

Restaurant Operators, Franchisors and Franchisees – Benefits of an Inventory and Theoretical Program

Today’s post is written by recognized restaurant operations expert Fred Kirvan. I’ve had the privilege of working with Fred (almost 20 years) on various projects building scores of franchised Fast Casual restaurants. Today Fred discusses the importance of creating an accurate, detailed and evolving inventory and theoretical Cost of Goods program. Franchised as well and independent restaurant operations should take the time to learn how to build an use such a program. It will not only help you save money but more importantly will create a better system for overall results with or without your daily participation in the operation.
– Gary Occhiogrosso
Founder and Manager – Franchise Growth Solutions, LLC. #howtofranchise
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Performing regular inventories will serve to organize your stores as attempting to perform an inventory in a disorganized store will take twice the amount of time. As part of the integration of this program, we will teach managers and franchisees how to perform accurate and effective inventories.

Benefits of an Inventory and Theoretical Program

By Fred J. Kirvan
Founder FK Consulting
Cooperative Member – Franchise Growth Solutions, LLC

I deal with numerous franchisors and restaurant operators and still can’t understand why so many do not employ a good inventory system. In fact, the sad truth is some don’t even conduct a weekly or monthly inventory…Instead, they use purchases to somehow (and inaccurately) calculate their Cost of Goods (COG’s).
Today I will attempt to explain why it is critical for professional restaurant management that you have a detailed Inventory and Theoretical COG’s Program. A 3%-5% saving in COG’s can add up to tens of thousands of dollars. Remember, this saving goes directly to your bottom line, not to mention the increase in accountability of your operation whether you participate in the day to day operation or not.

Here are just a few benefits of using such a program

1. Provides the ability to conduct a monthly audit on your purchases when the program’s Master Inventory Sheet is updated each month by you or someone in your organization. These audits should be updated internally.

2. The process of developing this program serves to streamline your order guide by having to determine which products you will use moving forward as they are now tied to menu and recipes within the program. What that means is your order guide gets cleaned up by removing duplicate or unnecessary items.

3. In addition to a Theoretical Food Costing Program, it will also include Inventory Sheets for performing accurate physical inventories.

a. Performing regular inventories will serve to organize your stores as attempting to perform an inventory in a disorganized store will take twice the amount of time. As part of the integration of this program, we will teach managers and franchisees how to perform accurate and effective inventories.

b. By having theoretical and physical inventory in one program we can immediately identify down to the penny, the difference which should be accounted for discounts, employee meals, and waste. The unaccounted-for amount is then either over portioning, shrinkage or theft. Without this information your operating blind.

4. This process will streamline your Recipes, portioning must be solidified to achieve costing which serves to assist with the consistency of menu offering as well.

5. This process will streamline your Plate Builds, portioning must be solidified to achieve costing which serves to assist with the consistency of menu offering as well.

6. Once the program is completed:

a. You’ll immediately be able to identify higher and lower costed menu items.

*** i. With that information, you may elect to change the portioning and/or pricing to remedy the issue having an immediate impact on your costs.

*** ii. Additionally, repositioning lower cost items on the menu will also serve to immediately lower costs as well.

b. You’ll be able to see the immediate impact on your overall food cost as a percentage and dollar amount by changing costs from your distributor.

c. You’ll be able to see the immediate impact on your overall food cost as a percentage and dollar amount by changing portions on menu items.

d. You’ll be able to see the immediate impact on your overall food cost as a percentage and overall dollar amount by changing prices on your menu items.

Quite simply, no professionally managed restaurant group can or should operate without this level of information – certainly not having this level of detail on your menu offering will heavily impact your ability to recruit multi-unit franchisees in the future.

For more information on building and using an Inventory and Theoretical Program and for a FREE Consultation please contact [email protected] or call (917) 991-2465
Visit www.frangrow.com
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About the Author:
FRED KIRVAN
Founder FK Consulting

Fred started in the franchise business in 1991. Working with the founder of Desert Moon Fresh Mexican Grille he developed the operating systems and grew the company from a single unit into a multi state, 30 unit franchised brand. In 2008 he became President of Desert Moon remaining in that role until 2013

Mr. Kirvan was then recruited as the Chief Operating Officer for TRUFOODS, LLC. a 100 unit, multi brand franchise company that included Pudgie’s, Wall Street Deli, Ritter’s Frozen Custard and Arthur Treacher’s Fish and Chips.

Upon leaving TRUFOODS he became VP of Operations for Energy Kitchen; a NYC based fast casual chain which pioneered the “healthy alternative” space before leaving to launch an early learning & play center business “Moozie’s Play Cafe” with his wife.

Working in a variety of capacities in food and non food business’ Mr. Kirvan’s experience in systems development, writing manuals, brand connectivity, purchasing and construction project management have proven invaluable assets to start up & emerging brands.

Currently FK Consulting works to develop a full suite of Confidential Franchise Manuals which include Operations, Managing the Business, C&D and other critical Job Aids and Training Tools necessary to grow and enhance the process of devloping successful franchisees.

Small Franchise Systems Can Go International Too

He also signed a development agreement for 10 locations in Saudi Arabia. After his success in the Middle East, he decided to target Western Europe where he had already exhibited in France and Spain.

Small Franchise Systems Can Go International Too

By Ed Teixeira
Chief Operating Officer of Franchise Grade

Just because a franchisor operates a small or emerging franchise network, it shouldn’t exclude them from exporting their franchise brand to other countries, providing they meet certain basic requirements. In fact, there are large franchisors that based upon their performance and product are unqualified for international expansion. In some cases, a small franchise system may find the market in the U.S. so competitive, it might be in their interest to consider expanding into foreign markets. There are certain attributes that qualify a franchisor for international expansion but size alone shouldn’t be the determining factor.
Russo’s Restaurant Franchise

To gain some perspective on this subject, I spoke with Chef Anthony Russo, CEO of Russo’s New York Pizzeria and Russo’s Coal Fired Italian Kitchen. Based in Houston, Texas Russo’s began franchising in 1998 and operates 30 franchise locations in Texas, Oklahoma, Arkansas, Tennessee, Florida and Hawaii.

I asked CEO Anthony Russo, how he came to take his franchise overseas. He explained that true New York style pizza wasn’t available in many U.S. markets and foreign countries. He told me how the two restaurant concepts have built their reputations on being undeniably authentic in every way. While still franchising in the United States, Anthony started his foray in other countries by engaging the services of a broker. After one year, without success from the broker, he decided to personally exhibit at a franchise show in the Middle East, where he presented his pizza. He received a great response and currently has seven franchise units in Dubai with two more under construction. He also signed a development agreement for 10 locations in Saudi Arabia. After his success in the Middle East, he decided to target Western Europe where he had already exhibited in France and Spain. Unlike other franchisors, he uses a development agreement franchise model in each country rather than a Master Franchise agreement. He feels this approach is less costly for the franchisee and he doesn’t risk giving up franchise rights to an entire country. As Anthony works on international expansion, he continues to franchise in the U.S.
I asked Anthony Russo what he considers the most important requirements for a smaller franchise to go International. His response: “Minimum 20 locations, a good system, strong corporate staff and sufficient working capital.”

Regardless of size, the following are important qualifying factors for international expansion:
• Suitable financial resources for an international project.
• The franchise has a successful operation in the U.S.
• Strong potential for expansion in other countries.
• Franchisor staff is available and capable of training, servicing and supporting a franchisee in another country.
• Franchisor leadership is engaged and committed to international expansion.
• The franchisor can provide the operational and marketing knowhow
• Operations and marketing manuals are current and up to date and marketing materials that can be adapted and translated for use in other countries.
• The franchisor acquires or has familiarity with target countries.

When a franchisor considers taking their franchise concept to other countries, an important factor to consider is whether their franchise is qualified to expand to other countries. One factor, that should not disqualify a franchisor, is its’ size. This doesn’t mean that any franchisor regardless of system size is qualified to go overseas, but rather that smaller franchisors shouldn’t rule out going international simply because of their size.

About the Author

Ed Teixeira is Chief Operating Officer of Franchise Grade and is the founder and President of FranchiseKnowHow, L.L.C. a franchise consulting firm. Ed has over 35 years’ experience as a Senior Executive for franchisors in the retail, healthcare, manufacturing and software industries and was also a franchisee. Ed has consulted clients to franchise their existing business and those seeking strategic solutions to operational, marketing and franchise relations issues. He has transacted international licensing in Europe, Asia and South America. Ed is the author of Franchising from the Inside Out and The Franchise Buyers Manual and has spoken at a number of venues including the International Franchise Expo and the Chinese Franchise Association in Shanghai, China. He has conducted seminars, written numerous articles on the subject of franchising and has been interviewed on TV and radio and has testified as an expert witness on franchising.

Strategies for Effective Performance Management

When establishing the goals for a position, you need to make sure your people leaders have what they need to clearly communicate and review the goals and expectations of the position to the employee. This should include job descriptions, policies, procedures, and performance program documentation.

Performance Management Avoidance

There is a plethora of reasons performance management programs are less than successful in meeting their intended outcomes. One significant factor contributing to this problem is the reluctance or hesitation of people leaders in conducting the performance review. Over time we have observed a variety of contributing variables that inhibit a people leader from engaging the employee to provide feedback.

Supervisors who:
• were never properly trained to deliver feedback
• are new and lack both the training and experience
• are unclear of what the expectations of the employee and position are
• inherently are uncomfortable with conflict
• have a personal relationship with the employee
• don’t want to upset the employee
• would rather do the work themselves compare to holding the employee accountable

As a business owner or leader, it is critical to understand these challenges of your people leaders and develop training programs, guidance documents, clear job descriptions and position goals to prepare these individuals for success. Give your people leaders the tools, resources and support to measure, manage, and improve the workforce effectively.

Five Key Factors to Effective Performance Management

Once your people leaders have been properly prepared to execute performance management in your organization, there are five key factors that lead to success for the workforce that we are going to review here.

1. Setting the Right Expectations from the Start

When establishing the goals for a position, you need to make sure your people leaders have what they need to clearly communicate and review the goals and expectations of the position to the employee. This should include job descriptions, policies, procedures, and performance program documentation.
Do not neglect other key components in this process that go well beyond paper. This includes your company culture (the actions and behavioral norms of the organization), the work environment, and the modeled behavior of the managers and leadership team.

2. Crucial Conversations

Recognize that discussions about performance are often challenging and require patience, trust, and mutual respect. Establishing a comfortable environment where honest feedback can take place and is received as a tool to support the employee’s success is easier said than done. Special attention should be given in the training and support of your people leaders to have crucial conversation with their staff to achieve success.

3. Listening as a Powerful Tool

Here is your chance to demonstrate diversity of thought and an inclusive behavior. If you do all the talking it is not a conversation, it is a lecture. Think about how you could possibly demonstrate care for the employee if you refuse to listen to their thoughts and ideas, as well as their feedback. You can be confident in knowing that you will learn something from the employee if you only take the time to listen. Empower the employee to provide you feedback, and this means teaching them how to share with you what they need from youin order to be successful in their respective roles.

4. Accountability is not Punitive

If the only time you provide an employee feedback is when they do something wrong, the entire system of performance management will be perceived as punitive. Instead, ensure your conversations are consistent and relay constructive feedback regarding when the employee if both meeting or falling short of established expectations. If you are building trust and engagement with the employee, you must be sincere in your communication about performance. Positive accountability leads to improved performance, professional development, the closure of skill gaps, and enhancement of capabilities. Even your best employee has room to develop and grow, and you should take advantage of your performance management program to support their continued success in this manner.

5. Recognizing the ROI of a Successful Performance Management Program

How does the business benefit from building and executing an effective performance management program? Of primary importance should be the validation that you as an employer are getting what you pay for. If employees are not meeting expectations, you are not getting what you pay them to do. That, alone, should motivate any employer to take performance management seriously. Other benefits for the business are increases productivity, maximizing workforce capabilities to deliver your products and services, improved trust and engagement with management, effective communication, professional development, and opportunity for succession planning. When executed well the organization is also informed as to the creation of effective training and development programs for the workforce.

Why is the Employee’s Perspective of
Performance Management is Important?

In creating a workforce in which communication is effective and mutually beneficial, resulting in trust and engagement, an employee must believe confidently that the business has their best interest at heart in achieving success.

When an employee doesn’t trust their supervisor cares about their success in the company, engagement breaks down as does communication and job performance. Employees are observing the behaviors of the management team all the time.

When they see actions not matching words, they lose faith in the leadership of the company and can become disengaged and they lose trust in those guiding the business.

If the employee is only receiving feedback when something is wrong, they will perceive the program as punitive and avoid sharing their ideas for the business. The environment will become disconnected and morale will deteriorate, leading to gossiping and lack of engagement.

Ensure your people leaders are trained effectively to engage their staff, build trust, and communicate all forms of feedback in a consistent and fair manner to establish positive relationships with the workforce.

Franchise Growth Solutions Expands at the International Franchise Expo

“We’ll be showcasing some of the most innovative and exciting franchise brands of the year.” Gary Occhiogrosso – Founder, Franchise Growth Solutions

Franchise Growth Solutions to Showcase Innovative Franchise Brands

New York, NY (RestaurantNews.com) Franchise Growth Solutions LLC, the New York-based strategic planning, franchise development and sales organization, headed by franchise industry expert, Gary Occhiogrosso, will exhibit at the International Franchise Expo, May 31-June 02, 2018, at the Jacob K. Javits Convention Center in New York City.

Mr. Occhiogrosso , a 30-year veteran of single and multi-unit franchise development and sales, was instrumental in the launch and growth of nationally recognized franchises including Ranch *1, Desert Moon Fresh Mexican Grille, and brands found under the multi-brand franchisor, TRUFOODS, LLC.

From booth #340, Franchise Growth Solutions will showcase some of 2018’s hottest franchise opportunities: Acai Express®, Taboonette®, Planet Wings®, YeloSpa®, SkinnyPizza®, and Snow Days® to an estimated 10,000 entrepreneurs and future business owners. Occhiogrosso revealed, “We’ll be showcasing some of the most innovative and exciting franchise brands of the year.”

With additional credentials as an in demand public speaker on franchise success, and as an adjunct instructor at NYU, Occhiogrosso will also moderate a panel discussion entitled, Private Equity and Franchising. As moderator, Occhiogrosso will host a discussion between franchisors and private equity investment professionals on how to find capital, the best ways to position franchises for growth/investment, and a checklist of what it required for strategic partnership in the eyes of the investment community. “This is my favorite venue to present this panel, we bring together Emerging Brands and Private Equity Investors to discuss ways to capitalize on the fired-up equity markets in Franchising” added Occhiogrosso. The event is scheduled for Friday June 1st at 10am.

The International Franchise Expo in New York City is the largest franchise show of its kind in the country. The three-day show traditionally attracts over 10,000 attendees and over 400 national and international franchise opportunities.

About Franchise Growth Solutions, LLC

Franchise Growth Solutions, LLC is a strategic planning, franchise development and sales organization offering franchise sales, brand concept and development, strategic planning, real estate and architectural development, vendor management, lead generation, and advertising, marketing and PR including social media. Franchise Growth Solutions’ proven “Coach, Mentor & Grow®” system puts both franchisors and potential franchisees on the fast track to growth. Membership in Franchise Growth Solutions’ client portfolio is by recommendation only.

For information on Franchise Growth Solutions or any of its franchise opportunities, please contact Gary Occhiogrosso at (917) 991-2465 OR email at [email protected]

Franchising Your Business? Don’t Let Dreams Of Success Influence The Process

A study of startup franchises was done by Franchise Grade.com www.franchisegrade.com over a ten- year period from 2007 to 2017. The franchises were divided into eight groups comprised of 0 to 100 locations, beginning with the year first franchised. The data showed that it took significant time for many startups to achieve even modest growth.

Franchising Your Business? Don’t Let Dreams Of Success Influence The Process

By Ed Teixeira, Co-operative member with Franchise Growth Solutions,LLC.

The dream of building and developing a successful franchise company continues to motivate independent business owners, many of whom operate small businesses. They are encouraged by numerous success stories about how small business owners grew their franchise into regional or national brands by utilizing the franchise model as a pathway to increased growth and financial success. However, many of these new franchisors may find their results falling short of expectations. The metrics pertaining to franchise startup performance, despite the hype from certain sources, reveals how challenging it can be to build a successful new franchise. Research reveals that a disproportionate percentage of businesses that launch a new franchise brand fail to achieve favorable growth during the first four years. Many cease franchising after failing to add a single franchisee, ultimately returning to operating their original business. One reason for this outcome is that some startup franchisors share the same expectations as a new franchisee. Namely, both see future franchise success as a smooth road, neglecting any potential potholes.

A study of startup franchises was done by Franchise Grade.com over a ten- year period from 2007 to 2017. The franchises were divided into eight groups comprised of 0 to 100 locations, beginning with the year first franchised. The data showed that, it took significant time for many startups to achieve even modest growth.

30.6 % of franchises that started four years before had zero to one franchise locations.
After ten years from launch 52.4% of the group had 50 or less franchise locations.
I’ve met with startup franchisors who had such unbridled optimism, they couldn’t foresee the smallest possibility of failure.

A Process to help arrive at a successful outcome

Build a strong foundation of franchising knowledge:

Business owners considering franchising their business should acquire a knowledge base on franchising from various sources including trade associations, Federal and State agencies, successful franchise executives as well as franchise attorneys and consultants. Don’t rely on a workshop at a franchise trade show to provide all you need to know. In the age of the Internet there are countless sources of information regarding franchising. A strong understanding of the franchise business sector, pertaining to independent and franchise brand competitors, is critical.
Focus on understanding what’s needed to develop a successful franchise system. Above all, don’t be overwhelmed by franchise success stories. Put ego aside. Unless you’re a franchise expert, listen to those who have a strong understanding of franchising. Think walking before running.
Develop a potential franchise market development study to identify the markets and regions that offer the best opportunity for success. Many startup franchisors will sell franchises throughout the country without ever considering the importance of brand building and franchisee support. This is a flawed strategy.
Avoid devoting the bulk of your franchise investment capital to building the franchise. Legal, consulting and marketing fees can add up very quickly. Some business owners exhaust the bulk of the project capital on building the new franchise with little left for franchise staff, marketing and other activities without knowing how costly and difficult it can be to sell that first franchise and more.
Whenever possible, make sure you have advice from people who have operated and developed a franchise system.
Just like the advice provided to prospective franchisees “Don’t allow yourself to be sold.” Rather be cautious, guarded and seek confirmation of important facts and representations.
Although, some new franchises get off to a fast start this is the exception not the rule. Be sure to temper your expectations and spend your franchise capital wisely.

Avoid these pitfalls of franchise startup failure:

Despite the advice of some franchise consultants, not every business is suitable for franchising and can’t be built into a successful franchise model. This may be because at the beginning of the franchise evaluation process there was a lack of objectivity when evaluating the business for a franchise.
Failing to utilize and follow the analysis and opinion of financial and legal advisors and request them to provide you unfiltered feedback.
The business owner and staff lack the required business skills to operate a franchise system. This situation can manifest itself in several ways including the inability to lead or manage a multi-unit organization. There is a lack of existing or available management staff that can operate the new franchise plus the existing business. Too many franchises start up as a two-three person operation.
The business owner doesn’t fully understand the implications of franchising a business and what it takes to be successful. Developing and launching a successful franchise program, requires the right ingredients. Unfortunately, a good deal of emphasis is placed upon building the franchise and not the launch and development of the system.
There is insufficient capital necessary to build, develop and operate a new franchise. A major reason why many startup franchisors fail, is a lack of capital needed to launch the new franchise brand. Just the cost of building a new franchise program including consulting and legal fees, can range from $100,000 to $200,000 or more.Many startup franchisors exhaust their franchise investment capital on the building stage and when it comes to staffing, marketing and supporting new franchises the franchisor lacks the required funds to execute the proper launch.
Business owners considering franchising their business need to be cautious, become franchise savvy and understand what it takes to build a successful franchise program.

There is a relationship between overly optimistic franchise system growth on the part of many new franchisors who lack the necessary business skills, capital and an attractive franchise investment model that appeals to consumers and franchise investors alike.
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About the Author:
Ed Teixeira is Chief Operating Officer of Franchise Grade www.franchisegrade.com and is the founder and President of FranchiseKnowHow, L.L.C. a franchise consulting firm. Ed has over 35 years’ experience as a Senior Executive for franchisors in the retail, healthcare, manufacturing and software industries and was also a franchisee. Ed has consulted clients to franchise their existing business and those seeking strategic solutions to operational, marketing and franchise relations issues. He has transacted international licensing in Europe, Asia and South America. Ed is the author of Franchising from the Inside Out and The Franchise Buyers Manual and has spoken at a number of venues including the International Franchise Expo and the Chinese Franchise Association in Shanghai, China. He has conducted seminars, written numerous articles on the subject of franchising and has been interviewed on TV and radio and has testified as an expert witness on franchising.

The opinions expressed are those of the writer.

The Sweet Street of Success, on the other side of the tracks.

Growing up in the Northern Valley of Bergen County, New Jersey, there was a neighborhood which always defined success for me. The street was and is still today lined with the most beautiful and luxurious homes from stately Colonials to contemporary Chalets and Mediterranean Masterpieces framed by lush landscapes, great entertaining space and swimming pools, lots of great swimming pools. That street is Wescott St in Old Tappan, NJ or as we said in Northvale- Westcott St. I find it fitting that my very first residential real estate listing is on the street which without a doubt helped to drive me towards success. I am proud to unveil my first residential real estate listing located at 10 Wescott St Old Tappan, NJ. A beautiful home that is truly the essence of Old Tappan. This location can’t be topped and the home is solid in every way and allows for the next owners to easily customize to their liking. Let me show you why this home is a steal at $1,099,000.

Real Estate is a great business and I am so happy to be helping people find their home of their dreams and helping seller’s maximizing the value of their home.

Click here to see George Lanzaro’s Real Estate listings in New Jersey

Are you looking for Capital or Deal Flow in the franchising space??

This session will consist of a panel discussion covering how to position your franchise company for Private Equity investment and what PE firms look for in a Franchise company acquisition or strategic partnership.

Are you looking for Capital to build your Franchise Company???
– OR –
Is your Investment Firm looking for deal flow in the franchising space??

By Gary Occhiogrosso
Founder of Franchise Growth Solutions, LLC.

On Friday, June 1st, I will be moderating a panel at the IFE in NYC. It will be comprised of Franchisors and Private Equity associates. Please see below for details and please let me know if you’d like to attend the meeting. If so, contact me here or at [email protected] & I’ll send you a FREE PASS to the Expo.

10:00 AM – 11:30 AM
+/- Private Equity Investing and Franchising
Room: 1B05
Moderated by: Gary Occhiogrosso, Managing Partner, Franchise Growth Solutions
Panelists: Roger Lipton, President, Lipton Financial Services; Grant Marcks, Vice President, Head of Business Development, Atlantic Street Capital; Kirk McLaren, MBA, CTP, CPA, Georgetown University
This session will consist of a panel discussion covering how to position your franchise company for Private Equity investment and what PE firms look for in a Franchise company acquisition or strategic partnership. In addition, there will be plenty of “networking” time for both Franchisors and Private Equity attendees to meet & network. This is a great opportunity for Investors and Franchisors to meet face to face and discuss current and future opportunities.
Sponsored by Franchise Growth Solutions, LLC. www.frangrow.com

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This session will consist of a panel discussion covering how to position your franchise company for Private Equity investment and what PE firms look for in a Franchise company acquisition or strategic partnership. In addition, there will be plenty of “networking” time for both Franchisors and Private Equity attendees to meet & network. This is a great opportunity for Investors and Franchisors to meet face to face and discuss current and future opportunities.

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SHAKE SHACK REPORTS – EXPANSION POTENTIAL, ALSO SIGNIFICANT RISK – UNIT LEVEL ECONOMICS SLIPPING

Investors, of course are primarily concerned about the future. Growth is continuing at what we think is accurately described as a “breakneck” pace, with 32-35 new company locations to be opened in calendar ’18 on a base of 90 at 12/31/18.

SHAKE SHACK REPORTS Q1’18 – EXPANSION POTENTIAL, ALSO SIGNIFICANT RISK – UNIT LEVEL ECONOMICS SLIPPING
May 10, 2018articles,
SHAKE SHACK REPORTS Q1’18 – STOCK UP 25% – WHAT’S GOING ON?
By Roger Lipton

IN A NUTSHELL:
36% of the stock float was sold short, so the numbers came through “adequately”, and the stock didn’t go down, so the short term traders panicked, covered their positions and drove the stock higher.

Before we look at the facts, we must restate that there is no publicly held restaurant company that we hold in higher regard than at SHAK. However, the Company is one thing, and the stock is another.

HIGHLIGHTS OF Q1’18:
Comps were up 1.7%, price and mix were important so store level traffic was down 4.2% (on top of a negative 3.4% Q1’17. Factoring out a promotion in Q1’17 traffic was still down 2.2%. Weather was a negative factor in Q1’18 but delivery pilots and an early Easter helped a bit. The table that follows shows line by line performance over the last three years, as well as Q1’18.

As predicted since SHAK came public, average weekly sales for domestic company operated shacks continued lower, at $81,000, down 6% YTY. Trailing twelve month AUVs were $4.5M, down $100,000 from the prior quarter. This latter number is predicted to be $4.1 to $4.2M for all of ’18. Store level “operating profit”, store level EBITDA in essence, was 25.0% of store revenues, up 28.5% on a 29.6% increase in shack sales so store level EBITDA contracted 30 bp. CGS was down 50 bp, Labor was up 20 bp, Other Operating Expenses were up 90 bp to 11.2%, Occupancy and Related expenses were down 30 bp to 8.0%. Below the store level EBITDA line: G&A was up 90 bp to 11.9%, Depreciation was up 40 bp to 6.6%, Pre-opening was down 110 bp to 2.0% (with unit expansion back loaded in ’18). Operating Income was up 15.7% (on an increase in Total Revenues of 29.1%). Income Before Taxes was up 15.7%, down 70 bp to 6.6%. After taxes at 19.4% (vs. 30.0% in ’17), Income After Taxes was up 28.9%. The summary is that the stores controlled costs rather well in a difficult sales (and traffic) environment, the corporate burden was higher, and lower taxes salvaged the quarter’s bottom line.\

Investors, of course are primarily concerned about the future. Growth is continuing at what we think is accurately described as a “breakneck” pace, with 32-35 new company locations to be opened in calendar ’18 on a base of 90 at 12/31/18. Company guidance was essentially “maintained” for ’18. Aside from the new openings, total Revenue expectations was raised by a nominal $2M to a range of $446-450M. Licensing revenue is expected to be $12-13M vs. $12.4M in ’17. In terms of line by line expectations, as shown in the table above, under “Guidance”, Same Shack Sales are now guided to 0-1% positive vs. “flat” previously. AUVs, as indicated earlier will be $4.1-$4.2M for ’18, vs. $4.6M in ’17. Store level EBITDA will be 24.5%-25.5% (affected by the new lower volume units), vs. 26.6% in ’17. G&A will be $49-$51M (plus $4-6M for “Project Concrete”) or 11.1% (plus 1.1%) of Total Revenues. Depreciation will be about $32M (7.1% ). Pre-Opening will be $12-13M (2.8%). Adjusted Pro Forma effective tax rate will be 26-27% (vs. 30.0% in ’17 and 19.4% in Q1’18.

THE FUTURE
Putting this all together for ’18, the Street estimates range from $0.54-$0.57 per share. Growth will be there, but operating leverage will likely not take place either at the store level or after the corporate support. The more interesting part of the exercise takes place in calendar ’19 and beyond. The Street estimate for ’19, according to Bloomberg, is $0.735 per share, up from $0.543 in ’18, up 35%. While the Company has not provided formal guidance for ’19, analysts must be expecting margins to be maintained from ’18 to ’19, both at the store level and the corporate level. We consider this to be possible, but far from a sure thing.

Read the entire article here: http://www.liptonfinancialservices.com/2018/05/shake-shack-reports-q118-expansion-potential-but-also-significant-risk-store-level-economics-slipping/
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