6 Tips When Buying A Franchise

6 Tips When Buying A Franchise…
Make a list of questions and spend the day to meet the team and get answers as well as a feel for the culture of the organization. Find out how deep the franchisor’s organization is and, please make sure you feel comfortable that the franchisor has enough experienced staff to service the franchisees.

By Gary Occhiogrosso
Founder and Managing Partner of Franchise Growth Solutions
Photo by rawpixel on Unsplash

Starting a business can be a life-altering event both good and sometimes not so good. One of the ways people reduce their risk is to purchase an established brand with a proven business model – a franchise.

Franchising has proved over and over again to give a new business owner the highest probability of success. If you follow the system, choose an experienced franchisor, work diligently, are appropriately funded and understand what you’re getting into then operating a franchise may be a perfect business model for you.

Selecting a franchise and purchasing a franchise combines gut reaction with solid research. Although there are many steps to buying a franchise here are my Top 6 Tips that will keep you moving forward in the process. I recommend never skipping or overlooking any of them.

Tip #1 – Begin With Some Soul Searching
Make a written list of what you believe you’re looking for in a business opportunity. However, for this exercise, you cannot put the words “make money” on your written list. The reason for that is simple. I want you to look inward at your dreams, background, hobbies, likes, dislikes, skills, social and community positions and all the elements that a business would need to deliver to you, despite the money. I know many franchisees and entrepreneurs that dread getting up every day to work their business even though are making all sorts of money. Franchisees that are great at selling or corporate engagement should seek a franchise that puts them in front of customers in a corporate environment, perhaps in the advertising business or financial business. Entrepreneurs that like to craft things or work outside or work with their hands should never seek out opportunities that land them behind a desk or stuck in a shop 12 hours a day. Although ultimately in time you will not be doing the “work of business” keep in mind that in the startup phase you may need to. Moreover, if you don’t like the work or have neither the time, desire or inclination to develop new skills you may never get to the next level in developing your business. If you can’t “see yourself” doing a particular type of work, then walk away, no matter how much money you think you’ll make. Look in the mirror and be honest when you sit down to write your list.

Tip #2 – How Much Available Capital Do I have?
Numerous business reports cite the number one reason a small business fails is that proper thought and consideration wasn’t given to the appropriate capital required to open and sustain the start-up of a small business. A lack of adequate money can destroy you before you even begin. It is crucial that you understand the numbers. Before you start your quest for a franchise, you should access your available liquid capital, your borrowing ability and the net worth necessary to collateralize a business loan. Also, there are various ways to finance your new business. That includes your savings, investments or loans from friends and family, bank loans, SBA loans and using the funds in your 401K to finance the new venture. Once you know the number, you can go shopping, or you may decide you don’t have enough money now and need to create a plan to accumulate the appropriate amount of start-up capital. Your accountant may be able to help you access your investment ability. Keep in mind many accountants (and lawyers) are not entrepreneurial minded or risk takers. Some will attempt to “protect you” by trying to convince you not to go into business. Remember you’re assessing your investing capability not looking for permission. That said, knowing how much you can invest will save you and the franchisor time. In addition, it’ll place you in a better position to succeed.

Tip #3 – Meet The “Parents”
In this case, the Franchisor. Once you’ve selected the type of industry you’d like to be in, its’ now time to search for a company that meets the criteria on the list we discussed earlier in this article. There are many ways to seek out opportunities, Franchise Trade Shows, Websites, Franchise Business Brokers and others. I’ll cover that in a subsequent article. Once you reach out to a franchisor, a franchise sales representative will most likely contact you. At this point be prepared to answer some questions over the phone. You may also be asked to fill out an application before going any further in the process. Many reputable franchisors will not engage in any serious conversation with a candidate without an application. My experience has been that franchisors willing to forgo written applications or skip asking qualifying questions at the start of the process may be desperate to “sell” a franchise. That should be a red flag for you. Beware, because it may be a sign the franchisor is undercapitalized and/or more interested in selling franchises and collecting licensing fees instead of supporting the franchisees long term by focusing on royalties from successful franchised locations.

Tip #4 – Take A Good Hard Look At All The Documentation
Once you fill out the application, the franchisor will most likely interview you over the phone or in person and then is required to issue you a Franchise Disclosure Document (FDD). Depending on the State where you live, you must have the FDD between 10 and 14 days before you can enter into any agreement or hand over any money to the franchisor. You will be asked to sign a receipt that you received the FDD and indicate the date you received it. This disclosure document has all the required information that the Federal Trade Commission (FTC) and various States require the franchisor to tell you. Please read it and reread it. Have a franchise attorney review the document and offer legal counsel regarding the franchise agreement. Then follow up with the franchisor. I would recommend that if you’re interested in moving forward, it’s now time to meet the franchisor in person (if you haven’t already) by scheduling a Discovery Day. Make a list of questions and spend the day to meet the team and get answers as well as a feel for the culture of the organization. Find out how deep the franchisor’s organization is and, please make sure you feel comfortable that the franchisor has enough experienced staff to service the franchisees.

Tip #5 – Speak With The Franchisees
Your best source of information is going to come from the franchisors customers, that means the franchisees. Call and visit as many franchisees as possible. Since many Franchisors don’t disclose Average Unit Sales and Operating Expenses in their FDD, they can not discuss it with you. Franchisors can only make claims and address financial issues published in their FDD. Be wary of the sales rep that starts telling you how much money the franchisees are making and how much money you can make. This practice of making “earning claims” not documented in the FDD is not only a violation of franchise regulation but also another red flag. However franchisees are not bound by franchise regulation and if they choose, are free to answer any question as long as they do not disclose proprietary information belonging to the franchisor, such as recipes or processes. When visiting the franchisees, build a report, let them know you’re close to making a decision and carefully phrase your questions so that they are not intrusive. I always ask about support and if they had the opportunity to “do it all over again” would they? Keep in mind there will always be a few disgruntled or struggling franchisees. Without knowing all the facts, it’s tough to condemn the system or franchisor. That said, if the majority of franchisees regret their decision or feel that the franchisor is not supportive, then you need to make further inquiries with the franchisor before signing the franchise agreement.

Tip #6 – Ready, Set, Go
Not so fast. Before the franchisor prepares a franchise agreement is it essential to discuss the best way to structure your new company. Many attornies will recommend that you not sign the franchise agreement in your name but instead set up a separate business entity such as a Limited Liability Compay (LLC) or an S-Corp. Seek competent legal advice from a franchise attorney before you sign a franchise agreement or set up a new company.

Franchise ownership can provide you and your family a lifestyle that can not be achieved by working a job for a company. Building a business can be rewarding, exciting and stressful all at the same time. As an entrepreneur, I believe business ownership is the best form of work for many people.

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About the Author
Gary Occhiogrosso is the Founder of Franchise Growth Solutions, which is a co-operative based franchise development and sales firm. Their “Coach, Mentor & Grow Program” focuses on helping Franchisors with their franchise development, strategic planning, advertising, selling franchises and guiding franchisors in raising growth capital. Gary started his career in franchising as a franchisee of Dunkin Donuts before launching the Ranch *1 Franchise program with its founders. He is the former President of TRUFOODS, LLC a multi-brand franchisor and former COO of Desert Moon Fresh Mexican Grille. He advises several emerging and growth brands in the franchise industry. Gary was selected as “Top 25 Fast Casual Restaurant Executive in the USA” by Fast Casual Magazine and named “Top 50 CXO’s” by SmartCEO Magazine. In addition, Gary is an adjunct instructor at New York University on the topics of Restaurant Concept & Business Development as well Entrepreneurship. He has published numerous articles on the topics of Franchising, Entrepreneurship, Sales, and Marketing. He was also the host of the “Small Business & Franchise Show” broadcast over AM970 in New York City and the founder of FranchiseMoneyMaker.com

Tips to Protect Your Business From Increased Sexual Harassment And Cyber Security Claims

Tips to Protect Your Business From Increased Sexual Harassment And Cyber Security Claim…

Photo by Mihai Surdu on Unsplash.

Employment-related risks can represent the most damaging exposure to a franchiser. Claims involving sexual harassment, wrongful termination or discrimination, from a current or former employee can potentially cause irreparable damage to a franchise brand and reputation resulting in significant financial cost. Franchises Need To Protect Themselves From Increased Sexual Harassment And Cyber Security Claims

Tips to Protect Your Business From Increased Sexual Harassment And Cyber Security Claims

With Permission
By Ed Teixeira
FMM Contributor

Sexual Harassment – Social Issue Concept

After hitting a two-decade low in 2017, sexual harassment complaints to the Equal Employment Opportunity Commission increased by more than 12 percent from last year. The federal agency has also been aggressive with litigation this year, filing 41 sexual harassment lawsuits so far, up from 33 in 2017. At the same time, cyber-crimes which involve the theft of personal information has cost some companies millions of dollars in damages to its reputation and from monetary claims.

Employer Liability Claims Increase

Over the course of this year, stories of sexual harassment have dominated the headlines. In what USA Today dubbed the “Weinstein Effect,” various sized companies have witnessed employees take part in the #Me To movement. This increased focus on sexual harassment has created a surge in protests, discrimination lawsuits, and government investigations, with almost no industry being immune, including a recent demonstration against McDonald’s franchise locations. Regardless of whether a sexual harassment allegation has merit, these claims can cause a company significant damage to its brand and sales. Seven in 10 human resource professionals said they believe sexual harassment complaints at their workplaces will likely be “higher” or “much higher” in 2018 compared to previous years.

A poll by the Human Resource Certification Institute found that “63 percent of HR professionals said that acts of sexual harassment “occasionally” or “sometimes” occur in their workplaces and 30 percent said that such acts “frequently” occur. Only seven percent said that such acts “almost never” or “never” occur.” The trend toward more sexual harassment lawsuits appears to continue as the EEOC increases efforts to crack down on sexual harassment. The EEOC has launched online access for employees to file harassment charges from their homes, with the EEOC.

Employment-related risks can represent the most damaging exposure to a franchiser. Claims involving sexual harassment, wrongful termination or discrimination, from a current or former employee can potentially cause irreparable damage to a franchise brand and reputation resulting in significant financial cost.

To gain more insight into employer liability and especially sexual harassment claims I spoke with Peter R. Taffae, MLIS, CFE and Managing Director Executive Perils, Inc. In 2014 they introduced a management liability policy, FranchisorSuite®, designed for the unique needs of Franchisors.

Q. How extensive are employer liability claims?

A. Companies of all sizes and industries have been affected by a surge in employment-related litigation and rising legal damage awards.

Q. What can be done to mitigate those risks?

A. Be sure that franchisers, franchisees and their employees are properly trained to understand the risks of sexual harassment, unlawful terminations, and discrimination claims. Have the proper procedures and protocols in place and have financial protection.

Q.What does the future hold for sexual harassment claims?

A. The threshold has been raised for what is appropriate in the workplace. This means that the expectation for proper employment practices is higher. Some experts believe that it will take 10 to 15 years to reverse the trend as current middle age retirees are replaced by today’s younger generation.

Q. Any other threats that franchises face?

A. One area related to the franchise industry that doesn’t receive a lot of coverage is cybersecurity. Every state has primary notification laws, which that when there is a breach of a customer’s personal data, the company or franchiser must notify every customer. In addition, there is no statute of limitations regarding these crimes. For example, if I purchased a meal at a franchise location 10 years ago and their system was hacked, and my personal information was stolen, that franchise is liable.

Franchise restaurants process so many credit cards and have the extensive point-of-sale equipment, that they are vulnerable to data theft. Websites, Wi-Fi and digital kiosks represent additional threats. Any franchise which does any of the following is at risk for a cyber-attack; Accepts credit cards, handles or views private information of employees or customers electronically, has Wi-Fi or conducts a portion of their business online.

It’s important that each component of the franchise industry be prepared to protect themselves from the threat of employer liability and cybersecurity claims.

Six Ways to Finance a Restaurant Franchise

Six Ways to Finance a Restaurant Food Franchise…

Before seeking financing of any kind, make sure you’ve done your own due diligence. Prior to beginning your search, it’s important to know your own net worth, your credit rating, and to have a comprehensive business plan that includes pro forma documents, operations details and market comparison analysis.

Six Ways to Finance a Restaurant Food Franchise

If you are considering investing in a franchise opportunity, the very first question that may come to mind is whether you qualify financially. Most entrepreneurs, restaurant aficionados, or business executives exploring opportunities for a restaurant food franchise will seek outside sources of financing. The golden rule is to expect to contribute 15% to 30% of your own money to start with, and then go from there.

If 30% seems daunting, there’s good news. Often a franchise business opportunity is looked upon by financial institutions as less of a risk, compared to independent business start-ups. This can be further reinforced by the history and recognition of the brand name, the number of units in operation, and even the support provided to the franchisee by the franchisor.

Before seeking financing of any kind, make sure you’ve done your own due diligence. Prior to beginning your search, it’s important to know your own net worth, your credit rating, and to have a comprehensive business plan that includes pro forma documents, operations details and market comparison analysis.

Franchise financing can be complex, but it doesn’t have to feel impossible. Consider these six ways to finance a restaurant food franchise like Taboonette.

1. Friends and family, as well as experienced business owners,d business owners turn inwardly toward friends and relatives to help finance their franchise or start-up business. With this kind of financing, individuals and families get to create their own terms for repayment and enjoy the collaborative support from those closest to them.

2.SBA loans.
The Small Business Administration is a government agency that helps entrepreneurs plan, launch, manage and grow their businesses.1 They work with financial institutions to provide SBA-secured loans. A lender may be more likely to approve financing for individuals backed by an SBA loan because it is 90% secured. This means if the loan goes into default, the SBA guarantees repayment of 90% of the loan to the lending institution.

3.Bank and private loans.
Since the 2008 recession, it has been more difficult to secure bank loans or loans from venture capitalists or angel investors. A bank loan not secured by the SBA is perhaps the most challenging to obtain, but if you have a good relationship with a financial institution, a stellar credit rating and the required minimum liquid capital, it may be a good option.

4.Veterans loan.
The Department of Veterans Affairs, another government institution, offers qualified veterans financing opportunities for franchise and business loans. The program, called the Patriot Express because of its speedy process, makes loans up to $500,000 to active-duty military preparing to transition to civilian life, as well as to spouses and survivors of veterans. The loans come with the SBA’s lowest rates.2

5.Home equity.
A home equity line of credit or second mortgage is a way of obtaining financing but comes with a personal risk. Financing in this way uses your home as security. This means if you default on a business loan, you lose your home. But with sufficient equity in your home, it can be a relatively easy financing source to tap.

6.401(k), stocks and other personal accounts.
It is not unusual for people to tap into their retirement or savings accounts to help finance business ventures. In an interview with the Wall Street Journal, Bernie Siegel, founder of Siegel Capital LLC, discusses a rollover plan where the franchisee creates a C corporation that will own and operate the new franchise business. That corporation then creates its 401(k)-retirement plan. The C corporation’s 401(k) plan then purchases stock in the C corporation. The cash paid to the corporation is then used as the down payment, and the balance can then be financed through an SBA guaranteed loan.3

At Taboonette, we are excited to work with financially qualified individuals to help them reach their goal of owning a restaurant food franchise. Together we look forward to growing both our Taboonette franchisee and customer bases and bringing our delicious trademark Middleterranean® food and a unique dining experience to more hungry guests.

For franchise information contact [email protected] . “Offer by Prospectus only”

1.https://www.sba.gov/
2. http://guides.wsj.com/small-business/franchising/how-to-finance-a-franchise-purchase/
3.https://www.wsj.com/articles/SB120242422031851929

The Importance of Franchisors Building Relationships With Their Franchisees

The Importance of Franchisors Building Relationships With Their Franchisees…

Photo by rawpixel on Unsplash

“Over my forty-plus years representing franchisors, I have seen too many franchisors fail because they do not realize how important it is for their franchisees to succeed and make money.”

The Importance of Franchisors Building Relationships With Their Franchisees
By Gary Occhiogrosso- Founder of Franchise Growth Solutions, LLC.

When Onboarding new franchisees the franchisor should always remember that a common thread to success is the franchisor’s culture of support, co-operation, communication, education, and profitability with their franchisees. Building an ongoing relationship with its franchise community can mean the difference between growing a restaurant brand to hundreds of units or failing before ever making a mark in the industry.

Without these critical components in place, a restaurant franchisee can quickly go “off the rails” and compromise brand standards. It’s not long before many of these franchisees negatively redefine the brand. Poor service, improperly prepared menu items, lesser quality ingredients and overall appearance and cleanliness of the restaurant are just a few reasons why a healthy relationship with your franchise owner is essential.

It Starts At the Beginning.

Creating the proper franchisor /franchisee relationship builds success for both. This relationship building must begin right from the start. Successful restaurant franchisors know that ramp-up time and getting a new restaurant profitable takes smart planning and hard work by both the franchisor and the franchisee. The training, support, communication and ongoing assistance the franchisee receives early on in the relationship can set the tone for the entire term of the franchise agreement.

One of the most crucial steps a franchisor can take begins when selecting a franchisee. Franchisors should conduct an in-depth interview as part of a thorough vetting process. Along with the obvious discussions such as past management and business experience, time commitment to the operation and funding, franchisors must also explore the core business values of the franchise candidate. Spending this time upfront to examine the candidate’s vision, expectations and the overall business plan goes a long way into understanding if the potential franchisee shares common goals with the franchisor. It is also the first step in building brand value and a robust, lasting business relationship.

Increase Your Communication And Reduce Your Failure

New businesses can fail for a variety of reasons. Although the vast number of restaurant failures are due to undercapitalization, it could also be the result of substandard operations, inefficient marketing, poor location and changing consumer trends. In addition, a failure in a franchised restaurant may be the result of the franchisee working outside the franchisor’s branded system. Franchisees can destroy their business by implementing procedures and introducing products that are counterintuitive to the brand image. Franchise owners often lack the time, experience and money to do proper research on a new product or a new procedure, never realizing that it may disrupt the entire system. Conversely, franchisors must always be aware and teach the idea that “everything touches everything else.” Building a healthy relationship and a clear channel of communication with the franchise owner can often prevent franchise owners from circumventing the system in the first place.

Harold Kestenbaum noted franchise attorney who has specialized in franchise law and other matters relating to franchising since 1977 explains: “Over my forty-plus years representing franchisors, I have seen too many franchisors fail because they do not realize how important it is for their franchisees to succeed and make money. Franchising is a two-way street, and to be a successful franchisor, you, as the franchisor, must understand this and make it happen. Franchisors cannot be successful if they think that it’s only them who should make money. Ray Kroc knew that franchising could only work if the franchisees made money along with the franchisor. Supporting your franchisees from the outset, and not when they are choking is imperative and franchisors need to realize this. One such way to make this collaborative effort work is by creating a franchisee advisory board. Franchisors with more than ten franchisees need to implement this without the franchisees asking for this. A franchisee advisory board will show the franchisees that you are trying to make them be a part of the system and that you want their input. Franchising is not an autocratic method of doing business; it is a collaborative method of doing business.”

Looking in the Mirror Helps

It’s easier to blame the franchisee for failure than franchisors like to admit. Franchisee behavior is often a reflection of the franchisor. Some franchisors are quick to dismiss why proper onboarding, relationship building, creating brand value, and adequate franchise support are vital to the success of the new business. When a franchisee loses confidence in the franchisor, it is complicated to turn back. Franchisees stray or “go rogue” because franchisors fail to supply the “rails” that the franchisee must run on.

An open, working relationship between the franchisor and the franchisee is the most important aspect of brand success. Franchisors must take a very active role in the franchise operation, perhaps more than they want. Supplying great tools, conducting superior training, regular visits to the restaurant to evaluate the goals and progress of the business is a crucial commitment a franchisor must make. Communication, transparency, ongoing coaching and counseling are the essential elements of relationship building. The ROI for these efforts will be opening hundreds or even thousands of franchised restaurants locations.

Franchisees Need To Have An Exit Strategy

Identify a qualified advisor who can aid in developing a formal exit plan. An advisor could be an experienced attorney, financial advisor or accountant, who can assist with the various implications and tax issues regarding the sale or transfer of ownership. Surveys of small business owners indicate that their CPA is considered the most trusted advisor.
Establish the primary exit goal, for example, transitioning to a family member, sale to a third party, the franchisor or private equity group.

Franchisees Need To Have An Exit Strategy

Ed Teixeira – Contributor
Relying on 35 years of franchise industry knowledge

Franchisees seek to sell their business for a variety of reasons including burnout, personal issues, retirement or new opportunities. Whatever, the reason, every franchise ought to have an existing exit plan whether the execution of the plan takes place or not.

The Exit Planning Institute reports that: “Roughly six million privately held companies are operating in the United States, with approximately $30 trillion in sales. An owner who is “ready” with an attractive business greatly increases the odds that the business will survive a transition of hands. The question is, how ready are business owners?” Although this report doesn’t indicate whether it includes franchises, we’ll assume these statistics can apply to the franchise industry.

A survey of Long Island business owners was conducted by Dr. Richard Chan of Stony Brook University and Christopher Snider of the Exit Planning Institute. Franchisees should compare the results to their own situation as a franchise owner.

* 74% of businesses are family owned
* 63% have no board of directors or advisory board
* 50% consider ownership transition a top priority but 50% were not ready to transition their business
* 43% had no exit plan
* 17% had a written transition or exit plan
* 60% had not determined what they need to obtain from the sale of their company
* 82% had no outside resource or advisors to assist in an exit plan
* Their most trusted advisor was their CPA

Fundamentals of a Franchise Exit Strategy

Franchisees, whether they operate one or more units should have a written plan in place for either selling their business or transitioning ownership to a family member. For franchisees, this issue is particularly important since unlike independent business owners, the sale of a franchise is subject to franchisor approval, that can require equipment and location upgrades, which in the case of certain franchises can be costly. Many a franchise sales transaction was canceled because neither the seller or buyer would do remodel upgrades. In addition, there are important tax considerations that come into play because of the franchise sale. The lack of an exit plan and the related decisions that need to be made can impact the value of the franchise when it’s time to sell.

How to Begin

Identify a qualified advisor who can aid in developing a formal exit plan. An advisor could be an experienced attorney, financial advisor or accountant, who can assist with the various implications and tax issues regarding the sale or transfer of ownership. Surveys of small business owners indicate that their CPA is considered the most trusted advisor.
Establish the primary exit goal, for example, transitioning to a family member, sale to a third party, the franchisor or private equity group.
Set a range of time for selling or transitioning ownership of the business, such as two-five years or longer.
Decide whether you’ll want to stay involved in the business as an advisor, minority owner, etc. Some buyers want the seller to stay involved for a period of time while others want a clean break. It depends on the buyer.
List those items or actions that could increase the value of the business. Sometimes a few changes can make a major difference in value.
A marginally profitable business can be very difficult to sell, according to BizBuySell, only 20% of all businesses listed for sale actually sell. Finding a buyer on the open market can be a long process. Some businesses can be difficult to value, and the selling price may be much lower than expected.

Payment Terms

Seller financing has always been a mainstay of selling a business. Many buyers are reluctant to pay all cash and use most of their capital. Some buyers also feel that a business should pay for itself and are wary of a seller who wants all cash or who wants the carry-back note secured by additional collateral or personal guarantees. What sellers seem to be saying, at least as perceived by the buyer, is that they don’t have a lot of confidence in the business or in the buyer or perhaps both. However, if we look at statistics, it’s apparent that sellers receive a much higher purchase price if they accept terms.

Studies reveal that, on average, a seller who sells for all cash receives only 70% of the asking price. Sellers who are willing to accept terms receive, on average, 86% of the asking price. That difference on a business listed for $250,000, meaning that the seller who is willing to accept terms will receive about $40,000 more than the seller who is asking all cash, which is compelling reasons for a seller to accept terms.

The Buyers Expect Certain Financial Information

Who does the franchise financials? How believable are the numbers? If the franchise has a bookkeeper, will they let a buyer contact him or her? Can you get a copy of the franchise credit report? Is the franchise on good terms with the major suppliers? Three years of financial information is expected. Equipment contracts or leases or any other financial obligations of the business. They will expect to see receivables and payables and hidden obligations of the business. Be prepared to present some information regarding the performance of the franchise network.

Valuing the Selling Price of the Franchise

The easiest, and probably the most reliable method of putting a recommended selling price on a small business is what is commonly referred to as the discretionary cash flow or the discretionary earnings method. This method is based on the actual earnings of the business and is determined by the profit and loss statement. To figure out the cash flow or actual earnings of the business, it is necessary to make certain adjustments to the profit and loss statement. These adjustments, when added to the profit of the business, determine the “real cash flow” of the business. Add the owner’s salary, perks, family perks, and salary, business trips, company vehicles, and other discretionary expenses. This total cash flow figure is then multiplied by a number applicable to the specific franchise category. For franchises, the average multiple can range from 2 to 4 times SDE. The discretionary earnings method is appropriate for small businesses and franchises many business brokers encourage to use. There are other valuation models available. The Business Brokerage Press sells a Reference Guide for Businesses and Franchises that provides numerous valuation models.

Franchisees should have an exit plan in place to sell their franchise. A formal exit plan will enable the franchise owner to maximize the value of their franchise whether the sale is planned or not.
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About the Author
Ed Teixeira
Ed Teixeira is Chief Operating Officer of Franchise Grade and was 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. He is a franchise valuation expert by the Business Brokerage Press. Ed can be contacted at [email protected]anchisegrade.com

Building a Trusting, Engaged, and Accountable Workplace Culture

“What is the culture of this company” to a front-line staff member, the receptionist, the janitor, or anyone in between and you will receive a different answer.

Company Culture – What does this Mean?
By Jennifer Cook, Chief Operations Officer
http://www.symbiancehr.net/

When working with our clients we often have the leadership team explain to us what the culture of the organization is. Sometimes it is comprehensive, other times the description is brief, and still other times the culture sounds oddly like a list of core values. Unfortunately, for most organizations, if you ask the same question “What is the culture of this company” to a front-line staff member, the receptionist, the janitor, or anyone in between and you will receive a different answer. It is a discouraging fact, however, it should also be a wake-up call for leadership to consider their efforts to reinforce the desired culture and message the cultural goals so it permeates across the enterprise.

Remember, culture is simple terms can be defined as the actions and behavioral norms of the organization. Therefore, regardless of what you think the culture is, or what you desire it to be, if you do not influence and impact the behaviors of the workforce to model and demonstrate the desired culture it will not exist.
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It is important that all employees within your business work together and share accountability. Employees who work together towards the same overall goal to help their workplace to become more accountable, in turn, make the business more productive and successful.

The Impact of Failed Accountability
By Laura Goad, HCM Consultant

Great leaders know that positive accountability creates a culture of trust, engagement, and excellent performance. The impact of failed accountability can be detrimental to your business. When employees do not have a system of accountability in place, things can quickly fall apart. Lack of accountability causes a culture problem within your business. When no one trusts each other at work to do what they are assigned to do, employee morale suffers. Employees feel like they can’t trust their supervisor. They feel undervalued, and when employees aren’t feeling valued, they are less likely to be engaged with their work.

Lack of accountability in the workplace often stems from ineffective leadership practices. To achieve the goals of your business, it is important that all employees within your business work together and share accountability. Employees who work together towards the same overall goal to help their workplace to become more accountable, in turn, make the business more productive and successful.

Change your workplace culture so that accountability is included. Lead by example. Make sure employees know that they’ll be accountable for their work by creating guidelines about how you’ll monitor their productivity. Set weekly goals and deliverables, which will in return motivate employees to complete takes on a regular basis. Finally, praise them when you find them doing things right.
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About SymbianceHR
The seasoned professionals that make up the SymbianceHR Team bring to the table over 40 years of hands on experience in all areas of Human Capital Management.

Small and medium sized business seem to be placed in an area where they find themselves either too small to have an in-house Human Resources department (HR) or not large enough to have the resources necessary to keep the in-house HR staff up to date on recent modifications, additions and new policies.

In essence, a large portion of the small to medium sized business are operating out of compliance, or in an ineffective, and costly manner. Much in part to the fact that they have either not exercised discipline in the area of Human Resources or have mistakenly seen it as an expenditure entry as opposed to a cost reduction source.

With an abundance of resources, our Team stands ready when our clients, or potential clients, need us most. Whether that is for covering questions or concerns pertaining to: hiring, firing, benefits, employee retention, compliance, or lack thereof, regulatory updates, and recordkeeping or a quick study of current policies and procedures for conformity.

One of a business’s greatest assets is their employee base (Human Capital), however with that great asset comes, at times, great challenges. We work with our clients to guide them through the challenging times as well as the not-so-challenging, assisting them toward accomplishing their goals, while often saving them time, money and stress in the process.
http://www.symbiancehr.net/
SymbianceHR – Your Challenges. Our Solutions. A Successful Relationship.

Inclusion used to Create a Competitive Advantage

In various work activities and in the execution of job duties, there is a myriad of opportunities to leverage the existing diversity of the organization to enhance the development of solutions to solve everyday business challenges.


Inclusion used to Create a Competitive Advantage
By Warren Cook

Over the past few decades, organizations have repeatedly asked me to “bring them diversity” and help them improve how they are viewed by the workforce and rest of the world. The request is fundamentally wrong and the strategy to enhance the workforce and create both ROI and a competitive advantage remain in an inclusion strategy.

Inclusion is the act of being inclusive, to include others. In various work activities and in the execution of job duties, there is a myriad of opportunities to leverage the existing diversity of the organization to enhance the development of solutions to solve everyday business challenges.

I encourage business leaders and human resource professionals to step back and analyze their current practices and approach to Diversity & Inclusion, and instead formulate a new strategy that does not focus on creating the diversity that already exists, but instead focuses on the development of programs that involve and include members of the workforce in creative and innovative ways to use their diverse characteristics as a competitive advantage.

If after reading this short article on this topic you are asking yourself “How can we turn inclusion into ROI and a competitive advantage”, then it is time to call me to schedule training for you and your leadership team on Creating ROI from Diversity and Inclusion. You can reach me at 302.276.3302 or via email at [email protected]

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/

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.

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.