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Here is my takeaway:

"Thus, the barriers and transition costs employees incur when switching employers have been reduced.

Greater options and lower costs to move mean that employees can be more selective and focus on picking jobs that best fit their personal needs and desires."

Employers are having a harder time recruiting new workers. AP Photo/Marta Lavandier
Ian O. Williamson, University of California, Irvine

Finding good employees has always been a challenge - but these days it's harder than ever. And it is unlikely to improve anytime soon.

The so-called quit rate - the share of workers who voluntarily leave their jobs - hit a new record of 3% in September 2021, according to the latest data available from the Bureau of Labor and Statistics. The rate was highest in the leisure and hospitality sector, where 6.4% of workers quit their jobs in September. In all, 20.2 million workers left their employers from May through September.

Companies are feeling the effects. In August 2021, a survey found that 73% of 380 employers in North America were having difficulty attracting employees - three times the share that said so the previous year. And 70% expect this difficulty to persist into 2022.

Observers have blamed a wide variety of factors for all the turnover, from fear of contracting COVID-19 by mixing with co-workers on the job to paltry wages and benefits being offered.

As a professor of human resource management, I examine how employment and the work environment have changed over time and the impact this has on organizations and communities. While the current resignation behavior may seem like a new trend, data shows employee turnover has been rising steadily for the past decade and may simply be the new normal employers are going to have to get used to.

The economy's seismic shifts

The U.S. - alongside other advanced economies - has been moving away from a focus on productive sectors like manufacturing to a service-based economy for decades.

In recent years, the service sector accounted for about 86% of all employment in the U.S. and 79% of all economic growth.

That change has been seismic for employers. A majority of the jobs in service-based industries require only generalizable occupational skills such as competencies in computing and communications that are often easily transportable across companies. This is true across a wide range of professions, from accountants and engineers to truck drivers and customer services representatives. As a result, in service-based economies, it is relatively easy for employees to move between companies and maintain their productivity.

And thanks to information technology and social media, it has never been easier for employees to find out about new job opportunities anywhere in the world. The growing prevalence of remote working also means that in some cases employees will no longer need to physically relocate to start a new job.

Thus, the barriers and transition costs employees incur when switching employers have been reduced.

Greater options and lower costs to move mean that employees can be more selective and focus on picking jobs that best fit their personal needs and desires. What people want from work is inherently shaped by their cultural values and life situation. The U.S. labor market is expected to become far more diverse going forward in terms of gender, ethnicity and age. Thus, employers that cannot provide greater flexibility and variety in their working environment will struggle to attract and retain workers.

Employers now have a greater obligation than in the past to convince existing and would-be employees why they should stay or join their organizations. And there is no evidence to suggest this trend will change going forward.

What companies can do to adapt

It has been estimated that the cost to the employer of replacing a departing employee is on average 122% of that employee's annual salary in terms of finding and training a replacement.

Thus, there is a large incentive for businesses to adapt to the new labor market conditions and develop innovative approaches to keeping workers happy and in their jobs.

A May 2021 survey found that 54% of employees surveyed from around the world would consider leaving their job if they were not afforded some form of flexibility in where and when they work.

Given the heightened priority employees place on finding a job that fits their preferences, companies need to adopt a more holistic approach to the types of rewards they provide. It's also important that they tailor the types of financial, social and developmental incentives and opportunities they provide to individual employees' preferences. It's not just about paying workers more. There are even examples of companies providing employees the choice of simply being paid in a cryptocurrency like bitcoin as an inducement.

While customizing the package of rewards each employees receives may potentially increase an organization's administrative costs, this investment can help retain a highly engaged workforce.

Managing the new normal

Companies should also plan on high employee mobility to be endemic and reframe how they approach managing their workers.

One way to do this is by investing deeply in external relationships that help ensure consistent access to high-quality talent. This can include enhancing the relationships they have with educational institutions and former employees.

For example, many organizations have adopted alumni programs that specifically recruit former employees to rejoin.

These former employees are often less expensive to recruit, bring access to needed human capital and possess both an understanding of an organization's processes and an appreciation of the organization's culture.

The quit rate is likely to stay elevated for some time to come. The sooner employers accept that and adapt, the better they'll be at managing the new normal.

[You're smart and curious about the world. So are The Conversation's authors and editors. You can read us daily by subscribing to our newsletter.]The Conversation

Ian O. Williamson, Dean of the Paul Merage School of Business, University of California, Irvine

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Supply Chain Problems

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Global shortage of shipping containers highlights their importance in getting goods to Amazon warehouses, store shelves and your door in time for Christmas

The global economy depends on shipping containers. AP Photo/Seth Wenig

Anna Nagurney, University of Massachusetts Amherst

Take a look around you.

Perhaps you're snacking on a banana, sipping some coffee or sitting in front of your computer and taking a break from work to read this article. Most likely, those goods - as well as your smartphone, refrigerator and virtually every other object in your home - once were loaded onto a large container in another country and traveled thousands of miles via ships crossing the ocean before ultimately arriving at your doorstep.

Today, an estimated 90% of the world's goods are transported by sea, with 60% of that - including virtually all your imported fruits, gadgets and appliances - packed in large steel containers. The rest is mainly commodities like oil or grains that are poured directly into the hull. In total, about US$14 trillion of the world's goods spend some time inside a big metal box.

In short, without the standardized container, the global supply chain that society depends upon - and that I study - would not exist.

A recent shortage of these containers is raising costs and snarling supply chains of thousands of products across the world. The situation highlights the importance of the simple yet essential cargo containers that, from a distance, resemble Lego blocks floating on the sea.

A Roman fresco depicts a Nilotic scene with pygmies in a boat loaded with amphorae.
Ceramic containers called amphorae were often used by the Greeks and others to transfer liquids like wine as well as grains. PHAS/Universal Images Group via Getty Images

Trade before the container

Since the dawn of commerce, people have been using boxes, sacks, barrels and containers of varying sizes to transport goods over long distances. Phoenicians in 1600 B.C. Egypt ferried wood, fabrics and glass to Arabia in sacks via camel-driven caravans. And hundreds of years later, the Greeks used ancient storage containers known as amphorae to transport wine, olive oil and grain on triremes that plied the Mediterranean and neighboring seas to other ports in the region.

Even as trade grew more advanced, the process of loading and unloading as goods were transferred from one method of transportation to another remained very labor-intensive, time-consuming and costly, in part because containers came in all shapes and sizes. Containers from a ship being transferred onto a smaller rail car, for example, often had to be opened up and repacked into a boxcar.

Different-sized packages also meant space on a ship could not be effectively utilized, and also created weight and balance challenges for a vessel. And goods were more likely to experience damage from handling or theft due to exposure.

A trade revolution

The U.S. military began exploring the use of standardized small containers to more efficiently transport guns, bombs and other materiel to the front lines during World War II.

But it was not until the 1950s that American entrepreneur Malcolm McLean realized that by standardizing the size of the containers being used in global trade, loading and unloading of ships and trains could be at least partially mechanized, thereby making the transfer from one mode of transportation to another seamless. This way products could remain in their containers from the point of manufacture to delivery, resulting in reduced costs in terms of labor and potential damage.

In 1956 McLean created the standard cargo container, which is basically still the standard today. He originally built it at a length of 33 feet - soon increased to 35 - and 8 feet wide and tall.

This system dramatically reduced the cost of loading and unloading a ship. In 1956, manually loading a ship cost $5.86 per ton; the standardized container cut that cost to just 16 cents a ton. Containers also made it much easier to protect cargo from the elements or pirates, since they are made of durable steel and remain locked during transport.

The U.S. made great use of this innovation during the Vietnam War to ship supplies to soldiers, who sometimes even used the containers as shelters.

Today, the standard container size is 20 feet long, eight feet wide and nine feet tall - a size that's become known as a "20-foot-equivalent container unit," or TEU. There are actually a few different standard sizes, such as 40 feet long or a little taller, though they all have the same width. One of the key advantages is that whatever size a ship uses, they all, like Lego blocks, fit neatly together with virtually no empty spaces.

This innovation made the modern globalized world possible. The quantity of goods carried by containers soared from 102 million metric tons in 1980 to about 1.83 billion metric tons as of 2017. Most of the container traffic flows across the Pacific Ocean or between Europe and Asia.

The Ever Given cargo ship loaded with shipping containers appear stuck in the mud along the Suez Canal in March 2021
The Ever Given was stuck for almost a week in the Suez Canal. AP Photo/Mohamed Elshahed

Ships get huge

The standardization of container sizes has also led to a surge in ship size. The more containers packed on a ship, the more a shipping company can earn on each journey.

In fact, the average size of a container ship has doubled in the past 20 years alone. The largest ships sailing today are capable of hauling 24,000 containers - that's a carrying capacity equivalent to how much a freight train 44 miles long could hold. Put another way, a ship named the Globe with a capacity of 19,100 20-foot containers could haul 156 million pairs of shoes, 300 million tablet computers or 900 million cans of baked beans - in case you're feeling hungry.

The Ever Given, the ship that blocked traffic through the Suez Canal for almost a week in March 2021, has a similar capacity, 20,000 containers.

In terms of cost, imagine this: The typical pre-pandemic price of transporting a 20-foot container carrying over 20 tons of cargo from Asia to Europe was about the same as an economy ticket to fly the same journey.

Cost of success

But the growing size of ships has a cost, as the Ever Given incident showed.

Maritime shipping has grown increasingly important to global supply chains and trade, yet it was rather invisible until the logjam and blockage of the Suez Canal. As the Ever Given was traversing the narrow 120-mile canal, fierce wind gusts blew it to the bank, and its 200,000 tons of weight got it stuck in the muck.

About 12% of the world's global shipping traffic passes through this canal. At one point during the blockage, at least 369 ships were stuck waiting to pass through the canal from either side, costing an estimated $9.6 billion a day. That translates to $400 million an hour, or $6.7 million a minute.

[Over 110,000 readers rely on The Conversation's newsletter to understand the world. Sign up today.]

Ship-building companies continue to work on building ever larger container vessels, and there's little evidence this trend will stop anytime soon. Some experts forecast that ships capable of carrying loads 50% larger than the Ever Given's will be plying the open seas by 2030.

In other words, the shipping container remains more popular - and in demand - than ever.

This is an updated version of an article originally published on April 5, 2021.The Conversation

Anna Nagurney, Eugene M. Isenberg Chair in Integrative Studies, University of Massachusetts Amherst

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Ghost kitchens are not new.

Commissaries are well known & failed to scale.

Why well it be different this time?

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Here is the obvious point: most restaurants cannot make money on delivery.

Domino's with its industrial strength pizza and 20 years of technology is the exception.

Restaurants need to drive people from their smartphones to the restaurant's location -- you got an app for that Braam? Grub Hub.png

How Effective are Your Email Campaigns?

Converting those prospects into franchise sales appointments? Or could you use some help?

New templates, perhaps?

"Our own sales teams at LinkedIn swear by these: five core templates to suit different prospects, different situations, and different stages of the buyer journey"

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Personally, although I love LinkedIn's platform, I have serious doubts that I would ever respond to this type email, favourably respond.

I am more likely to swear at it, and not by it.

"Lost for words? Here's your starting template for inspiration:

Subject line:

[Prospect Name], Jessie recommended I reach out

Blah, blah and who cares what the message is. Because, in my experience, these types of messages never end well -- for me.

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And sure enough, if morbid curiousity drove me on, I find the following "offer", which is to do someone's homework for free.

Message:

Hi [Prospect Name],

Our mutual connection, [connection name], and I were talking recently about [hot topic]. She said you were an expert on this issue.

I'm writing an article about [hot topic] because it's relevant, timely, yet confusing to many of my customers. Can I include your perspective, [Prospect Name]?

Regards, [Your Name]

Sure, here is my perspective: Read and quote any of the 18 articles I have written on the topic. And no, I don't want coffee.

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(Note to self: disconnect from "Jessie" as soon as possible.)

So, if not LinkedIn templates, what is the powerful sales too you might be missing out on? Conversational talk -- because you would never use any of these words, or the sentences, in this template when talking face to face. So, don't use them in an email. You are welcome, no coffee required.

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Here are (3) dangers lurking with the delivery apps.

1. Traffic mismatch. The guest can use your brand's app or a 3rd party delivery app. If the latter, your brand has to pay a commission.

2. The delivery app is going send your customers to a nearby competitor, if they can make a food delivery sale.

3. When something goes wrong with the order, your brand will be blamed -- even if you aren't responsible for the delivery.

uber eats.jpg

What are the alternatives?

1. "Jimmy John's is satisfying customers one sandwich at a time -- but what if you don't live in one of chain's highly coveted zones?

Well, the sandwich maker might just buy you a house.

Jimmy John's announced its "Home in the Zone" contest this week, a first-of-its kind competition where a deserving superfan will win a new home within one of Jimmy John's famous five-minute delivery zones."

2. Panera is accessing new customers from the aggregators, but not using their delivery service.

"We're open to it now because it's additive and, very importantly, the customer experience is protected.

There's a standard of quality that we believe in, and the economics work for us and very importantly, for our franchisees, which a lot of these models don't," Wegiel says.

He says delivery companies told Panera it was one of the top search brands on their sites. Panera was only willing to partner up, however, if aggregators agreed to some conditions.

The company wanted to ensure a deal would add incremental volume instead of cannibalizing what it had already built, which was confirmed through testing."

3. Domino's, the acknowledged leader in pizza delivery, says: "Despite the pressure, Dominoʼs is not planning to partner with a delivery site.

Allison said that he doesnʼt think partnering with third-party platforms creates incremental sales, and that those platforms will end up hurting restaurant profits."

For more, see the discussion on LinkedIn, below.

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For new franchisees, their grand opening is the biggest event that they will put on.

What are your tips for getting it right?

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Here are some ideas on grand opening signage, from FASTSIGNS.

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Two years ago, Jim Cramer declared, about the deal Yelp in which Yelp sold Eat24 to GrubHub.

""I think this partnership has the potential to give both companies a major shot in the earnings arm," Cramer said."

Now, 2 years later, we find out that Yelp/Grubhub have trying to trick users to order food from Grubhub controlled telephone numbers, instead of the restaurant's number.

Yes, that will boost their earnings -- until people find out about it....

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Should we expect the vegan revolution to be different this time around, since it is marketed as "plant-based" food?

(In which case, all plant eating animals might qualify.....)

Dr. Sylvain Charlebois thinks that this time is different.

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Why do people consistently order using 3rd party aggregators, instead of using the restaurants's own website or app?

Interesting discussion, have your say.

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How Important to are Environmental Certifications, like Arooga's being a Certified Green Restaurant to the restaurant crowd, do you think?

Do guests care about a restaurant being Certified Green? Or, is it just a Marketing gimmick?

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I am not sure what natural stupidity is, so I am less clear on the obverse idea: artificial intelligence.

It appears that I am not alone...

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The POS hardware industry in restaurant franchising is lucrative. Franchisee have to spend $2,000 - $6,000 yearly on service contracts.

That might come to an end -- when the guests show up with their own built in POS devices, their iPhones.

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Our partners, Prompt Cuisine, have spent 3 years getting a smartphone mobile app to comply with the rigorous privacy rules required by Europe.

Now, you can become a member, and jump to the front of the line.

Here is how it works.

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Is the smartphone generation going to accept that they have to order off a menu?

Or is it more likely that they will demand that they be able to use their smartphone?

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In 2013 How Do You Roll - HDYR sushi made a big splash on Shark Tank.

However, the match with HDYR & Kevin O'Leary was not to be.

And did not make it past the post-show deal closing round and due diligence.

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O'Leary You're Dead to Me.jpg

The fast-casual, create-your-own sushi restaurant franchise, How Do You Roll, was pitched on Shark Tank in 2013.

Yuen Yung and his brother Peter learned the restaurant business from their parents who ran a mom and pop restaurant in Chinatown, New York.

After college, the brothers opened the first How Do You Roll restaurant in Austin, Texas. On Shark Tank, they made a deal with Kevin "Mr. Wonderful" O'Leary -- $1 million for 20 percent equity."

"The deal with O'Leary fell through and the Austin restaurant closed, as did two Chicago locations.But there are still two How Do You Roll locations open - in Fort Myers, Florida and North Hollywood, California. " - Source August 2, 2016, 2paragraphs.com

HDYR was not deterred by their Shark Tank fiasco of getting a deal with a Shark only to lose it after the show.

They went on to sell franchises.

In fact, they inked a 25 unit development deal for Washington D.C., Maryland, Delaware, and part of Virginia with great fanfare.

Then from a QSR magazine article:

"How Do You Roll? currently has ten units open in Arizona, Florida, and Texas. The company has signed franchise and development agreements for more than 400 units over the next twenty years."

These agreements span Arizona, Arkansas, California, Delaware, Florida, Illinois, Maryland, the Middle East, Nevada, New Jersey, New York, North Texas, Pennsylvania, Virginia, Washington, D.C., and Western Canada." - Source January 17, 2014, QSR

What went wrong with these aspiring sushi franchise tycoons?

Here's the Yung's Shark Tank pitch on the ABC show.

Shark Tank HDYR Image.jpg

Lots of Unanswered Questions

What's the status of HDYR franchising today?

What are the HDYR franchise owners doing with their businesses?

Who owns the HDYR concept and IP?

What are they planning to do with it?

Being a franchisor and building a durable and sustainable franchise network requires more than reality TV notoriety and a pitch.

It takes a financially attractive business model, a reliable supply chain, with great branding; solid operations, training & support, and great franchise owner recruitment.

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You Have Bad Customers

Bad customers are everywhere.

It is getting worse because many of your good customers are turning bad.

How do you spot a bad customer?

Here are some signs:

  • Showing up with coupons, but no cash.
  • Wanting written estimates so they can price shop elsewhere.

Bad customers make "frugal" a four letter word.

Even loyal and good customers are behaving badly -- how did it get so bad? Is it just this economy or has something else gone wrong?

When Business Was Good...

Imagine that you sell and install auto parts.

Imagine your perfect "parts" customer. Call her "Maria". Why is Maria ideal? She is the perfect customer because;

  • She showed up for her regular appointments;
  • She accepted your service upgrades without hesitation, and;
  • She didn't haggle over the price of "parts" and service.

Business was good. For you and Maria.

Why Business is Getting Bad...

Now, however, the "parts" business is getting hard.

On one hand, there are after market stores which will sell "replacement parts". With their large, or on demand inventory, they can undercut you on the price of a "part".

On the other hand, is the rise of the "do it yourself mechanic", an unregulated body of individuals mimicking specialized work. The DIY crowd can "install parts" cheaper than you, given the right diagnostic.

And now, Maria is getting wise.

She shows up, more often than not, asking only for a written diagnosis of her problem. Or she wants you to install "parts" she has bought from a competitor.

Maria has become a bottom feeder.

Soon, you will only see her when, in desperation, you put out another ill conceived marketing offer - buy one and get one free, or a BOGO.

You don't want to turn down business. But, you would like to fire Maria. Except, so many of your customers are starting to look a lot like Maria.

What You Should Not Do...

One response is tempting. You can raise prices and drive out the bottom feeders. This response risks alienating your good customers - turning them into "Marias".

You cannot afford that solution.

What do you do with a problem like Maria?

What You Need is a A Bad Customer Detector

No, what you want is a permanent or real solution- a Maria detector if you will.

Your strategic problem is this.

You are being asked to give away confidential information - a diagnostic scan, a specialized legal opinion or insurance solution- to a user that is not yet committed as a customer.The user may thank-you for your valuable information and take it without paying.

You may respond by charging something for this confidential information. And, this may work for a short period of time -but it may also turn more of your loyal customers into price conscious shoppers - on the slippery slope to being a Maria.

So, what you need is a way to detect Bad Customers.

How Would This Work? Create A Specialized Bad Customer Training Exercise

If you knew a user was going to turn out to be a Maria, your staff could gently turn her request for confidential information down. Staff would explain that it is policy to only give away confidential information to proven and loyal customers.

How could you get a Bad Customer detector? How could you train your staff to play "Spot the Maria Game"- staff that were top notch Maria detectors? How much would you be willing to pay get train your staff with the Bad Customer detector?

(The "Spot the Maria" is a fairly simple variant of a well known negotiation training exercise. The logic of this strategy can be found by googling "deterrence" or "sub-perfect Nash equilibrium". But, you don't need to know why this games has attracted the attention of theorists; you just need to know that there is training exercise, which could be customized for your unique problem.)

Who Else Uses Negotiation Role Playing?

There are many excellent providers of standard negotiation training exercises. Most of these providers or their affiliates can address standard negotiation exercises and provide training that sticks to your staff.

Two top notch Universities are: Northwestern's Kellogg School of Management Dispute Resolution Research Center, and Harvard's Program on Negotiation, each which provide standard negotiation exercises, which you can review on line for free. Each has its own Linkedin Group, DRRC Linkedin Group, and PON Linkedin Group.

DRR and PON have free newsletters, seminars and useful resources. They also have for profit training seminars.

Here is a partial list of the DRCC and PON testimonials:

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Chipotle depends on a more complex supply chain for its 1,900 outlets that includes scores of small, independent farmers.

That can lead to ingredient shortages and questions about food safety.

chipotle.png

Chipotle is fresh -- and suddenly, that's a problem.

Members of Franchise-Info weigh in on the topic.

"Made in China" can kill. in 2007, it killed Zhang Shuhong. Zhang's company was Lee Der Industrial.

"Lee Der had been an important vendor for Mattel. ... Everything began to unravel, however, after Mattel discovered lead on toys based on Dora, Elmo and other beloved characters." Secrets of the Money Lab, Chapter 6.

When Dora & Elmo were transformed from cuddly to toxic, both Mattel and Lee Der were in deep trouble.Zhang was betrayed by his supply chain - when someone added lead to the paint. The paint on those toys for American children.

At the height of the scandal, "Made in China" toys threatened 300,000 children with lead poisoning. Mattel paid over $30 million for the product recall. Zhang paid with his life, he hung himself.

Lee Der had its export license revoked - a corporate death. And the brand "Made in China" suffered badly.

Yet, Zhang was an experienced vendor, who had worked with Mattel for over 15 years.

But, as the supply chain got longer and more fragmented both Zhang and Mattel lost control over quality.

Mattel was perplexed: "They [Lee Der] understand our regulations, they understand our program, and something went wrong."

Contrast Mattel's compliance program to what Kroc, McDonald's and their meat suppliers did in the late 50's with hamburger.

Mystery Meat

In the late 50's, hamburger was mystery meat. At times, unsafe, contaminated and poisonous. "Nitrates were used to keep the meet pink, even when it had turned"

At other times, soy protein was added. Soy protein was cheaper and because the soy absorbed water, there was less shrinkage in cooking.

The only regulation in place was that anything designated as "hamburger" could not have more than 30% fat. So, meat suppliers added extra blood to meet this requirement.

Finally, beef offal could be ground up and added to the "hamburger" mix.

The Standard or Recipe

The recipe for "hamburger" was created with the help of Golden States Food Corporation, GFS.

(GFS went on to be a major supplier with McDonald's. It is now the third largest beef supplier, with revenues over $6 billion. Not a bad payday for helping create and maintain a standard.)

The Strategic Problem

The negotiating strategy of the meat suppliers at the time was this:

Agree on a price with a drive-in, independent or chain, but then lower the quality to make the deal "work economically".

Since there were no standards or recipes for hamburger, the meat purchasers always had to bargain hard on price - quality could not be bargained for.

Remember that the regulations only required that anything called "hamburger" didn't have a fat content higher than 30%.

Suppliers could not credibly commit -in advance- to delivering standard hamburger.

This hurt consumers. It hurt the drive-ins and chains. Battling over pennies left no room for paying for the costs of monitoring and controlling quality.

It was the classic chicken and egg problem. If the drive-ins could expect high quality, they could pay more because the individual monitoring costs would be less, and they could charge consumers a bit more.

But, suppliers knew that they couldn't deliver high quality hamburger because some drive-in's would adulterate it and also sell it for the higher price.

The market for quality unravelled, before it got even started.

The Solution: High Standards and Tough Compliance

To solve this strategic problem, Ed Turner and others first decided that the McDonald's standards would hold fat content to between "17 and 22.5%".

And that "hamburger" had to be "83% lean chuck "shoulder" from grass-fed cattle and 17 percent choice plates (lower rib cage) from grain-feed cattle."

Some suppliers thought they could cheat McDonald's. Since the supply chain was fragmented and local, these supplier thought McDonald's would not and could not police their standards.

"They had not counted on the intensity of McDonald's commitment to its meat standards.

Rather than leave the inspection of meat to visual inspections -the method used by the McDonald brothers and most other drive-in operators - Turner and Karos advised franchisees to have the meat routinely analyzed in labs."

Finally, McDonald's provided other simple tests for its franchisees to use, conducted surprise inspections, and kicked out suppliers who failed the standards.

They also quit "hard bargaining" on price - giving up a few pennies on the pound to the meat suppliers.

It is this type of dedication to creating and enforcing standards, in collaboration with its franchise operators and meat suppliers that made McDonald's the force it is today.

It is a good reminder of the value of franchising: the creation and maintenance of standards as a result of collaboration between buyers and sellers & without relying upon the penalties provided by government regulation.

Sources:

Secrets of the Moneylab: How Behavioral Economics Can Improve Your Business Chapter 6- In Whom We Trust.

McDonald's: Behind The Arches Chapter 6 - Making Hamburger.

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Stuff happens! Often, human resources professionals encounter the unexpected. When employees bring surprises, priorities get rearranged, if not completely usurped. Still, having a plan helps everything stay on target and go much more smoothly. The new year is the perfect time to anticipate and plan, making all the difference in what gets accomplished. Here are a few ideas on getting started:

Know your organization. Understand the overall business goals and objectives. Identify how the human resources department can contribute and obtain top management support. Create a human resources strategic plan that supports the organization, its goals and mission.

Stay on top of deadlines. Whether month-by-month or week-by-week, develop a calendar or other means to track tasks for legal compliance and other deadlines that predictably occur. Overlay this framework with the additional HR projects you need to accomplish.

Update your employee handbook. Take into account changes in state and federal law as well as the National Labor Relations Board stance that social media policies not constrict employees' right to discuss the terms and conditions of their employment. Check for clear, concise wording and readability. Make sure policies are consistent with one another.

Revise job descriptions. Job duties change and job descriptions need regular updating. Make sure they are clear and accurate and convey the essential functions of the job. Well-written job descriptions provide a road map to employees, serve as a foundation for performance evaluations, and justify exempt vs. non-exempt status under the Fair Labor Standards Act. Use wording that complies with the Americans with Disabilities Act (HR Made Simple subscribers may access HRSentry's Job Description Tool to quickly create ADA-compliant job descriptions.)

Train managers and supervisors. Your need to depend on these folks on the front lines to properly implement your policies and procedures and state and federal employment and non-discrimination laws. Help them understand their role in claim prevention, especially in areas such as sexual harassment and retaliation. Teach the importance of proper documentation and let them know that HR serves as an internal consultant to help prevent and solve HR-related problems.

Target problem areas. Do you have high, unplanned turnover? Is FMLA abuse or absenteeism a problem? Are independent contractors vs. employees classified properly? Are you paying overtime lawfully? Are work-related injuries too numerous? Every organization has areas to improve. Identify the two or three most pressing issues and make this the year to solve them!

Need more in-depth help? Expect the unexpected and plan for what you can! HR Made Simple subscribers have all the resources and tools they need at their fingertips 24/7.

Enjoy a stellar 2016!

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In this article and in a few of the articles to follow we are going to explore the differences between small businesses that are troubled and small businesses that are triumphant.

While there are a lot of differences between troubled small companies and triumphant small companies, there is one commonality that they both share. It's been my experience that the owners of both types of companies really have the all the answers that they need to make their businesses successful and that's not true most of the time; it is true every time.

There was a time when I didn't recognize that. I was sure that I had all the answers and all I needed my clients to do was follow my lead.

But one day I was working with a client on the beltway in DC. His company consulted with the government on submarine nuclear warfare so he was a consultant also. The project was really successful'

My job was to develop a succession plan for the owner. He had no children, what he had was 10 retired admirals, each of whom ran a division and each of who truly believed they should not only be allowed to run the company, I'm fairly sure they each felt they should be allowed to run the world.

Talk about a room full of egos.

But I did my job, named the successor and convinced each of the other Admirals that their job was probably more important than the CEO spot. We didn't lose one of them.

So the owner and I went out to dinner. Before we left for dinner he pulled an envelope out of the safe and told me that we were going to look at its contents at dinner, I of course was feeling pretty good about myself and then he opened the envelope and showed me the name he had written down before I started the project.

Of course it matched the Admiral that I had chosen.

He then asked me if I knew what the definition of a consultant was. He told me the answer which was that a consultant was someone who borrows your wrist watch and then tells you what time it is.

And that was a great revelation to me.

There is a great difference between a business owner who knows what the answer is, knows what change needs to be made and can make the changes and an owner who knows what the answer is, knows what changes need to be made and just can't make the necessary changes.

And don't underestimate the fact that change is very difficult to bring about . In fact that's the reason that consultants like me are needed, we are change agents.

Machiavelli said" It ought to be remembered that There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things because the innovator has for enemies all those who have done well under the old conditions and only lukewarm defenders among those who may do well under the new"

Truer words were never spoken. And that's why consultants like me who are really change agents can make a good living; we understand a lot about processes and know how to bring change about.

We could spend many pages more describing the process of change, but I can assure you, the process exists and if you are going to operate a winning or a triumphant business you must understand the change process.

Now let's consider a question. If I were to tell you that there were two business owners in the same industry and they were equally smart and had exactly the same number of years of experience.

Now given that scenario if I were to ask you which of the owners would be the most successful I would get answers ranging from the one that works the hardest to the one that has the best sales staff to the one that is the luckiest.

While all three of those options can be helpful, in my consulting practice I learned that companies that had operating plans consistently outperformed companies that did not have an operating plan.

Think about it. The reason is simple, attempting to operate a business without a clear concise plan that leads you to your goals is just like trying to go on an automobile trip without a map. If you are going to maximize your results you must have a plan.

And once you have a plan you must live the plan, not just once a month or once a week but every day.

And if you are going to have an effective plan you have to get your entire team involved in its creation.

Sure, as a business owner you could go into your office and sit down and go through the process of creating a plan and present it to your employees and tell them this is your plan.

You could say "Go out and be sure we achieve this."

Your employees just have a plan that they think has been shoved down their throat. This is an ineffective way to manage.

It's kind of like a quote I saw from a former marketing executive at Citrix Corporation. He said "Teamwork is a lot of people doing what I say."

If you don't involve your employees in the creation of the plan, they certainly have no sense of ownership.

Owners of winning companies involve their employees in the creation of a plan. Every employee should be responsible for developing their portion of the plan.

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Donna is a 30-year old single parent working at a quick service restaurant. She's been working here for months, but it won't be for much longer. At home on her kitchen counter sits a pile of unopened bills and collection letters. She's been struggling to receive consistent child support, and now she's behind on her rent. Daycare services are expensive and her credit cards are maxed out. She has trouble concentrating at work.

She makes careless mistakes with orders, has a surly attitude with customers, and even considered "borrowing" some of the contents of the cash register. She calls in sick when she needs to deal with occasional financial flare-ups. Last month she borrowed from her parents and sister just to prevent her car from being repossessed. Donna wonders how long she can hold on. She spends time during her lunch break looking at job sites on her phone.

Once Donna leaves or is terminated, her employer will need to interview, hire, and train a new candidate. Her money woes are about to be her boss's problem.

What will it cost to replace Donna? According to studies, the cost of a lost employee vary according to their level of expertise and credentials. For positions earning less than $30,000 annually, every time a business has to replace an employee, it costs an average of 16% of that person's annual salary.1 That's $4800 for someone earning $30,000. But high employee turnover perpetuates itself. When staff members witness a revolving door, they tend to disengage, and become less productive, increasing the odds of their own departure.

Customer service becomes a casualty when staff is stretched, due to the exodus of employees. For management, continually interviewing, selecting, and training the newest hires, becomes exhausting. The monotony leads to cutting corners in the selection process, resulting in bad hires and further spikes in turnover.

How many Donnas work at your franchise? Surveys reveal that 33% of US workers across all industries, report feeling severe financial stress. According to PwC, 37% of these workers report that they spend over 3 hours per week at work thinking about or dealing with personal financial issues.

About 30% of the Gen Y labor force, find it difficult to make their minimum payments on credit cards, while only 19% of baby boomers do. The figures for the relatively unskilled labor force found in quick service franchises are bound to be sadder still, as many teeter on a ledge of despair.

What's more, 29% of money-troubled employees blame their employer for their predicament.2 "Study after study has shown that employees who are financially stressed, experience health problems more often, and are less productive," says personal finance author Gerri Detweiler.

According to Reeta Wolfsohn of the Center for Financial Social Work, financial stress is the number one stressor in people's lives. The absence of a consistent and reliable work schedule for workers in businesses such as quick service restaurants, with a specific amount of income on a regular basis, increases that stress many times over.

These workers need greater stability in all areas of their lives, particularly in their jobs. When that is missing, the challenge of arranging for childcare and transportation can become unmanageable and result in absenteeism, lateness, and job loss.

What can a franchise employer do? The first step is to acknowledge the severity of the problem, and commit to addressing it.

Resources to Help

EAP's - Corporations with extensive benefit packages offer employee assistance programs, where staff can call for help in times of crisis. But franchises are smaller business units, where these services are not as widely offered.

The Employee Assistance Professionals Association (EAPA) can help employers select and hire a group to provide assistance. Be sure to compare EAPs according to services provided and fees per employee.

Workplace Posters - Among free resources available, CareConnect USA has published a free workplace poster, for franchise management to print and display for employees. Posters list national helplines for employees to find assistance. The helplines cover critical categories such as Child Support, Housing Assistance, Credit Counseling, Free Bankruptcy Advice and more.

Calls are routed to government, non-profit, and private help centers according to region. Calls are free, and posters are available in large quantities for multi-unit owners.

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Mobile App - A free mobile app called "Trusted Helplines" instantly connects employees with financial and crisis resources in a vast array of categories, including mental health, depression, abuse, and addiction. This format is well suited to young workers who primarily use mobile devices to access information. Franchise managers can print the app flyer and post it in the workplace. Employees can then discreetly download the app and explore many free resources on their own time. Posting such a flyer also sends a signal that management cares about the well being of employees outside of work.

Financial Education on Site - For employers willing to play a more active role, the Personal Finance Employee Education Foundation (PFEEF) can help them establish effective financial wellness programs and help employees adopt sound financial habits. Using the Personal Financial Wellness Scale™, PFEEF is able to assess the financial wellness of individuals before, during, or after the implementation of a financial wellness program to quantify the benefits of a given program. PFEEF then provides resources and services to help deliver effective instruction and training to employees.

It's no secret that franchise owners face a challenge to deliver quality products and services in a competitive marketplace. But within that challenge lays the tricky task of mobilizing a distracted workforce, walking a tight rope over financial ruin with no safety net. A walk that eventually leads straight out the door.

1 The Harris Poll

2 Center for American Progress

(A financial counselor since 1993, David has worked with housing, debt relief centers nationwide. In 2005, he created a reference tool to help social workers find resources for their trouble clients. Always searching for innovative ways to help employees and families connect with appropriate assistance. For comment or questions he can be reached at [email protected].)

5 Gifts to Your Employees

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American traditions abound next month and Thanksgiving: traveling to visit family, overflowing dinner tables, football games on television, Black Friday sales and, for many workers, a long weekend. But there can also be cultural pressures to meet an elusive holiday ideal and, for many, it's stressful when family relations go awry or dinner falls short of Martha Stewart perfection.

Add multiple doses of commercial tactics to ramp up holiday spending and another frenzied set of expectations emerges. Layer this atop an economic climate of insecurity and you've got the perfect recipe for stressed out employees. No wonder we sometimes neglect both the thanks and the giving in Thanksgiving!

But employers can help put both back into the holiday season while assisting their employees in the process. Consider these five ideas:

1. Model Gratitude. Thank your employees for what they do for your department and the organization. Catch them doing things well and let them know you notice and appreciate it. Give positive feedback whenever possible to help them feel motivated, encouraged and engaged in their work.

2. Appreciate the Whole Person. Employees don't bring compartmentalized pieces of themselves to work. For better or worse, they bring their whole being, their enthusiasm, talents, concerns and problems alike. Get to know your employees as unique individuals; learn about what's important to them and let them know that you care.

3. Create a Culture of Wellness. Everyone is better off when staff members are healthy, physically and mentally. Absenteeism and turnover go down; teamwork and productivity go up. Employees feel cared about when you pay attention to their well-being. Create wellness events, such as yoga, mindfulness training and nutrition classes, and provide an Employee Assistance Program to help staff manage personal issues and hardships.

4. Support Volunteering. The opportunity to serve others is gratifying. It can even be therapeutic when experiencing difficulties in one's own life. Consider a policy that allows employees to spend some work time volunteering for a worthy cause. Your generosity in allowing employees to themselves be generous will be appreciated and will encourage loyalty and greater commitment among your staff.

5. Nurture a Sense of Community. Trying to get more done with less these days, stressed out employees can narrow their focus, hunker down, view other departments as thwarting and lose sight of the greater picture. To counter these tendencies, create opportunities for staff, across departments and functions, to get to know one another better. Interdepartmental projects, committees and social events can foster cooperation, collaboration and even friendship. The U.S. Congress of twenty years ago engaged in socializing and friendship across party lines that resulted in compromise and cooperation which, today, is almost non-existent. It's all too easy to demonize others when you don't know them.

It can take mindful effort to pause and be thankful. But the more you do it, the easier and more habitual it becomes. So take some time out this week and in the coming weeks to encourage your employees to likewise pause, breathe, pay attention to others, engage in helping those less fortunate and appreciate one another.

Model, cultivate and provide opportunities for healthy, cooperative and generous behaviors and your organization will enjoy a culture of more committed, collaborative and appreciative staff.

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As technology quickly advances, there's sure to be at least one critical new platform that you'll be introducing to your organization. You will move into that new technology with either a technology vendor, or a partner.

The selection of a technology company can be an arduous and daunting process. There's no doubt you'll research references, look at work samples, and meet several times before you commit to a contract. So, you can assume with some confidence that this company is professional, has integrity and has been successful in your industry.

But make no mistake that once selected, that relationship will be based on trust. Because only time will tell whether you selected a true partner, or just another vendor.

Lets explore some ways you can better qualify companies and discern between those who will step up to the plate and become true partners and those who will fall by the way side as just another vendor.

1. Experience is just the beginning

A well-selected partner can rely on their previous experience to guide your franchise system in making informed decisions that will strengthen your organization. But that's just the beginning. A partner will do more than just impart best practices in your industry. A partner will care about making you and your entire organization successful. A well-chosen partner will ask probing questions about how they can help take you to the next level, not just complete the project at hand.

A partner will ask lots of questions, looking for ways to push the envelope for you. They will always look beyond the short term, focusing instead on the long term success of your entire organization.

In time a partner will gain the respect and earn the trust of those around them, as they work towards a relationship of loyalty.

2. Partnership is a two way street

A relationship based on trust and respect is a two way street. When a partner makes a valuable contribution to your organization, they expect to be recognized and rewarded for it. This type of 'ask' should be expected, as a partner who understands that their 'going above and beyond' is a valuable contribution to your organization should not be shy about wanting to be recognized for their efforts.

Here are some simple questions you should expect from a company that is seeking to be your partner:

1) Do you have a vendor of the year award at your national convention?

2) When we win your loyalty, will you be a reference for us?

A partner expects to win such recognition and making you a loyal customer who's willing to 'shout from the rooftops' about their exemplary service.

3. Communication is the key
One way to discern between a partner and a vendor is by who the company asks to talk to in your organization, ie. who do they want involved in planning meetings, business reviews, etc.?

A vendor wants to meet with the decision maker. A partner wants to meet with everyone, from the franchisees to the managers, directors and 'C' suite. A partner understands that the success of their one project depends on the entire organization and affects the whole.

With this approach to communicating with your organization a partner can gain a clearer understanding not only of what your organization does and needs, but why. And to make the most impact to any organization you must understand the DNA of that company, and why they do what they do. A partner understands this and seeks to understand your DNA at every turn.

Lets face it, in many ways the success of some of your most important initiatives in 2015 may rely on building a relationship with a new partner, or going back to the drawing board with an existing one. The partners you choose will undoubtedly reflect back on you and your integrity, reliability and ultimately your value to your executive team, franchisees and customers.

Building a partnership will require some additional effort by you and your staff, but the potential benefits of the relationship far outweigh the extra time. When you have a great relationship with a partner, they become an extension of your company's team, and this can result in new opportunities, savings, and benefits for your entire organization and franchisees.

In the end, a partner's influence is far reaching, because it's trusted. It's not an opinion; it is advice and insight. It's in this spirit of shared success that you will find the characteristics of a company that shares your values, and will become an invaluable partner.

Here is our free checklist--->>

The Top 6 Most Effective Methods of Online Marketing for Multi-unit Organizations to help you implement your own franchise's online marketing.

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Kyle, age 21, handles the scheduling, appointments, estimates, and all payment transactions for the auto service center near my office.

On a weekday morning at 8:16, I call to inquire about getting my vehicle in for shocks and an alignment. Kyle politely tells me that if I can bring it in within the next 30 minutes, he'll have it out by 11:45, in time for me to make my lunch appointment.

I agree and head out immediately.

I arrive at 8:37 and notice that there are already three customers in the waiting area in front of me. Kyle is working fast and furious to make certain each gets their questions answered, receives an accurate estimate, and signs the required paperwork to begin the job. With so much to do, Kyle is multitasking like a one-armed paperhanger in a stiff breeze, and he's trying to make everyone feel like they are important and will attend to them shortly.

Kyle's friendly, knowledgeable, and he seems to be very competent at keeping so many plates spinning at once.

However, as I observe him more carefully, I can detect a subtle level of frustration brewing under the surface.

He's working solo throughout this rush and it's got to be incredibly stressful to take such good care of the four customers in the showroom while, at the same time, being constantly interrupted with questions from his service techs, while, at the same time, handling an endless stream of phone calls from prospective customers.

Eventually, it's my turn and Kyle begins by apologizing to me for the delay while looking over my shoulder to acknowledge the two additional customers that just walked in.

"I don't know too many people that are working harder than you are today, Kyle." I said to him.

Something about my statement must have made me appear like a therapist, as Kyle took a deep breath, shook his head, and began to offload his stress.

"I've been here for over a year and it's like this every day. Every day, man! They tell me to give friendly personal service to every customer and to suggest other things we can do for their car, but when they don't staff anyone else to help you, and they don't provide a voice mail system to help handle the barrage of calls that come in from the ads they place, you wind up playing the incompetent fool. Ultimately, no one gets the service they expect or deserve...I say I'm sorry a thousand times a day...and I can't wait for my shift to end."

I'm no therapist, but it doesn't take Dr. Phil to realize that Kyle is not going to be working here in six months. (Heck, I'd be surprised if he made it six more days.) And when he finally quits, this national big box retailer will attempt to find another Kyle to plug into that position.

It's a crying shame, too. Because if Kyle had just a little support from upper management, he'd be a safe bet for long-term employment. Imagine how much better he'd be with five more years' experience!

If management in this operation would observe what I did, they'd be the ones listening to Kyle, and they'd most certainly provide him with the resources (another counter person, etc.) and the tools (voice mail, etc.) he needs to succeed.

By supporting Kyle, their customers would get a much improved service experience; the kind they'd tell their friends about. And those referrals from delighted customers would have a substantial impact on revenues, decreasing their reliance on expensive couponing and marketing gimmicks to get new customers into the store. Not to mention the repeat business from their existing customers.

Unfortunately, this story isn't going to end like that.

With a death grip on wages and operational costs, my prediction is that this national retailing giant is going to keep churning and burning the Kyles right out of their organization. Their employee turnover and marketing costs will continue to escalate. Customer satisfaction, repeat business, and referrals will continue to erode. Stock prices will continue to fall.

Are you paying more attention to your daily deposits than you are to your Kyles?

POST NOTE: Kyle apologized again when he called at 2:18pm to tell me that service to my car was finally completed. He said one of his techs went home sick and that he had to install the shocks himself.

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As we enter the "teens" of the twenty-first century, we find technology playing an ever-increasing role in both our personal and professional lives.

One of the dominant trends that has become a part of our daily existence is the increasing importance of Social Media. What began as a way to connect and share information with friends, has grown into the most important mechanism for communication since the invention of the telephone.

Social media has played a role in some of the most significant events in recent years. The ousting of the Egyptian government, the on-going struggle for freedom in Syria, Presidential elections here in the US, coverage of riots in the UK; all of these things played out on Social Media platforms like Twitter, YouTube, Facebook and others. It is becoming obvious that social technologies are having a huge impact on our world.

It is also becoming obvious to companies large and small that Social Media is a phenomenon that is not likely to go away any time soon. But how do we make it work for business?

One way that savvy businesses have found to harness the power of Social Media is by updating their training platform to a Social Learning Management System.

A Social LMS brings one of the most powerful technology tools in recent years directly into the daily operation of any business. It offers the power of collaboration and knowledge-sharing in a way that benefits the entire organization.

Just a few of the business advantages that a Social LMS offers include:

  • Faster and more cost-effective training delivery
  • Easier access to information
  • More effective HR processes
  • Better new-hire training
  • Community building within the organization
  • Mobile learning technologies
  • Better connection to vendors and partners
  • Localization of training into different languages
  • Establishing a culture of learning

The business benefits of a Social LMS are nearly unlimited. Imagine the power of a fully connected and collaborative franchise system.

The isolation and ineffectiveness that many of today's franchisees are feeling should be a thing of the past.

Replacing it would be a culture of information sharing, connectedness and community. The technology that has so dramatically changed the political and social world in which we live can bring that same positive change to business.

TOPYX® is the Social LMS that allows companies to more effectively manage their training, information management and corporate communications - all from a single cloud-based platform. And the best part is that TOPYX can be implemented quickly and seamlessly.

Click here to request a free, personal demo of what TOPYX can do for your organization. It's time to harness the power of Social Media for the benefit of your business!

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Most business owners know that customers will walk - take their business elsewhere if they're not treated as they'd like to be. But how does a business owner find out what the customer really likes or dislikes?

Well, as the Telephone Doctor, your customers have told us what they won't tell you. Here are TEN things only your best friend will tell you. (By the way, that would be us...The Telephone Doctor.)

Dear Telephone Doctor -

I'm not a person to be confrontational and cause a scene. However, there are several things that bother me when I call or walk into an establishment. If you pass this on to management, it couldn't hurt and probably would help. Thank you.

Dear Owner/Manager:

  1. Nobody greeted me when I walked into your store. No one said, "Hello," no one asked if they could help me, and no one said goodbye when I walked out. Well, at least I wasn't any trouble.
  2. Your sales staff looked tired. Yea, they did. Otherwise why wouldn't they greet me with a big smile and some enthusiasm? It didn't look like they even wanted me in the place.
  3. I bought a lot of stuff. I couldn't believe no one said, "Thank you." No one told me to enjoy my purchase. I did get a luke warm "Have a nice day." But it was said so routinely, it didn't mean anything to me.
  4. When I phoned for some information, my call was treated as an annoyance. I sensed very little desire to be of any real help. Know what I did then? I called a few more places until I found one who sounded as though they wanted my order.
  5. Whoever answered your phone never identified themselves. I happen to like to know who I'm talking with and when I don't, it hurts any trust I might give your company.
  6. During the phone call, the voice of whoever answered sounded aggressive and challenging. I didn't feel very welcomed.
  7. When I walked in, all your employees were talking and laughing amongst themselves and ignored me until I asked a question.
  8. There was no management around. Remember the old saying "when the boss is away, the mice will play." Guess what? They do!
  9. When I told your staff about my problem, which was important to me, no one sympathized with me. It was 'business as usual' for them.
  10. Everyone looked angry. No one was smiling. Remember, sometimes it's the things you 'don't do' that make me want to go elsewhere.

# # #

Reprinted with permission of Telephone Doctor Customer Service Training. Nancy Friedman is a featured speaker at franchise, association & corporate meetings. She has appeared on OPRAH, Today Show, CNN, FOX News, Good Morning America, CBS This Morning & many others. For more information, call 314-291-1012 or visit www.nancyfriedman.com.

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The Real Importance of Job Descriptions as Risk Management

Job descriptions aren't legally required and, as writing them sometimes feels daunting, you may be tempted to avoid having them or to not update the ones you do have.

But I know from experience that real job descriptions are helpful for myriad reasons and provide important legal protection for your organization.

Why have job descriptions? They serve as a communication tool between the employer and employees so there's mutual understanding about the expectations and responsibilities of the position. They provide a useful reference for performance management and as grounds for termination if an employee cannot or will not meet the written duties and expectations of the job.

Job descriptions justify Exempt or Nonexempt categorizations as required by the FLSA, and they can protect an organization from employment claims brought under the ADA or Title VII. The key is to do them well.

Be thoughtful about making sure all the "essential duties" of the position are documented. The EEOC describes these as the tasks which are fundamental to the position and, if removed, would fundamentally change the job. You can also think of essential duties as the reason the job exists. If you are creating a description of a position that isn't new but already exists, get input from the person doing the job as that person knows the job well and will appreciate being consulted.

When culling the essential duties in a job description, focus on what needs doing, not on how it's done. Here's an example: don't say, "lift up to 50 lbs. equipment" if what is actually required is that the equipment be moved. The function to be accomplished is transporting the equipment so that's what you should say to make sure you don't exclude individuals who might need a reasonable accommodation such as using a dolly.


You should also pay attention to bona-fide occupational qualifications (BFOQ) to make sure the job description does not violate Title VII or other laws related to protected to class protection, such as those based on race, gender, age, national origin or pregnancy status. So, for instance, don't specify that the job occupant needs to male or female unless you can prove that it's really required to this this job. For instance, a counselor of a support group for teenage girls discussing sexual issues needs to be a woman if the girls are to feel comfortable opening up. So being female in this case is a BFOQ.

As mentioned job descriptions are not legally required but, if you have them, they are treated as legal documents and they must be kept for at least two years. So be thoughtful and careful about creating them and consider using Job Descriptions Made Simple to ensure they work well for you!

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Location brings information together

Although the success of Culver's stems a great deal from the delicious food it serves, the company also relies on Esri ArcGIS Business Analyst software and data to ensure the locations its new franchisees are selecting will be successful. Using Business Analyst, new sites can be easily compared and contrasted by analyzing the demographics of existing restaurants, then pinpointing new areas that are similar.

Owners of successful franchises, like Culvers, have relied on GIS technology to discern markets for many years. The software provides tools that help organize information by using location as the common identifier for data. By understanding where franchises, the competition, and customers are located, franchisors can make informed decisions, improve communication, and share their knowledge with others.

"We chose Esri because they have the best information available for what we need to know," says Dave O'Brien, real estate manager at Culver's. "Using ArcGIS Business Analyst, we are able to easily compare and contrast new sites by analyzing the demographics of our existing restaurants and then pinpointing new areas that are similar."

O'Brien uses a combination of software for an in-depth view of the market at analysts' desks as well as a providing an easy way for anyone in the company to incorporate the information they find into the tools they need to do business. ArcGIS Business Analyst, including the segmentation module, provides in-depth customer analytics.

The Business Analyst Segmentation Module provides block group level geography, consumer survey data from Mediamark Reaserch Inc. and an intuitive interface so the analysts can accurately estimate demand and market potential for potential new franchisees.

Business Analyst Online is used for creating boardroom-quality maps and easy-to-understand reports that are used by the franchise partners. "We are a family company, and this is apparent in all our daily efforts," stresses O'Brien. "We want our franchise partners to succeed. Without them-the local owners and operators in their own communities and hometowns-we would not exist."

Selecting the Choice Sites

Even with an extensive menu, every food item at Culver's is made fresh to order throughout the day.

With almost 500 restaurants that stretch from Wisconsin's heartland east to South Carolina into Texas and west to Utah, existing franchise partners and franchise candidates are continually looking at possible new sites.

"The best way to determine a good site versus a bad site-besides understanding its access to guests, how to place signage, how good visibility is, and the location's prominence in a particular market-is almost certainly going to be a comparable store analysis," says O'Brien.

Whether by existing franchise partners or new franchise candidates, new sites are always being scrutinized for potential. "Working with franchisees requires a lot of time; we're either on the phone discussing locations or viewing prospective sites in person," explains O'Brien.

He goes on to add that ArcGIS Business Analyst helps everyone focus on trade areas that are more appealing before going out to visit prospective restaurant locations, helping to decrease the time it takes to narrow down choices.

Culver's analysts define areas being serviced by existing restaurants by creating locations on a map of their restaurants and using tools within ArcGIS Business Analyst to delineate market area boundaries around sets of customers. Next, Culver's uses the ArcGIS Business Analyst Segmentation Module to mine valuable customer profiling information.

The Segmentation Module consists of Esri's Community Tapestry data extension, which classifies U.S. neighborhoods into 65 segments based on their socioeconomic and demographic composition. Operating on the theory that people with similar tastes, lifestyles, and behaviors seek others with the same tastes-"like seeks like"-these behaviors can be measured and predicted.

The ArcGIS Analyst Segmentation Module has intuitive wizards that guide the analyst to answer questions about customers such as, Where are other neighborhoods that look like neighborhoods we are currently in that tend to have higher sales volumes? What do they buy? How can I reach them? and Where can I find more like them?

Using these spatial analysis tools, Culver's is able to segment the demographics of a restaurant location and find new areas that have similar attributes.

ArcGIS Business Analyst allows Culver's to define areas being serviced by existing restaurants. The software extension does this by creating locations on a map of the restaurants and defining market area boundaries around sets of customers, in this case one-mile rings.

To quickly share this information with corporate managers and new franchisees, the Culver's Real Estate and Franchise Development team uses Business Analyst Online. Business Analyst Online is a Web-based solution that applies GIS technology to extensive demographic, consumer spending, and business data to deliver on-demand analysis and presentation-ready reports and maps. Reports and maps are easy and convenient to use, with more than 50 templates readily available for the Culver's analysts to use for presentations to their board members and potential franchisees.

"We want to give our franchise partners the support they deserve," says O'Brien. "GIS technology gives them the ability to maximize their potential at Culver's."

Today, GIS is seen as a strategic business solution that helps businesses continue to grow. The company is expanding into the state of Florida, a new area for development. "GIS is a tool to help us make even better decisions as we continue to expand," says O'Brien. "GIS doesn't replace anything we have now, including people. Instead, the software has become a necessary tool that complements our existing business process."

The Culver's Culture

Intuitive wizards in ArcGIS Business Analyst make it easy to answer questions about market areas, in this case finding the census tracts with the highest population growth in order to decide where to open a new restaurant.

The first Culver's restaurant opened in 1984. Co-founders Craig Culver and his wife, Lea, oversee almost 500 restaurants in 20 states through Culver Franchising System, Inc. Culver's attributes the success of its franchise restaurants to the owner/operator concept and the understanding that their business, as much as they'd like to say is about the food - it's really about people.

Franchise partners and team members make sure everyone who comes to Culver's feels welcomed. This resonates even today each time a team member holds open a door, or checks in tableside to find out how the meal is.

Culver's guests order from a cashier or drive-through, but the restaurant goes a step further by bussing tables and bringing around fresh coffee refills. Culver's has won many accolades including recognition as one of 25 high-performing franchises in the country by the Wall Street Journal.

Franchise partners operate their restaurants full-time. Before they can open the door to a new restaurant, each franchisee must complete an intense 16-week training program where they learn, hands on, the business of operating a restaurant.

Founded in 1984 in Sauk City, Wisconsin, Culver's is a growing franchise. The fast casual restaurant specializes in frozen custard and hamburgers called the ButterBurger®.

Culver's is a growing fast casual restaurant that just opened it's 473rd location in December. The restaurant's founders Craig Culver and his wife Lea look for franchise partners willing to work side-by-side to create restaurants that ensure every guest leaves happy. Culver's works hard to help its franchise partners choose great locations to ensure they are successful.

Today, the Culver's oversee franchised restaurants in 20 states through Culver Franchising System, Inc.

First opened in 1984, Culver's specializes in Frozen Custard, a premium ice cream, and the ButterBurger, a juicy hamburger so named because of its lightly toasted and buttered bun. Without a holding pan in sight, the restaurant cooks everything to order, including making the namesake frozen custard, fresh on the premises throughout the day.

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As I speak with franchisors, multi-unit decision franchisees and their marketing teams. I am hearing some very common themes from some of the top franchises in the nation and even new and upcoming ones.

If you are reading this and are a franchised company or multi-unit operation, you understand better than anyone the incredible challenges that your business model faces. In addition to keeping up with the competition and staying ahead of the curve, segmented marketing options are making it difficult to properly manage, sustain and protect your brand identity and marketing efforts.

As franchise marketing challenges continue to grow, you need tools that will enable you to get a grip on your brand and maintain its identity while giving your franchisees the freedom to cater to their unique local markets, in a way that represents both you and the franchisee accurately. The trick is finding a tool that is both cost-effective and flexible enough to meet those challenges without compromising the brand you have worked so hard to build.

Here as some common themes I am hearing.

1. Franchised businesses face very specific issues, particularly when it comes to localized content and marketing. Whether franchisees expect that name recognition alone will gain them customers or they have their own special methods of advertising and marketing to their local niche, brand consistency is the most vital component of successful franchise companies. Still, it can be difficult to retain brand consistency when facing the following challenges:

2. Franchisees are typically not marketing-savvy and therefore resort to simply running the business, relying solely on the brand to get them through.

3. Franchisees are ok with supporting the national brand but want it localized, so they take matters into their own hands, using content or marketing tactics that damages or ignores the brand altogether.

4. There is not an end to end marketing system in place to monitor, drive and sustain the brand. In turn the franchisees sometimes get creative to localize promotions or products or services that they offer to cater to the local market. In their mind they are left to fend for themselves as the franchisers expect them to find or customize locally relevant content or marketing promotions.

Based on my experience as a franchise, I also believe.

1. Tools for localized marketing are clunky and difficult to navigate, and often buried in the company CRM. So even when franchisees are willing and able to build communication to speak to the local client base, it becomes cumbersome and intimidating to do so.

2. Most importantly, let's be honest, you would be lucky to get 10% participation across the board from traditional tools incorporated in CRM's. ( There are exceptions)

3. Franchisors are not accessible to franchisees or owners are busy running the business, making communication difficult and putting the Franchise brand at risk. I know I know... there is typically one or two in a typical franchisor marketing team for small and large chains alike. You can only do so much. Sometimes you just need a little help.

4. Franchisees are ok with paying into supporting the national brand but get frustrated that the content does not speak to the local product mix or growth vertical they are capitalizing on. They would like a little input or control. That would make them real happy!

It is also well known that Franchise Marketing tools that collect dust. We have all seen them, 10 year old marketing collateral that was brought in with good intentions but were not utilized properly at the time and fell into the hands of an unsuspecting customer. Sometimes with an old offer or pricing that makes conversations awkward and damages brand and cuts into profitability.

Content Curation Tools as a Solution

One type solution to the many challenges faced by franchisors and savvy business owners in the franchise business today is the use of content curation tools.

Content curation tools gives franchisors an outlet to control the company's brand identity without limiting franchisees in their local content, promotions or other marketing.

Franchisors can push national marketing direction to the franchisees often housed on the company website or blog and share basic marketing materials and content for the franchisees to change out if they feel necessary. This could include products , services, calls to action, promotions, specials etc.

Franchisees can edit or alter certain controlled aspects of the messaging to reflect the brand's presence in their local community, all without compromising the image that the company has worked to create. Given the limited resources most companies have we build and provide the newsletter content for you (with your guidence of course).

So most Directors of Marketing can simply make a few suggestions to edit and then publish to the local franchisees who can then edit from a selected amount of related local content or offers and share via email list or share socially via Twitter , Facebook etc.. It is a simple, inexpensive and all-encompassing way to control your message, give the local franchisees an opportunity to get involved and fine tune content and offers on a local level which at the end of the day, should retain and grow existing business as well as gain new customers.

What else? What other challenges are there? I would love to hear from you or chat about possibilities.

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Some people say it's lonely at the top. Well it doesn't have to be!

In today's post I'll introduce you to a powerful way of getting your employees involved in the business.

It's called Open-Book Management and it has two critical elements:

  • sharing business information (open-book)
  • developing a process that enables everyone to use that information to improve the company (management).

But you can't just open up the books and expect more engagement and improved results - you have to actively and persistently manage the process.

That's where The Great Game of Business by Jack Stack comes in.

It's about running your business in a strategic, forward thinking fashion.

Employees are taught the rules of business, enabled and expected to improve performance based on that knowledge, and given a Stake in the Outcome - good or bad.

They aren't looking to historical financial information for answers, they are forecasting the future of the business and making it happen.

Business is a game, after all.

It's a competitive undertaking with rules, ways of keeping score, elements of luck and talent, winners and losers.

It can be as exciting, as challenging, as interesting and as fun as any game - provided, that is, you understand the rules and are given a chance to play. The difference is that in business, the stakes are higher, much higher.'

How do you teach people the business and make it understandable, interesting, meaningful, and maybe even a little fun?

That's the challenge - and that's where The Game comes in.

What if we could approach our day-to-day business activities with the same state of preparation, the same level of knowledge, the same enthusiasm, and most importantly, the same desire to win as we do with any competitive endeavor we pursue?

The Game is strategy and management practice that takes the basic components of any game, applies them to the challenge of running a business, and provides employees (the players) a way to understand, participate and contribute in the overall performance of the business.

The Game levels the playing field and gives everyone the opportunity to act and take responsibility for the success of the company.

The Principles of the Great Game of Business; Every Employee...

  • Should be given the measures of business success and taught to understand them
  • Know & Teach the Rules
  • Should be expected and enabled to act on their knowledge to improve performance
  • Follow the Action & Keep Score
  • Should have a direct stake in the company's success or risk of failure
  • Provide a Stake in the Outcome

Something to think about? You bet!

For in-depth business growth training, video tutorials, and done-for-you tools and marketing pieces you can implement in your business today, get a $1, 30-day trial of The Goldhill Internet Academy.

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7th Circuit Court of Appeals Judge Richard Posner has written an essay in the New Republic "discussing" Justice Scalia's recent book (co-authored with Bryan Garner), "Reading Law: The Interpretation of Legal Texts."

In Judge Posner's essay, he reminded us of an "old saw," an unreported 2006 Massachusetts court decision** about the meaning of the words we choose to use in our leases.*** In this particular case, the word is "sandwich."

A Panera Bread franchisee spent several months negotiating a lease, "partly because of [Panera's] request to include an exclusivity clause in the lease."

Panera prepared the original text and it was revised three times before the lease was signed. Subject to a number of carve-outs, the core of its disputed language was:

Landlord agrees not to lease... for [use as] a bakery or restaurant reasonably expected to have annual sales of sandwiches [emphasis ours] greater than ten percent of its total sales... ."

Pretty simple - protect our sandwich business, we don't want the competition.

Along comes the Mexican-style QSR (quick service restaurant f/n/a fast food restaurant) - Qdoba. Its menu items include tacos, burritos, and quesadillas.

So, after Qdoba spent "over $85,000" in planning costs and contractually committed to spending another $300,000, Panera threatened its shopping center landlord and the landlord reacted by seeking a declaratory judgment to the effect that Panera's exclusive use right had not been violated.

Panera responded by asking the same court for a preliminary injunction to stop Qdoba. The niceties of those remedies, declaratory judgment and preliminary injunction.

And Panera lost. Here's why:

Simply speaking, Panera argued that a burrito was a sandwich and the Landlord argued that it was not.

So, the court had to interpret the lease. There are a series of rules used by courts to aid in contract interpretation.

For now, all we need to know is that "[t]he starting point must be the actual words chosen by the parties to express their agreement. [] If the words of the contract are plain and free from ambiguity, they must be construed in accordance with their ordinary and usual sense."

From that point onward, it was all downhill for the court. It found that the term "sandwiches" was not ambiguous. Thus, because the lease didn't provide its own definition, it looked for the "ordinary meaning."

Where did that come from? The court turned to The New Webster Third International Dictionary, where it found a "sandwich" to be "two thin pieces of bread, usually buttered, with a thin layer (as of meat, cheese, or a savory mixture) spread between them."

Without saying so, the court couldn't find the "second" slice in a taco, burrito or quesadilla, and it didn't even believe that the flour tortilla was bread.

Panera tried to extend a finding by the International Trade Court's to "prove" that a corn taco shell was bread, but this court was unmoved. It said the Trade Court's tariff-setting opinion used "bread" in its commercial sense, but the Panera lease was using "bread" (as an unspoken part of "sandwich") in its ordinary sense, and tacos are not ordinarily thought of as "bread."

According to the court, there was no evidence that, during their negotiations, either the landlord or the tenant intended burritos, tacos or quesadillas to be counted as sandwiches. Thus, Panera lost.

The Massachusetts court pointed out certain missed opportunities for Panera to have done a better job for itself. For one, during negotiations, it never even told the landlord that it had any concern about burritos, etc. Next, it knew or should have known of other QSRs that sold sandwich "alternatives," either by way of its general knowledge or because there were Mexican-style restaurants at other shopping centers near this very location.

Fundamentally, the court summed up this blog for us when it wrote: "Because [Panera] failed to use more specific language or definitions for "'sandwiches' in the Lease, it is bound to the language and the common meaning attributable to 'sandwiches' that the parties agreed upon when the Lease was drafted."

What went wrong for this Panera franchisee was that it forgot what it really wanted to protect. It defined its business too narrowly. The Panera franchisee shouldn't have thought of itself as being a sandwich business.

Assuming that it wasn't going to be able to bar every other style of QSR, it probably should have seen itself as selling items that were the functional equivalent of sandwiches.

Courts are people too, and as people they understand categories described by way of example. So, Panera could have "gone for" a list, such as: "sandwiches and the functional equivalent of sandwiches, including without limitation: wraps, burritos, tacos, quesadilla, and pita pockets."

Add "hamburgers" or "hot dogs" if that's what you intend. That might have done the trick.
Also, it would have fleshed out the "issue" during negotiations, and had the text survived, this case would not have arisen in the first place - no angst, no legal bills.

Now, to beat up on the court a little (as Judge Posner seemed to be doing). The court's strict reliance on the dictionary ended any other attempt it might have made to understand what was really intended and, quite frankly, what should have been expected - at least to the point where the issue could (or should) have been fleshed out during lease negotiations. That's unfortunate because, had the court been inclined (or persuaded by Panera's attorneys) to think beyond "textualism," it might have realized that it was authorizing the sale of items like pita pockets (under the one piece of bread theory).

From there, one could go to an intact roll with a slit on the side and stuffed with meat. How about an "open" roast beef "sandwich"?

How about two of them on sale for five dollars? Eat them one at a time (meaning neither is the court's "sandwich") or fold them together yourself - sandwich or not? On the other hand, how would have the court defined an "open roast beef (or other open) sandwich" if it had already concluded that a sandwich needs two slices of "bread"?

Does the ordinary consumer "see" a hamburger as a sandwich? The court did. Did the landlord? Honestly, did the tenant?
So, if any reader wants to take a shot at redrafting for Panera, keep in mind that using the "list" approach of specifically saying "tacos, burritos, and quesadillas," and not using those as examples, might not catch wraps, pita pockets or similar foods of which neither the reader nor this writer are aware.

We won't discuss whether a restaurant serving "Middle Eastern" food is protected by a carve-out for "near-Eastern" food. Nor did this court, even though the question apparently was presented.

Wikipedia says it like this: "Before the First World War, "Near East" was used in English to refer to the Balkans and the Ottoman Empire, while "Middle East" referred to Iran, Afghanistan, and Central Asia, and the Caucasus. In contrast, "Far East" referred to the countries of East Asia (e.g. China, Japan, Formosa, Korea, Hong Kong, etc.)." It also says the following: "Many [who?] have criticized the term Middle East because of its implicit Eurocentrism."

Ruminations takes no position on this because, if it did, it would feel compelled to figure out what a "Mexican-style restaurant" might be.

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In recent years, many states have been aggressively taking the stance that out-of-state franchisors have nexus in their state (based on a variety of business factors).

Certain states have even been taking the position that nexus is created when a Franchise Disclosure Document ("FDD") is filed in that state, since the filing of the FDD actually registers the franchise to do business in the state.

Given the complexity of the nexus issue and the ramifications of registering to do business in certain states, franchisors should perform an analysis to determine which states tax returns should be filed in.

Furthermore, franchisors should strongly consider taking advantage of amnesty programs where offered. In addition to the limited availability of these programs, franchisors should be cognizant of the fact that these amnesty programs are only available for short periods of time and often come with specific criteria, such as: that no claim for unpaid taxes has previously been asserted against the taxpayer or the taxpayer has not been notified of an audit for the tax period or periods for which they are applying for amnesty.

  • Amnesty programs were available in the following states
:

Ohio Tax Amnesty Program - Runs from May 1, 2012 through June 15, 2012. During this time, Ohio will waive all penalties and half the interest for eligible taxpayers that file delinquent tax returns and pay the taxes due. The program applies to all tax periods for which the original tax return was due before May 1, 2011. To be eligible for Ohio's general tax amnesty, taxpayers must have owed taxes on May 1, 2011.

Texas' "Fresh Start" Amnesty Program - Runs from June 12, 2012 through August 17, 2012. During this time, Texas will waive all penalties and interest for eligible taxpayers that file delinquent tax reports and pay the taxes due. The program applies to all tax periods for which the original tax return was due before April 1, 2012.

If you have businesses in the states mentioned above, we strongly suggest franchisors contact their tax advisors to determine the appropriate actions to be taken.

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Why should every business owner write an operations manual...and why now? What is the urgency? Creating an operations manual is a big job. It requires valuable time that most business owners would rather use elsewhere. Some owners complain that the manuals end up collecting dust on the shelf, so why write one?

Operations manuals are used for several reasons, among them are: to on-boarding new employees, build a second, third or forth (etc.) store, risk management and added value. Obviously, new employees need to be trained. The ops manual is often used to ensure that new employee training is consistent and accurate. Without this, employees are trained by the the most experienced employees, who may or may not be doing things the way the owner wants it done. Operations manuals eliminate this confusion.

By eliminating this confusion and documenting the required systems and routines , the business can grow and duplicate. Replication is the key to becoming a franchise, or successful chain. The most successful multi-unit chains write, use and maintain an operations manuals because they create consistency and uniformity.

Creating an operations manual is a risk management tool as well. What happens if the owner is suddenly "hit by a bus"? Who in the business understands all aspects of the systems that need to be implemented. Without written instructions regarding how to run the business, who would understand how to keep things moving while the owner recovers? Did you know that most businesses that suffer such a catastrophe fail within six months? This tragic end of successful businesses is the result of having all the operations locked in the owner's head.

Operations manuals add monetary value to the business. Business brokers know that owners who invest in writing a comprehensive operations manual (or at least an Owner's Emergency Handbook), increase the value of their business. Operation manuals can add between $10-20,000 to the sale price of a company, and eliminates the need of the owner to stay on and train the new owners how to run things. Who doesn't like more cash?

JumpStart Manuals give business owners the tools and process to write their own operations manuals. Whether one uses our template-style workbooks, hires a consultant, or strikes out alone, writing a standard operating manual is key your success. Operations manuals decrease inconsistency, improve employee training, avert catastrophic collapse and increasing the value of the company.

What business can afford not to have an operations manual?

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Let's say you own a regional system of franchised stores. Your newest franchisee has just handed you a draft lease for the store he intends to operate.

What are the six most important changes you can negotiate to protect your interest in the new location - and the associated goodwill - in case the franchisee defaults under the lease, the franchise agreement, or both? In order of importance, here are six critical goals to shoot for:

1. Notice of default. Insist the landlord agree to give you written notice of any lease default by the tenant, even if the lease does not require that the tenant be notified. Keep in mind the lease may make certain events (e.g., nonpayment of rent or failure to maintain required insurance) automatic defaults without needing to notify the tenant. If the lease does require notice as a precondition to default, insist the landlord agree to copy you on the notice sent to the tenant. It is essential that you learn about your franchisee's failure to pay rent (or otherwise perform under the lease) in enough time to decide upon - and implement - an effective response.

Without this most basic of protections, the eviction process could be well under way or even complete before you learn of the tenant's failure to perform. Although some landlords resist the administrative burden, a prudent one will recognize that bringing you into the process early on will enhance prospects of a quick resolution without substantial legal costs or prolonged interruption of the rental stream.

2. Right to cure. Having the right (but not the obligation) to cure any lease default by the tenant goes hand-in-hand with the right to receive notice of that default. Ideally, the period permitted for your cure will exceed that allowed for the tenant's cure; among other things, the lease may permit the tenant only a short period, or none at all, to cure matters such as a monetary default, failure to insure or a prohibited assignment.

You can expect the landlord to try to limit the number of times you will be permitted to cure during the lease term; you can also expect the landlord to try to keep the cure period to 30 days or less.

3. Consent to lease amendments. If the landlord and tenant are permitted to amend the lease without your consent, any protections you succeed in building into the lease can disappear with a stroke of a pen.

Moreover, the way will be cleared for the tenant to leave your franchise system (or join a competing system) and retain control of the store by negotiating necessary lease changes (such as a modified use clause or rent structure) directly with the landlord. Having the right to approve any amendments to the lease (or, at a minimum, those that affect your rights and interests as franchisor) before they become effective is critical to your ability to protect your interests and preserve locational control.

For similar reasons, you should seek to prohibit the tenant from having the right to renew or extend the lease term, assign the lease or sublease the premises without your consent; all are mechanisms for the tenant to attempt to exit your system, join a competing system or bring in a competitor to operate in the store location.

4.Limit permitted uses. The uses permitted under the lease should be limited to operation of the franchised store under the parameters of the franchise agreement.

Not only will this impede the tenant from assigning the lease to a competing operator (or anyone else who does not intend to operate the franchised store), it will also help ensure the lease can be transferred only to you or another franchisee in the event of the tenant's bankruptcy.

5.Conditional assignment of the lease. Consider requiring the tenant to conditionally assign the lease to you. Such an assignment would give you the option (but not the obligation) of taking over the lease and operating the store (or possibly transferring the lease and store to a another franchisee) in the event of the tenant's default under the lease and/or the franchise agreement.

Conditional assignment language can be inserted in the lease itself or in a separate document. However the assignment is documented, the landlord's consent (given up front, upon execution of the lease) is essential. You can expect the landlord to seek your agreement to completely cure any existing default by the tenant if you choose to exercise your assignment rights.

6.Cross-default with franchise agreement. Including a clause that makes a default under the franchise agreement an automatic default under the lease will give the tenant/franchisee another incentive to perform, and it will increase your leverage in the event of nonperformance. However, the landlord may be concerned about the risk of lease termination because of a technical default under the franchise agreement.

Be prepared to identify which of the tenant/ franchisee's obligations under that agreement are important enough to justify termination of the lease in the event of a violation.

Even Better Protection

Your financial standing and track record, the size and prominence of your franchise system, and the importance of the lease to the landlord will all impact your success in securing these changes. Ideally, negotiated concessions are set forth in a rider or addendum to the lease, which you would sign as a party along with the landlord and tenant.

Alternatively, language can be added to the lease naming you as a third party beneficiary of the negotiated concessions. This is a less desirable approach, however, because your rights to enforce the lease as a third party beneficiary may not be clear. In any event, obtaining these six changes - or most of them - will afford you much greater protection than the typical landlord form lease.

This has been a guest post by Steven J. Davis, counsel to Thompson Hine LLP. Steve is counsel in the firm's Real Estate practice group. He focuses his practice on the acquisition, sale, development and leasing of commercial real estate and commercial construction contracts.

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Choosing the right franchise requires some research and due diligence before making such an important decision. You should think about your experience and your strengths and weaknesses to determine if it's a good fit. Do a thorough evaluation of the opportunity. Assess your goals and objectives to see if they're in line with what the franchise has to offer. Determine how you can compliment it with your background and business experience and expertise.

Do you understand the franchise system - how it works and does it really work effectively and efficiently?

Be sure to understand what you need as a franchisee to operate the business successfully. On the other hand, understand what your requirements are as a franchisee to the franchisor. Ideally it should be a win-win relationship. You create a successful business based on the support and expertise of the franchisor. In return for this support, the franchisor receives his royalty fees knowing that the business will be successful based on his proven business model.

It's all about processes - get them in place - are all the ducks in a row?

So here's where we really get to put the franchisor's experience and expertise to the test. Are there streamlined processes in place to help you run the business? And have these been proven to be effective by others in the business? A positive answer to these critical questions should most help to steer you in on the right path whether or not this is the right business to acquire.

Manage the Process - operational management - Who's in charge of operations?

Now comes your part as a franchisee. Can you follow the "rules book" from the franchisee? After all, at this stage of the game, the franchisor is acting like your coach. He know the rules and is in fact saying to you that if you follow the rules of the game, you will succeed. Well it's not quite that simple, but you know what I mean. So know the rules of engagement to manage the process.

Know your Numbers - so what are they telling you... and are you listening?

Ah yes, the numbers. Sometimes the most neglected part of running the business. So often, the focus is on marketing and sales. But without accurate and timely financial information most businesses are running blind and doomed to failure. You need to understand the numbers so you can see where your business has been (historical financial information) and where it's going based on projected financial information. This helps you to run your business proactively based on informed decisions that allows you to make course corrections along the way. It's sort of like your business compass or GPS system.

Here are a few crucial numbers you need to know and monitor to control your business operations:

Pay particular attention to cash flow. It's still the king. Review the balance sheet, income statement and cash flow statement every month to assess net worth, net profits or losses and cash flow. On a quarterly basis, calculate the following financial ratios to evaluate key performance measures:

  • Sales year to date
  • Gross profit margin
  • Cost of sales as a percentage of sales
  • Labour rate as a percentage of sales

By comparing these ratios to those of franchise or industry averages, you can determine the progress of your business. If you need advice or assistance, an accountant experienced with franchises would be your best resource. This professional can help you interpret financial results and benchmark your progress relative to both competitive businesses and other locations within your franchise system. He or she can also guide you on how to strengthen and improve results.

Proactive Management - are you working on your business?

And finally, your ultimate goal is to get to the stage where you're working On your business rather than In it. So often, franchisees start off a business with great excitement and lots of ambition and enthusiasm. Only to find out that things are not as they anticipated and they actually become an employee of the business rather than an employer. In short, the business is running them, rather than them running the business. For those of who who really want to understand this philosophy, I highly recommend you read "The E-myth Re-Visited" by Michael Gerber. There is a famous chapter in the book entitled "Working On your Business, Not In It". I think you'll enjoy it.

The Bottom Line

So here you are! You've decided on a franchise in which to invest. It's a financially stable company that provides "know how" and support to help you become a successful entrepreneur. But be sure to get the accounting support you need, either from the franchisor or your own accounting professional -- and be committed to follow the "rule book", know the numbers and manage and monitor your business in real time to achieve financial success. After all, isn't that why you're an entrepreneur?

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Now as scary as providing a personal guarantee may be there is not all bad news in both how you approach the subject with your prospective landlord and how you can negotiate a better guarantee for yourself.

Lastly you also need to understand the "law" in your local jurisdiction, which could mean State, County,City laws.

This is why it is essential for you to have legal representation in any real estate transaction.

In many jurisdictions landlords are required to "mitigate" their losses. What this means is before they can cash in what you put up to guarantee the lease the landlord has to do a few things first.

Firstly they can use your security deposit right away. No questions asked.

Secondly, they must make every effort to re‐lease the premises in a timely manner. This means they can't sit around waiting for the next tenant to arrive on their doorstep. They must actively market the space. Once a replacement tenant has been found and secured and only then will your loss or the amount you will be paying as a result of your guarantee be calculated.

The landlord will calculate the number of months of not receiving rent. They will add to this the marketing costs, legal fees, renovation costs and commissions associated with the loss mitigation.

They will in most cases be entitled to interest on the outstanding amount owed for mitigation period. So unless you are near the end of your lease the amount of actual exposure can be significantly reduced.

However, if market conditions are unfavorable or the economy is not good this can work against you as it may take a landlord longer to find a replacement.

The following are some pointers of reducing your personal exposure under the personal guarantee.

1. You can try and limit the amount of time you will guarantee the lease term. Perhaps you can have language that says "that after 2 years in the space, provided the tenant has not been in any default and has been in good standing with the landlord" the personal guarantee goes away or reduced by certain amount of time".

2. You can also try to tie the time limit to your business doing a certain amount of gross sales which you can substantiate to the landlord and if you achieve that level of sales for a certain amount of continuous time the guarantee goes away or is drastically reduced.

3. You can try a have a "liquidated damages" clause which means you are willing to lose a preset and mutually agreed upon amount of money to settle any default. Be cautious as this may mean a substantial amount compared to going the mitigation route.

4. You should require language that absolutely requires the landlord to mitigate its loss, just in case there are no hard and fast laws in your jurisdiction.

5. You can try and have a co‐signor or co-guarantor who has better financials, but be careful as its usually a relative and you all
know how that can play out if your business falters.

6. Try can have a shorter term lease, is reduces the total amount. For example if you were thinking of a 5 year lease term, think about a 3 year term with an option to renew for 2 years.

Your exposure would be only 3 years. Please note however, the shorter term lease may cost more because the landlord wants the security of knowing they won't have to re‐lease the space sooner. Also be aware, if in the event you are having interior improvements done by the landlord and the cost is being rolled into the lease payments, this can cost you more for
a shorter term since the payments will be based on the length of the initial term.

Lastly,if you get a business loan for whatever reason the lender will require you to have a lease term that is the same or greater than the loan term.

Other than these tips you should be prepared to have to sign a personal guarantee.

The only exception might be if you are going to lease property in a run down, economically stressed area, then a landlord should be happy to see you and your business and not require a personal guarantee.

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A Good Franchise in a Poor Location will become a Poor Business!

One of the most effective strategies to conducting site selection is not by looking for the proverbial needle in a haystack, but instead, by using the process of elimination.

The number one reason for a franchisee's failure or poor performance is due to a poor location. A poor location ultimately results from poor site selection. How else can you explain that identical stores from the same chain or franchise system will vary as much as 200% in sales volumes? Of course you will need to factor in store size, marketing budgets, management and so on; however, these are all secondary to the importance of location, in my opinion.

Essentially, there are three types of franchise businesses: profitable, break-even and go-broke. A truly profitable franchise location will make money and the business will appreciate in value. A break-even franchise location will pay the owner a small salary and pay the rent but not much more. The go-broke location that comes to my mind lasted less than three months from opening to closing for one unfortunate tenant. Despite my warnings that this was a go-broke location, the business owners poured in $80,000 into their store setup and couldn't pay their rent by the second month of operation. Usually, a go-broke location will not only steal your capital but also put you into personal bankruptcy - after you have maxxed out your credit.

If you thought that franchise site selection was all about location - location - location, you're right ... intellectually. However, when first-time tenants with limited leasing experience are involved in the site selection process, good old common sense often goes out the window. Consider for a moment that site selection involves both science (with part research and part timing) and good intuition (part luck). Franchise tenants, typically, will mistakenly rely on either a landlord's real estate agent or their franchisor (without a dedicated in-house real estate team) to lead them through the process.

In my book, Negotiate Your Franchise Commercial Lease or Renewal, I have dedicated an entire chapter to site selection. Here are just a few relevant tips from the expert:

1) Allow enough time so that you're not making decisions under pressure. Typically, for a new franchise business, you should start the site selection process six months or more in advance of when you want to open. If you find a prime location, usually the landlord will hold it for you for a few months. However, if the process takes longer, you may need several months to finalize the Offer to Lease, review the formal lease documents and/or build out the store.

2) Don't let a realtor show you space all over town. Franchise tenants often fail to realize that realtors/agents/brokers typically work for landlords who pay them a commission on lease deals signed and closed. When one agent shows you another agent's listings, this will effectively create commission-splitting between the property's listing agent and the leasing agent. This will also undermine your negotiating power since the landlord's real estate agent will know how you feel about every location. A realtor may be very helpful in pointing out a location you were unaware of, but remember who they are working for. While their advice may be sincere, it may be sincerely wrong.

3) Make your leasing inquiry by calling the "For Lease" number on the property sign. This way, you will meet and negotiate with the listing agent directly. Tour prospective sites in order from worst to best based on curb appeal. This way, you will become more confident, ask better questions and be more in control of the leasing process.

4) Don't telegraph your intentions by giving buying signals. Ask the leasing representative to e-mail you preliminary information before you agree to view the space. When viewing, stifle the urge to think out loud; subtle comments to a partner/spouse and overheard by the leasing representative can work against you. If you're asked how much you have budgeted for rental payments, remain vague. Not every question asked deserves an answer - not yet, anyway.

If you find yourself weighing a better location at a higher rent versus a lesser location at a lower rent, my advice is to go for the first option. When consulting to franchise tenants and doing site selection, my job isn't to find the cheapest location, it is to select a site that will help the franchise tenant maximize his/her sales.

Also remember that landlords sometimes prefer to lease their worst space(s) first and save the best space(s) for last. Usually, the individual unit or location you lease within a shopping centre or strip mall is more important that the mall itself - or at least equally important. Know that lease rates within a building can vary by 200% depending on unit desirability, walk or drive-by traffic flow, space shape, quality of neighbouring tenants, anchor tenants and your operating status as an independent or a national chain name. While you don't always get what you pay for in leasing commercial space, you normally don't get more than you pay for either.

Note that if you already own a franchise business but are considering relocating when your current lease expires, start your site selection at least nine months ahead. If you cannot get a satisfactory lease renewal, you will need this time to select alternative sites and negotiate a new lease elsewhere.

Franchise tenants need to know there is a great deal more involved with the site selection process than just what is explained here ... these pointers are just a few tips of the iceberg.

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With the constantly evolving atmosphere of the business world, understanding the particular nuances of brick-and-mortar stores is imperative to establishing an image within consumer market any size.

This is where Geo-analytics (also known as location analytics) becomes an effective way to optimize a business' location. Geo-analytics equips businesses with the tools and knowledge to plant and grow effectively.

Before deciding to invest in a geo-analysis for a business, you may want to ask what makes geo-analytics so beneficial. To help understand how Geo-analytics could be a "game changer", here are a few important points:

  • Information is key to building a new location for your business, and a geo-analysis of your immediate area allows you to see numerical and graphical representations of what you need to know.
  • Geo-analysis supplies detailed information about spending patterns, consumer needs and wants, and other information about the demographics in your desired area.
  • The shifting web-based consumer market can seem like a threat to many physical stores, but geo-analysis gives you a visual of how to create an environment to communicate with your locations demographics.
  • With the knowledge about your specific location, you can make important and educated decisions about implementing a new business model.

Consumers seek businesses that seem to understand them and their needs, and having the proper information about the location in which you plan to build a business is key.

Whether you're building a franchise or starting up a business from scratch, knowing exactly what the community around you needs can give you an edge over your competition.

The post How Geo-analytics can Improve Your Business appeared first on Predict and Prevent Business Failure.

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No risk no reward it is often said. Franchise ownership is definitely not for the faint at heart. Owning your own business has incredible rewards and can represent everything about yourself professionally.

The old saying of "you'll never work a day in your life if you love what you do" certainly applies to many small business owners.

However, the same passion Franchise owners have for their core business does not necessarily translate well to other areas outside their core competency.

Welcome to the world of indirect costs.

It does not matter if you are restaurant, medical office, manufacturer or a retail store, indirect costs can eat right through your profits in no time.

Indirect costs include many areas that are not a deliverable to your customer such as transportation, merchant services, electricity, gas, fuel, insurance and office equipment or supplies.

Franchise owners struggle in these areas because of a lack of expertise, leverage and most importantly the lack of time. The indirect cost providers have no such lack of expertise or time compared to the small business owner. This usually leaves the Franchise owner with the least amount of leverage. Kind of like a nail to hammer relationship! Not much leverage for the old nail.

However, Franchise owners do have options to increase their leverage if they choose. Here are three ways they can increase their leverage with indirect costs:

  1. Open up negotiations - there a lot of indirect expenses in which there are no restrictions to competition so rebidding the service is a very viable option. This even includes using your current provider. There is nothing wrong with checking the marketplace for updated pricing and service plans. Service levels, service providers, technology and your own needs change over time. You just might be surprised to find key savings right in front of you.
  2. Buying groups - buying groups add value to their members through essentially group discounting. These groups are often associated by industry and can be a very effective way to increase leverage with providers to the industry. There can be costs associated with joining these groups, but the cost of membership can easily payoff in the savings associated.
  3. Strategic partnerships - there are strategic partners that specialize in indirect costing solutions that give small business access to negotiation leverage they just can't get on their own. These partners add leverage to the Franchise owner through their expertise and their relationships with these types of providers. They can provide preferential pricing to the Franchise owner because of their track record and relationship with these providers and pass these savings onto the Franchise owner. These partnerships not only pass along savings to their clients, but they also allow Franchise owners to leverage time because they act on the behalf of the small business owner allowing them to focus on their core business. Some of these partners specialize in one are while others can provide a one stop shop for all indirect costs.

Franchise ownership requires maintaining cost to keep you competitive in the marketplace.

While you can't save your way to higher sales, you can price yourself out of the market.

Indirect costs are just part of doing business so make sure to review those costs for opportunities that just might give you an edge.

If it has been a while since you reviewed those contracts the investment of time could pay off exponentially.

How To Create Buyer Confidence

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How would your conversion rate and profitability change if you could implement a method to develop a prospect's confidence about the value of your offering earlier in the sales process?

Wouldn't it also be valuable at the same time to learn what would change your prospect's mind about deciding to buy from you?

Questions are a great way for you to become the problem solver your buyer will want to do business with.

Questions are strong tools for helping your potential buyers see the value of doing business with you, and to get them to tell you what factors must be mitigated before they write a check.

"What do you need us to accomplish for you to consider our work with you a true success?" is a good question for uncovering real reasons they are exploring the value of your service.

"Is there anything else that would need to be in place for you to decide to move ahead?" is an appropriate question if you want to understand the risks the buyer sees in going forward with you.

Under the traditional sales model, you don't get to your prospects' objections until after you try to close the sale. At that point, it's often too late, and you may have labeled yourself as a product pusher.

By asking questions up front you create trust, engage respectfully, and deal with objections early on. You've now established yourself as a problem solver, making closing easier.

What powerful questions do you ask to educate your buyers about the value you provide, or to help them overcome their resistance to buying from you?

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Any manager or employee involved in outside sales knows the incredible joy of getting their territory right.

It is simply tremendous to walk in the door of a prospective customer and know that your referrals are good, there are 30 more customers waiting for you down the street, and you have all the territory information you need to make a good pitch, from approach to close.

The right territory mapping software puts your sales team in the right spot at the right time, so that these golden opportunities are maximized.

Headache Inducers

On the other hand, every outdoor salesperson has the experience under their belt of that one time they accidentally followed on the back of another team member from their company: territory gone wrong.

Customers hate it, and sales people leave the approach at best feeling like grinning idiots, at worse, they are chased off the premises by irate customers who feel cheated.

The problem is not your employees, your management or your customers!

The problem is your territory mapping system.

In many sales territories, you have to divide up territories in high-traffic, highly populated areas where little more than a street will divide one high-performing sales rep from another.

Headache Reduction in 4 Steps

  1. Real Time Updates - Whether you are trying to close out a sales territory for a deadline, make room for incoming sales reps, or just adjust your system for market changes, you have to change assigned territories. It is part of the job. The right territory mapping software will do this automatically, preventing the data loss from sleepy eyed sales reps having to scan a list of prospects for the day and make their own maps.
  2. Integrate Data - Your sales team needs information to contact your customers, your customers need information to see the value in what you are offering. With so much information available online via governmental and social media websites, good territory mapping software will automatically include relevant and current demographic data.
  3. Manage Long Term Territories - For businesses setting up franchises, or seeking to establish long-term sales reps, the ability to virtually experiment with your territories is absolutely a prerequisite for establishing a territory. You can start with protected territories, knowing that the area you chose was large enough for growth.
  4. Reduce Stress Through Sharing - Any outdoor sales rep knows the experience of snipping images from their sales software into a presentation or document and then trying to show that to a reticent prospect. Modern software systems reduce the need for cutting, copying and pasting. Simply share a link to the relevant data and your prospect can pull it up on their own phone/tablet/computer.

Although the business of communicating to prospects will always have interpersonal issues involved, ensure that your sales team has the least amount of headaches possible with the right territory mapping software.

The post 4 Ways a Good Territory Mapping Software Prevents Headaches appeared first on Predict and Prevent Business Failure.

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In Alabama, the Coca-Cola Company has just expanded the franchise territory of Coca-Cola Bottling Company United (CCBCU) to include seven new cities.

The new contract means the franchise area of CCBCU more than doubles in size.

It's almost certain, however, that the local CCBCU customers will probably see no change in their day-to-day operations, despite the exponential growth of the soft drink supplier.

Coca-Cola has long been known for their exceptional products and their even more outstanding customer service. It has built its reputation on ensuring the local beverage purveyors receive product on a timely basis, ready to sell, and easy to track. Their advertising over the years has indelibly connected their corporate face to "doing good" in local and global communities.

So how will CCBCU manage to maintain their relationships with existing customers while expanding into such an extensive territory? Presumably, technology will facilitate not just the transition, but provide the foundation for a smooth, painless shift to the (much) larger corporate footprint. Proprietary franchise management software will direct their next steps, based on analysis of their new territory data.

A franchise offers significant benefits as a small business. The products/services are already developed; the processes of start-up and launch have been streamlined, and the artwork, imagery and labeling development has already been proven effective. Managing the business effectively comes down to knowing the territory and the target customer base.

Smart franchise owners elect to leave the product maintenance to their franchisor, in order to focus on building a strong relationship with their territorial customer base. The success of those local customers is vital to the success of the franchise, so identifying, tracking and modifying the data within that franchise territory is integral to the business success.

This comprehension of the base market is almost certainly why Coca-Cola has remained at the top of the franchiser list for so long - they respect and maintain a strong connection and quick responsiveness to the business of their local customers.

Regardless of the size of a franchise territory, proprietary software can contribute to business strategy by collecting, analyzing and strategizing franchise territory data.

Gaining this information assures franchise owners that they are responding appropriately and productively to their local market, as well as building a strong future for themselves.

The post Tracking the Market Within Your Franchise Territory appeared first on Predict and Prevent Business Failure.

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Workplace investigations are tough enough without the office grapevine gossiping about who did what to whom.

As such, it's standard practice to ask anyone who participates in an investigation to keep their mouths closed about what is discussed behind the closed doors.

A new ruling from the National Labor Relations (NLRB), however, suggests that a blanket "keep your mouth shut" mandate may be improper.

The Case behind the Concern

Like many investigators, the HR director for Banner Heath Systems asked workers involved in an in-house investigation to not talk about the investigation with their co-workers. However, James, one of the employees involved objected that this request violated the rights of employees to discuss the terms and conditions of their employment with their coworkers. The National Labor Relations Board sided with James, saying that blanket requests for confidentiality during an investigation are overly broad and might have a chilling effect on appropriate - and legally protected - communications.

So what's an Investigator to do?

This is a new ruling (July 30, 2012) and time will tell what this means from a practical standpoint. However, the NLRB's ruling does offer some guidance. First of all, investigators can still ask witnesses to keep quiet as long as they have a legitimate business interest in making the request.

This business interest must extend beyond the usual "we're trying to protect the integrity of the investigation" reasoning.

So what business interest is legitimate?

It is one that arises from that particular investigation.

Perhaps, for example, the facts you've uncovered so far suggest that the accused might try to intimidate witnesses if s/he learns they will be talking to an investigator.

Perhaps you haven't had a chance to retrieve some valuable evidence and are concerned that, if the investigation leaks out, it might be destroyed before you have a chance to do so.

Or perhaps you have reason to believe (again, based on what you've uncovered) that a group of witnesses might get together and "get their stories straight" before you have a chance to interview them individually.

In addition, when you do feel requests for privacy are warranted, limit the scope as much as possible. For instance, ask that the witnesses not discuss the investigation as long as it's active or during work hours or on company property.

The Bottom Line

In every investigation, investigators walk a tightrope, trying to balance a number of competing interests. This recent ruling extends those competing interests to include the need to maintain confidentiality and employees' rights to discuss the conditions of their employment.

For now, the best solution during an investigation is to avoid blanket requests for privacy, articulate valid reasons for privacy requests when they occur, and make sure your requests are as limited as possible.

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Come October 1, 2015 there are big changes coming to the payment industry.

The US is the last major market that is still using the old swipe and sign cards.

The familiar card technology is blamed for the fact that the US accounts for nearly half of the world's credit card fraud while only accounting for a quarter of the transactions.

Here are some of the highlights from an article that showed up in my inbox from the Missouri Restaurant Association about the changes taking place on October 1, 2015:

  • Swipe and sign credit cards are being replaced with cards with a chip and will require either a signature or a PIN at the point of sale
  • The way they are incenting everyone to move to the new system is by placing liability on the party that doesn't comply by the date ie:
    • If a customer uses a swipe and sign card the liability is on them.
    • If a customer has a new chip card, but an establishment doesn't have chip technology and forces the client to use a swipe and sign card the liability is on the merchant
  • The new chip based cards will erase themselves if they sense that they are being tampered with.
  • The NRA predicts that the industry will lag behind other industries in adopting this technology with the main reason being that there doesn't seem to be a lot fraud in our industry.

Has anyone started looking into this at all?

How are the payment vendors handling this?

Are the fees and equipment more expensive?

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On a recent sales process audit of a medium to large format full service franchise concept, we spent time with one of their new franchisees.

The concept is less complicated than a TGI Friday's but more challenging than a Qdoba Mexican Grill.

The unit is around 5000 square feet has a traditional grill menu you might expect with beer, wine and spirits.

The franchise owners were first time franchisees and had never owned a business before this one.

They both had very successful corporate careers as engineers.

Now, both are franchise owners. One is the full time primary owner/operator, the other owner is part time and still working as an engineer.

We asked the operating owner why a bar/grill concept?

His answer was straightforward and simple.

And only partly what you might think.

He and his financial partner had always wanted to be in this kind of business. Sort of makes sense - engineers are not shy around beer!

Then, I asked why a franchise and not just open an independent restaurant?

His answer was much more interesting.

He knew he didn't have the resident knowledge of the business, but could buy it in the form of franchise.

He planned to learn this new business inside and out, working as many hours as it would take and he did, and does

He also described how he could use his engineering skill, training and experience to run his franchise.

He went into great detail on how they made improvements to their operations by the way they chose to run their beer lines and design of the bar itself. He walked us through his kitchen describing the cooking and food expediting process. And told us what design mistakes they made with the build-out.

In his previous engineering role, he described the complex manufacturing problems he solved daily.

And, how he uses that knowledge everyday in running his business.

The engineer had a plan to buy a franchise in this category. He's smart. He knew what he wanted. He knew that he didn't need training - which was a good thing because his location is miles away from the corporate headquarters.

And, he approached this franchise project as an engineering problem to be solved.

Now there are a number of franchisors who would have looked at the application of these two engineers & would have rejected them since they didn't have the restaurant talent required.

They would have missed out a great franchisee who's running a topnotch unit and who plans to build two more.

And if you went into this restaurant and met the franchise owner you'd never believe he has only run a restaurant for a short time and this was his first one.

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"When dealing with people, remember, you are not dealing with creatures of logic, but with creatures of emotion"
~ Dale Carnegie

"A simple rule in dealing with those who are hard to get along with is to remember that this person is striving to assert his superiority; and you must deal with him from that point of view"
~Alfred Adler

"Business, more than any other occupation, is a continual dealing with the future behaviour of people; it is a continual calculation, an instictive exercise in foresight."
~Henry R. Luce

"If you want to learn how to deal with difficult people, have a few kids"
~ Overheard in a Chicago bar

All managers will have to deal with difficult employees during their careers. It is a chore all managers endure, all managers despise, and few, if any, ever learn to do effectively.

First, there will always be difficult employees. In fact, I have observed that what we often deem to be "difficult" or "odd" behaviour in a person is really present in order to help this person maintain their psychological balance. "Difficult" people in this context are the people we don't know how to deal with us or those who are difficult for us to deal with due to (perceived or otherwise) them being stubborn, arrogant, oversensitive, or any trait that needs a special type of treatment Second, it's your job as the manager to deal with them. If you don't deal the problem, it will only get worse and impact the lives of those around you (and the subject employee) who would be looking to you for leadership.

Why Are Difficult Employees Like That?

Difficult employees are that way simply because it is a behavior that has worked for them in the past. They may not know any other behavior, or, they may choose this behavior when they think it will be most effective. You will be successful in dealing with difficult employees only to the extent that you can make these undesirable behaviors no longer effective for them.

In many ways, it's like dealing with children. If every times a child screams, its parents give it candy, what will the child do the next time it wants candy?

The same is true for the employee who "blows up" whenever anyone disagrees with him. When he does that, people stop disagreeing with him and he thinks he has won.

How Can A Manager Deal With Difficult Employees

1. Evaluate:

It is important when dealing with difficult employees to act quickly. Often you will need to act almost immediately to neutralize a dangerous situation. However, it is always appropriate to think before you act.

Clearly if an employee comes to work with a gun, you will need to act more quickly than when someone complains that another employee is always taking credit for her work. In either case, take the appropriate amount of time to evaluate the situation before you act. You don't want to make it worse.

Recognize that most employees can be "difficult" from time to time. This can be caused by stress on the job or away from it. Some employees are difficult more often than others. It is not always your least-productive employees who are difficult. So take a moment to evaluate each situation for the unique situation it is.


2. Do your homework:


Always act on facts. Don't base your actions on gossip or rumor, or even your own preconceptions and/or opinions. You can't allow yourself to be anything but impartial. The person(s) spreading the gossip is a difficult employee in their own way and must be dealt with when the immediate need has passed.

If you have not seen the inappropriate behavior yourself, look into it. Ask the people reportedly involved. Collect all the facts you can before you act. Don't use the fact that you haven't seen the inappropriate behavior as an excuse to delay doing something. It is important to act promptly.

Make sure you aren't part of the problem. It will be much more difficult to remain calm and impartial in confronting the difficult behavior if you are partly responsible. If that's the case, be sure you acknowledge your role in it, at least to yourself.


3. Develop a plan:


You're a manager. You know the value of planning. This situation is no different.

You need to plan the timing of the confrontation. You need to select a quiet, private place where you won't be interrupted. You need to decide whether you need to have others, like an HR representative, present in the meeting. Plan the confrontation and then make it happen.

When you have prepared, it is time to act. You do not need to act impulsively, but you must act quickly. The longer an inappropriate behavior is allowed to continue, the harder it will be to change it or stop it.


4. Confront the problem:


Don't put it off. It may not be pleasant, but it's an important part of your job. It will not "fix itself". It can only get worse. You have planned this confrontation. Now you need to execute.


5. Deal with the behavior, not the person:


Your goal is to develop a solution, not to "win". Focus on the inappropriate behavior; don't attack the person. Use "I" statements like "I need everybody on the team here on time so we can meet our goals" rather than "you" statements like "you are always late".

Don't assume the inappropriate behavior is caused by negative intent. It may be from fear, confusion, lack of motivation, personal problems, etc.

This is the important part; the part most managers never get right: Give the other person a chance to develop a solution to the problem. They are more likely to "own" the solution if they are at least partially responsible for developing it.


6. Try to draw out the reasons behind the behavior:


As you talk with the difficult employee, actively listen to what they say. Stay calm and stay positive, but remain impartial and non-judgmental. Ask leading questions that can't be answered in one or two words.

Don't interrupt. When you do respond to the difficult employee, remain calm.

Summarize back to them what they just said, "so what I understand you are saying is.....", so they know you are actually listening to them.

If you can find out from the difficult employee what the real source of the inappropriate behavior is, you have a much better chance of finding a solution.

Sometimes these confrontations will go smoothly, or at least rapidly, to a conclusion.

Other times it will require several sessions to resolve the problem.


7. Repeat as necessary


Minor problems, like being late for work, you may be able to resolve with a simple chat in your office with the employee. An office bully, who has used that behavior successfully since elementary school, may need more than one confrontation before a solution can be reached. Be patient. Don't always expect instant results. Aim for continuous improvement rather than trying to achieve instant success.


8. Know when you are in over your head:


Sometimes the underlying issue with a difficult employee will be beyond your capabilities. The employee may have psychological problems that require professional help, for example. Learn when to keep trying and when to refer the employee to others for more specialized help. Your company may have an EAP (employee assistance plan) or you may need to use resources from the community.


9. Know when you are at the end:

While the goals is always to reach a mutually acceptable solution that resolves the difficult employees inappropriate behavior and keeps your team at full strength, sometimes that is not possible. When you reach an impasse and the employee is not willing to change his or her behavior then you need to begin terminations procedures in accordance with your company's policies.

Coming to a Solution

The desired result from confronting a difficult employee's inappropriate behavior is an agreed upon solution, and the inappropriate behavior will continue unless you and the employee agree upon said solution. You will get more buy in and greater results if the employee plays a role in crafting the strategy on how to get there.

Your employees will always needs to know what is inappropriate about their behavior just as much as they also need to know what is appropriate behavior. The need for a manager to communicate clearly is always high, but it is especially important in these situations. Make very sure the employee understands the requirements, what is expected of him, and, if necessary, the consequences.

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Your franchisees are the eyes and ears of your business. They know what is working and what is broken. They are the first to hear your customer's complaints. They overhear important industry gossip from your vendors.They are most likely to identify inefficiency and waste.

Obviously, you need to know what your franchisees know as soon as they know it. That is why it is important to create a company-wide tradition that encourages open communication and collaboration. It is the prerequisite to creating a highly flexible and nimble organization that can respond quickly to fast changing customer and competitive circumstances.

Setting up a 21st century suggestion box is a simple way that many organizations capture franchisees ideas. However, it does not go far enough. Instead, you should leverage your franchisees' suggestions to create your company's Continuous Improvement cycle.

What is Continuous Improvement?

Continuous improvement is the goal of the most popular quality management approaches. For example, CMMI, (the Capability Maturity Model created by Carnegie Mellon University for the U.S. Department of Defense) offers a five step business improvement pyramid.

Notice that Continuous improvement is at the top of the CMMI pyramid.

Business improvement models, like CMMI, are helpful to explain the importance of adopting management theory. However, most organizations struggle with practical implementation.

To help, the Breakthrough Book suggests a simple three step approach to create an franchisee-powered continuous improvement cycle:

Step One: Capture your franchisee's idea, suggestion, issue or other information using a "Communication Switchboard."

Step Two: Assign a "Switchboard Operator" to forward the issue to the appropriate Process Team and to monitor resolution.

Step Three: The Process Team resolves the issue.

Communication Switchboard Template

The Breakthrough Book provides a Communication Switchboard template to help you create an ongoing tradition of communication between franchisees and the franchisor's teams.

To use the Switchboard, ask franchisee to report their ideas, suggestions, customer complaints and other issues directly to the Communication Log Switchboard Operator.

he switchboard operator then forwards the issue to the appropriate process team for resolution. The operator maintains a communication log that managers use to hold process teams accountable for resolving the reported issues. Also, the log is used to credit (and reward) employees with the ideas they contribute. The Breakthrough Book also suggests using coaching and team meetings to encourage employees to report their ideas, and ask process teams to report their progress in resolving critical issues.

In a very small company, the "switchboard" can be a spiral notebook hanging next to your water cooler. In a larger company the "switchboard" can be maintained by a receptionist, executive assistant or quality manager.

The switchboard logbook should have the following column headings:

  • Date: The date the issue was first reported.

  • Date: The date the issue was resolved.

  • By: The franchisee who reported the issue.

  • Process Team: The process manager responsible for resolving the issue.

  • Idea Description: A sound-bite description of the issue .

  • A sound-bite explanation of the issues resolution.

  • Impact: An estimate of the financial benefit of the resolved issue.

How Continuous Improvement Can Work

To illustrate the benefits of initiating your company's continuous improvement cycle consider the following scenario:

A franchisee is frustrated because her employees are wasting valuable time looking up warehouse location codes that could be easily added to pick lists generated by the company's sales order software. Correcting this issue would improve productivity, speed order processing and reduce cost. The franchisee reported her suggestion to multiple field representatives over the years.

Promises were made, but no action was taken.

Now consider the quick resolution that is possible if the company facilitates communication between its franchisees and field representatives who are empowered to optimize and improve their procedures:

  • franchisee reports her suggestion directly to the Switchboard.

  • Switchboard forwards the issue to the Order Taking field representatives team.

  • field representatives team discusses the issue. Several resources from the IT department are included in the collaboration. The decision is made to add the warehouse location code to the product database and add it to the pick lists generated during order taking.

  • field representatives team creates a project to manage the steps necessary to implement the change.

  • Order Taking process team updated related procedures and training materials.

  • procedure change was communicated to all affected franchisees and their employees.

  • issue was resolved quickly because franchisees and franchisor employees from multiple departments were empowered to communicate, collaborate and resolve problems that related to their areas of responsibility.

The above scenario illustrates how culture, effective process management and open communication work together to optimize your company. It is simple, organic and stealthy. It institutionalizes a culture of excellence. It leverages your franchisee's insights and creativity. It helps make your business flexible and resilient.

You will likely need to dedicate 5-10% of your franchisees' time to improving your company. Consider it the cost of your freedom. It is also a cost that should result in a significant return on investment.

Your company will finally have a way to capture your franchisee's ideas for saving money, making money, minimizing waste, and increasing quality, consistency and customer satisfaction.

People steal. There's no surprise there, right?

Well, what are you (the owner/manager) going to do about it?

What's your first line of defense? Awareness.

Creating awareness about loss prevention is a major component to fight the war on shoplifting and internal theft. If you help your employees think more centrally around the concept of loss prevention, then thieves will notice and feel uncomfortable in your store or restaurant.

Awareness can even lead to creating a sense of ownership amongst employees too. You can create a mindset of "Hey, I don't want anyone stealing from my store. Shrink affects my bonuses," which creates a halo effect on others.

Here are 5 tips, plus a bonus tip, on how to create more awareness in your restaurant or retail store.

1. Challenge your employees to know the store stats. If you talk about loss prevention everyday with your employees, they will become more aware of what it is and how it affects business. What is your shrink percentage? What is your shrink goal? Where are the spots in the location where people are most likely to steal? What are recovery statements? Who is your Loss Prevention Manager? In what instance should they be called?

2. Make an LP informational bulletin board in the break room. Keep all the things employees should know here; shrink percentages, facts and information, success stories, incentives, a list of behaviors shoplifters typically exhibit, contests, the loss prevention hotline poster and numbers to call in case of an emergency.

3. Explain the importance of shrink and how it affects each employee. If shrink is too high, someone might not get enough hours they want or the raise they requested may be put on hold. A lot of things depend on the shrink percentage of the store or restaurant.

4. Create incentives/contests to encourage a lower shrink percentage. Sets goals and when you achieve them, reward the employees that made a difference. Nothing motivates people more than an incentive.

5. Role play. Sometimes employees can be aware, but when faced with a real life situation they freeze and don't react as well as they should have. This is where role playing comes in. During a controlled environment role play, have one employee ask another for an extra discount on top of what they're already getting. This give the employees to formulate a statement back to their peer. Ex. "No, I don't think that's allowed. You can always check with the manager to see when the next extra 10% off is though."

Bonus Tip: When you talk sales, talk loss prevention too. Maybe this is only a retail instance, but when coaching employees in the sales environment, coach them on loss prevention as well. This will prove that it's something equally as important as sales.

Ex. "Give me 3 examples of how you would sell this watch. Then give me 2 examples of how you would approach a potential shoplifter if you thought they were trying to steal it."

Again, employee awareness is key.

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The high school senior was so excited about her upcoming school dance. Her dress was exquisite, and her shoes and purse matched perfectly. She was saving money from her job at the local fast food restaurant to pay for all she needed to make the event so special.

There were flowers to choose, a limo for her and her date and a few friends, pictures, and a whole lot of extras that would make the evening a long lasting memory. She had all her future earnings planned out for the next few weeks and earmarked for the special occasion.

What she had not planned for was the inexplicable shortage of $20 on her cash till at work. The restaurant had a policy that all cash shortages had to be paid back. "Oh no!" she thought. "I didn't steal any money; what am I going to do? I need every penny I earn to pay for the dance."

Mandatory Payback Policy

When consulting with retailers and restaurant owners, the conversation will generally turn to cash shortages. A few have boasted they simply did not have cash shortages because of the policy they put in place.

The policy required cashiers to pay back shortages in their tills. They further stated that shortages may occur once or twice, but after paying for the shortages, a cashier was not often short again.

The shortages required no investigation, no investment of a manager's valuable time, no disciplinary action, and no complicated cash handling policies.

Policy Repercussions

So having investigated many, many cash shortages and implemented effective cash control programs for retailers and restaurants, paying back cash shortages is not part of the equation unless of course a thorough investigation was conducted, the cashier admitted to cash thefts and restitution was part of the resolution.

Docking pay or having an employee pay the employer for cash shortages could result in the employee making less than minimum wage and jeopardize the employer of violating wage and hour laws.

Unintended Consequences

Making cashiers pay back shortages may also have an opposite effect of its intention. Suppose that the young cashier is making preparations to go to the special dance, as in the scenario above.

She needs money for her gown, matching shoes, tickets, hair and make-up, and perhaps sharing the cost of a limo. It's all a great expense for the young lady, but she is budgeting carefully and every dollar she earns is allotted as she prepares for her special event. She is a very good cashier and even better employee.

But, alas, her cash drawer comes up short. She didn't steal any cash from the till.

A mistake in counting back change or mishandling currency may have been the problem. Perhaps there are other possible explanations.

Maybe there was a mistake by a manager removing excess cash from her cash register.

Maybe another cashier rang transactions on her register while she was on break and mishandled the cash - or stole it.

According to the rules, our cashier has to pay back the shortage. She panics because she envisions her perfect evening will be ruined. She can't afford to pay back the shortage.

Could she ask for permission to not pay back the shortage? Sure.

Could she ask someone to loan her the money? Yes.

But, she is desperate. She decides to get the money back by methods she knew other cashiers were doing. They had been ringing fraudulent transactions and stealing money for longer than she had worked there and not one manager ever questioned them about it. They had bragged often about their "extra" money.

She had always been disgusted with their cavalier attitude about stealing. She makes her decision. She would only take the amounts needed to make her dance special, - and then pay it back. She rings fictitious employee meals, voids, refunds and price reductions and pockets the cash.

She's stealing! It was so easy that she continues to take money far exceeding her intent to replace the money she had to pay back.

The manager can quickly spot register shortages, but neglected the other parts of cash management. The thefts continue long past her dance and her cash drawer is never short - and she never pays it back. She crossed the line, and is now a thief. If caught she could be arrested.

Cash Management

This story is true, and has occurred at many retail stores and restaurants. A sound cash management program does not require cash shortages to be reimbursed.

The incidences of cash shortage should be recorded in the performance history of the cashier.

Cash management programs should include investigations of significant cash variances and implementation of progressive disciplines for each incident that require retraining when needed.

Acceptable tolerance levels should be established for each component of customer transactions such as voids, refunds, price reductions, and no sales. Performance in these areas should be monitored and disciplines established for poor performance.

Each time an exception occurs outside the acceptable level of performance in handling cash transactions the discipline is stronger.

For example, the first time a cashier is short more than $3, a written warning is reviewed with the cashier. The warning includes heavier repercussions with subsequent violations that may lead to suspension and possibly termination. The concept is called progressive discipline.

The warning puts the employee on notice that their performance is being monitored, that proper cash handling is important, and establishes documentation of poor performance. The idea is to change behavior.

Effective loss control programs contain these elements of cash management.

They are fair and equitable, establish the "ground rules" for performance in cash handling, and provide accountability to those employees who may be stealing by manipulating transactions.

Requiring the payback of cash shortages as the foundation of a cash management program does not adequately address proper cash handling. It may even the cash tills, but does little to address exploiting the lack of cash controls.

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Much of the modern economy focuses on data, information and social networking, but in retail, the age old adage "location, location, location" still fits. For retail technology, the goal of any advanced data, information or social networking is to find and engage the perfect market, and in a physical retail space your location defines your target market.

Why Location Still Matters

Many people interested in starting a franchise retail store are interested and invested in modern business systems, and want to know why the old adage is still applied to modern businesses. It is simple, a retail franchise must interact with customers, find them and bring them into a place where they can purchase products.

Although much is made of online retail (a very profitable business), the online retail space is not limited by location, so a small start-up is either going to be part and parcel of one of the billion dollar enterprises already in the retail space (Amazon, Ebay, Etsy) or trying to compete against them.

The great opportunity of a physical location is the fact that it is physical. When you are operating a store in a location, there is no one else in that space. Traffic is limited by your location, which means you have a custom-made niche already set up for your business, the moment you open your doors.

Demographics

The right retail technology gives you the ability to choose location based upon up-to date demographics through the use of heat mapping in territory creation. Understanding the demographics of the location where your business will locate is essential to remaining in business and creating profits. If the people passing your door are not interested or able to buy your product, or if they just aren't there at all, you will not have profit.

The most important decision for building your business is to have the right customers for the product you are selling, and good retail mapping technology gives you the tools to locate and choose your target demographic before ever setting up shop, increasing your chance to make profit because you have invested customers.

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In this video Candace Couture, director of franchise admissions at Planet Fitness, discusses her role in selling franchises and new franchise locations, and to approve new franchise locations for existing franchisees looking to open up new locations.

Planet Fitness has 536 locations currently; and is looking to open over 100 more this year. Right now they operate in 47 states right now. Candace has to tell whether or not an area is going to work demographically before a franchise location can be sold, so she uses the SCOUT software to run comprehensive demographic analysis, looking mainly at population in an area of 1-3-5 mile radius.

She also looks at highly Hispanic markets because they have worked very well for the company, so they look at race and ethnicity. Planet Fitness typically works well in a median level income market so they are making sure that the income levels aren't so high that the area wouldn't make sense.

SCOUT also interfaces with the Planet Fitness billing software which is very important because with the company's expansion across the country they are starting to go into markets and open up locations closer to each other so want to make sure they are not cannibalizing on each other.

And with the ability to interface with the Planet Fitness billing software, an employee can basically click on a star on the map of any location and populate the map with all Planet Fitness members so it's crucial for the company to have that data.

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Keeping a business running requires a lot of moving pieces. Good management, employee satisfaction, effective marketing, high sales, and client satisfaction are just a few of those pieces.

Juggling it all takes a lot of work, and that is why the quality and happiness of your employees can sometimes be seen as the most important factor behind a successful enterprise. Making sure your employees are doing their best work goes far beyond hiring the right talent. You need to make sure that talent is being put to use in the right places.

One essential tool for talent management is the performance review, but it needs to be used correctly in order to reach its full potential.

Here are nine ways to conduct more effective performance reviews:

1. Use a form to gather feedback - When collecting feedback from the employee's superiors and subordinates, use a form that asks specific questions and provides some multiple choice answers and some room for free form reviews. This will make it easier for the people filling them out as well as easier for you to provide the feedback to the employee.

2. Always start and end with positive feedback - Sometimes when providing evaluations to employees, managers focus on the negative areas that need improvement. But it is important to start and end with some positive feedback so that your employee feels valued, even if he is imperfect.

3. Provide specific examples - Always use specific examples in your feedback of both the positive and negative work the employee has done. This will make the critique more effective and give the employee assurance that it is based on the employee's work and not someone's bias or personal feelings.

4. Go up the ladder and down - It is very important to give subordinates the chance to review their superiors, as well as vice versa. How a manager runs his team and how that team feels about the manager is just as important as how the manager feels about his team.

5. Encourage questions - If the performance review doesn't include time for questions, it can feel like a lecture instead of a discussion. Your employee will probably have questions during the review, as well as afterwards. Encourage him to ask both so that he can move forward and improve his work.

6. Focus on behavior over attitude - It might seem like attitude is important - and it is - but because it is so subjective, it is not good to talk about it in a performance review. Don't say "You don't seem to care about showing up late." Say, "We have noticed you often show up late."

7. Be prepared and professional - Don't squeeze in a performance review when you don't have the time. Schedule the appointment in advance, meet in a private office, and don't accept non-urgent interruptions. Allow for more time than you expect and have written reviews from co-workers and superiors in front of you. Do not go off the cuff.

8. Do not argue with the employee - Arguments sometimes crop up in reviews because the employee feels as though she is put on the defensive. If the employee tries to argue with you about something you say, try to shift the argument into a conversation.

9. Look towards the future, not the past - Although the conversation will be largely based on past events, you should focus on ways to improve for the future. You are not seeking retribution for missed deadlines, you are seeking to ensure there are no more of them. Make this clear to the employee as well by talking about the future more than the past.

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If you are selling your franchise, then you probably are subject to capital gains taxes. As a general rule, the sale of property subjects the seller to capital gains taxes.

However, exception to this general rule may apply if you are using the money to purchase another franchise business, if the sale applies for a "1031 exchange" you may be able defer losses or gains if you purchase like-kind property within a specified period of time after the sale.

The details are complicated and here is a general overview.

First, the 1031 exchange definition is complicated; however, the Internal Revenue Service Code states, in relevant part, that "no gain or loss is recognized if property held for productive use in a trade or business or for investment is exchanged solely for property of a like kind to be held either for productive use in a trade or business or for investment".

The definition of "like-kind" property is crucial to a determination of whether a transaction qualifies. Certain kinds of property are specifically excluded from qualifying for a 1031 exchange.

According to the IRS Code, the following types of property are disqualified:

(i) Stock in trade or other property held primarily for sale;

(ii) Stocks, bonds, or notes;

(iii) Other securities or evidences of indebtedness or interest;

(iv) Interests in a partnership;

(v) Certificates of trust or beneficial interests; or

(vi) Choses in action.

In order to better understand how a 1031 exchange works, consider the following example. Imagine that you own a rental property in Indiana that was originally purchased for $50,000. Since the purchase, you have completed $20,000 worth of improvements on the property, however, the property has also depreciated by $10,000.

Imagine further that you now wish to sell the property. The sale of the property grosses $145,000 with selling expenses of $10,000. The profit from the sale of the rental property would normally be subject to capital gains taxes totaling $14,800 if you are in the 25 percent, or higher, tax bracket. If, however, the sale qualifies for a 1031 exchange, you will be able to hold onto the $14,800 that you would have paid in capital gains taxes, interest free, until such time as you sell the replacement property.

(At 3.5 percent interest, that reflects a savings of $518 per year, or $2,590 over a five year period of time. Of course, if the $14,800 you held onto as a result of using a 1031 exchange is investment in a higher yielding investment, your savings will increase accordingly.)

The replacement property must be one of like-kind. In the above example, this means you cannot purchase a property in which you plan to live to replace a rental property. In addition, the replacement property must be purchased within 180 days after the sale of the original property to meet the 1031 exchange definition.

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Since the inception of the WOTC program in the late nineties, lawmakers have remolded the framework and refocused objectives to encompass a greater target audience but because the program as a whole is still underutilized, several misconceptions remain.

The program as a whole has dual, complementary objectives. By enabling individuals dependent on government assistance to find gainful employment, it will subsequently reduce the financial burden on the U.S. economy.

Program success is demonstrated by the over 6 million success stories where jobs are secured by those previously on Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP - or food stamps), Supplemental Security Income (SSI), or other programs.

Because the program has, indeed, been successful, lawmakers have frequently changed the framework to allow the arm of WOTC to reach more than the originally indicated target groups. Years ago, WOTC was referred to commonly as the "welfare and felon credit."

Although applicable at the time, employers may now also receive a federal credit for hiring a variety of Veterans, disadvantaged youth or someone living in an economically depressed area of the country. By only looking at WOTC as the welfare and felon credit, you could prevent yourself from realizing greater benefits. Likewise, using any version of the appropriate screening forms other than the most recent available will prevent the recognition of your eligible employees.

WOTC is a point-of-hire incentive, meaning that applicants must be screened for eligibility prior to employment. Therefore, you unfortunately cannot screen your current workforce. Nor can you dismiss your staff, rehire them and then screen - which is a common question to sales agents and another misunderstanding of the program. At that point, they are considered prior hires, which are disqualified.

If you've previously dismissed participating in this incentive because you don't believe you hire ex-offenders or food stamp recipients, you may be missing out on substantial federal tax benefits.

Make sure you are taking full advantage of the WOTC program, and in some states, the piggy-back credits that allow additional rewards.

To maximize the degree of your savings, speak with a WOTC consultant about your incentive involvement today.

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For a complete and detailed listing of each federally recognized target group, visit our website at www.taxcreditco.com.

Market share is your piece of the pie. It is important to investment banks, your partner, your sales team and your growth. But what is that pie and how do you calculate your slice?

Although market share is likely the single most important marketing metric, there is no generally accepted best method for calculating it.

There are however three common ways to measure it:

  • Dollars or Revenue collected: The owner of Coffee & Tea, a boutique coffee shop, is located in central Manhattan where people spent $10 million dollars at cafe's last year. Coffee & Tea made $1 million dollars during that time. They have 10% market share. (1,000,000/10,000,000 = 0.10).
  • Customers served: High-End Remodeling, Inc. has a trade area that covers 10 square miles around their office. They serve the well-to-do housing market. That area includes 100,000 housing units but only 10% are homes that are worth more than $1 million dollars. That means 10,000 housing units are potential customers to High-End Remodeling. The company currently does remodeling for 1,500 homes in that area giving them a 15% market share. (1,500/10,000 = 0.15)
  • Volume or Unit sales: Westside Auto Dealership determines that there we're 50,000 cars sold last year in their market. Of those, Westside Auto sold 8,000 cars giving them a 16% market share. (8,000/50,000 = 0.16)

In the U.S. you can get data on the size of the entire pie by looking at the US Census FactFinder. Here you can find the dollars spent for your product or service, by geography, by year.

Depending on what data is available to you, use any, or all of these methods to determine your piece of the pie.

What other methods do you use to calculate your market share?

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Here's part two of the Moneyball blog. Part one was posted on Monday, click here to read part one if you haven't already.

SMART Pre-Shift Inspection Protocol™ is a checklist system, not unlike the pre-flight checklists that pilots run through to ensure safe operations. Except that the restaurant data that's captured is not viewed in isolation, nor just logged and stored and never looked at again.

With the SMART Pre-Shift Inspection Protocol, you can leverage your workforce to collect data, which will let you draw correlations between operations, sales, and costs. That will help you determine your shortest path to optimized profits.

The SMART Pre-Shift Inspection Protocol is performed by your workers at any skill level, using a tablet or iPad to log in the restaurateur's most valuable assets: "in-game data."

Since this approach is a protocol (a programmatic workflow, based on a pre-established critical path), the SMART Pre-Shift Inspection Protocol is not dependent on the skill levels of your workers. The intelligence is embedded in the protocol itself. Literally anyone can run the protocol.

Baselines are covered first. The SMART Pre-Shift Inspection Protocol captures data that is essential to operations and inspections (fridge temps, food temps, locations of sanitizing buckets... everything you need for CYA moments and health inspections).

But the SMART Pre-Shift Inspection Protocol also collects the seemingly extraneous data that could be far more telling than the fact that the cooler maintained a <41F temperature, as required, or that cleaning chemicals were safely separated from potential contact with food.

"Seemingly extraneous data." What' s that?

Well, we all know that restaurants succeed and fail as much on human interactions / human discretion as on the wholesale price of a salmon steak or a plate of wings. Much depends on the intangibles, which are really not intangibles at all, if they are recorded and examined.

Imagine if you have a protocol checklist for how well dressed the wait staff is. (Crisp shirt? Check. Spotless tie? Check. Clean apron? Check. Finger nails clean? Check. Tattoos covered? Check.)

Or if the protocol checklist checked that the side work has been done.
Or if you had a check-off system to ensure that your workers didn 't take all the parking spaces nearest the entrance, when that act alone could attract (or deter) enough customers to get a solid second turn at brunch.

Or that you were aware that the ice machine is undersized for the required volume of glasses, which delayed the refills, which caused half of your patrons to skip dessert, which triggered spoilage, which made your dumpsters full one day too soon, which turned away another 30 diners who thought the establishment just looked filthy when they circled around back to park.

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People, such as investors, are especially interested in your business plan for growth, and your retail sales forecast is a big part of what they take into consideration.

It should show your projected monthly sales for the next year and by year for the next two-to-five years.

That doesn't mean you have to get your sales forecast perfect; it is always part past data, part common sense, part research, and part guessing.

These 3 tips will help point you in the right direction to having a reasonable sales forecast.

  • Project unit sales. Whether you are selling a product or service, start by forecasting your unit sales per month. It is easier to forecast by breaking things down to component parts. For example, a product-oriented business will show number of units, such as packs of notepads or number of cars sold. Don't think this doesn't apply to you because you have a service-oriented business. You can still apply this principle by breaking your forecast down, such as how a lawyer bills by the hour. Remember to take peak buying seasons into consideration; an accountant may forecast an increase in billable hours every year at tax time, while a florist may see a rise in the sale of roses around Valentine's Day.
  • Use past data. Recent sales data can be your best tool to forecasting the future. Statistical analysis, for example, will help you spot trends that you can apply to predict the future. Past data is also useful when forecasting sales of a new product. It is easier to make an educated guess on these sales when you can use an analysis of an existing product. Are you launching a new software product? Base your forecast on the sales of a similar software product.
  • Project prices. After you developed your forecast that projected unit sales monthly for 12 months and then annually, you need to project your prices. This area is another where your research and analysis of past data will pay off. Use it to help you guess future pricing and any fluctuations you notice as a trend.

Forecasting your retail sales isn't as difficult as it first seems. If you have any questions or need help with your sales forecast, contact us.

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In Part 1 we looked at why it's vital for organizations to document employment situations diligently.

But what constitutes good documentation that reduces employer risk? Of course every situation is fact specific but, practically speaking, here's some guidance on some types of documentation and what to include:

1. Summaries work well when behavior is being tracked over a period of time. When documenting a disciplinary situation, be sure to cite specific examples and information that aptly illustrate the problem.

In a summary, it's important to answer the classic questions who? what? when? where? and why? by including:

  • Description of the offense , why it is an offense, when and where it occurred, names of witnesses and any other critical details;
  • Copies of any supporting documents such as time sheets or production records.
  • Description of any disciplinary action that has been or will be taken;
  • Recap (including dates) of any prior oral conversations or disciplinary actions that have a bearing on the incident;
  • Description of the behavior expected from the employee;
  • Employee's version of the events;
  • If the employee has any appeal rights, the procedure to exercise those;
  • Future action to occur if the offensive behavior does not cease;
  • Dates and signatures-sign and date the form and give the employee an opportunity to sign. If the employee refuses to sign, note that.

2. Forms work well for individual incidents and help employers standardize the documentation process. Forms may save time by prompting supervisors and managers for information and can help ensure consistency across the organization. They can also encourage the proper analysis of situations and consistent disciplinary actions. Forms may provide details and information that may later be incorporated into summary documentation, depending upon the circumstances. HRSentry subscribers may access a sample documentation form in the Discipline and Corrective Action Kit.

3. Other types of documentation further the human resources goal of risk mitigation. Here are a few examples usually handled by the HR department itself:

  • Employee Acknowledgements-These are signed and dated forms to prove that employees have received and understand important information. Acknowledgements are useful when providing such items as: employee handbooks, job descriptions, and important policies such as anti-sexual harassment, anti-retaliation and confidentiality.
  • Proof of Training-When you train employees and supervisors on important topics such as sexual harassment awareness and , document attendance with a sign-in sheet or use training software that tests for comprehension.
  • Employee Communications-Documentation of important communication with employees can be copies of letters, emails or notes based on a phone conversation. Examples include forms designating FMLA leave, hire letters, and contracts.
  • Recruitment Files-Maintain applications for at least one year or longer. Keep copies of all communications and candidate information in case there is an allegation of discrimination.
  • Documentation of an Investigation of a Complaint-This a huge topic by itself. For further information, see our HRSentry blog on investigating allegations of sexual harassment.

Electronic files, backed up and with password protection, can help employers save space when documenting. Be sure to hold supervisors and managers accountable for their role in supporting this critical risk management function.

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Ever wish there were a "Moneyball approach " to managing multi-location restaurants?

It would be a business model where we would field dozens of "scouts " who could fan out across multiple locations, logging in data, observing and recording "in-game activity, " and making note of even the smallest thing ... like the fact that the day the dumpster was overflowing, the location sold 23 fewer desserts.

Or that when the men 's room was dirty, the bar take was down 29%.

Or that at Saturday lunch (when the young wait staff looked as though they'd come directly from an afterhours party) you got only two table turns and not three.

Just like in Moneyball, an "overlord " manager would sit at a computer and view a dashboard of data, some of it raw, and some of it synthesized, based on algorithms. He'd make decisions based not on guesses. Not on theories. But on facts, gathered in real time in the field. It would be a Big Data solution for multi-location restaurants.

Impossible to put in place, right? Too expensive!

Heck, you 'd need to field a team of scouts out there walking the floors of your locations.

(Wait, don 't we have that now? Aren 't our managers walking the floors and building grounds already?)

And they 'd all have to be carrying tablets or iPads.

(Wait, everyone 's got tablets or iPads now. If not, the costs are minimal.)

And the data would have to feed a system that analyzed it.

(That exists today as well, and plus, these days, customizing analysis of data streams is not cost prohibitive, especially given the amazing ROI that's achievable.)

So, with the workforce in place ...

And the technology in place ...

The only thing missing is a protocol, a process, a workflow that would prompt the workforce to start collecting data.

The question is: Which data? What things should our "Moneyball scouts " be looking at?

That 's where SMART Pre-Shift Inspection Protocols come into play.

With the SMART Pre-Shift Inspection Protocol, you can leverage your workforce to collect data, which will let you draw correlations between operations, sales, and costs. That will help you determine your shortest path to optimized profits.

Old Pilots Don't Crash. Old Restaurants Managers Do. Ever see an old pilot skip a pre-flight checklist? Nope. That 's why so few planes crash.

Ever see an old restaurant manager (over confident that he knows it all) crash a restaurant? Yup. Happens all the time.

That's why we have to bring the rigor of the preflight inspection to the management of restaurants.

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Microsoft has discontinued MapPoint starting this year, which was used as a territory mapping software.

This left many users with an urgent need to replace it.

However, the big question here is, what exactly does a business, like a franchise, need in a mapping package?

The Biggest Feature Needed Isn't A Map

The biggest features that I hear are needed in mapping software are: something they can use quickly, get decisions fast, have cloud ability to collaborate with other team members and ultimately to the franchisee. Microsoft taught us that creating something that only works on a PC no longer works.

Benefits of a Map

Selling Franchises

Of all the bells and whistles that Microsoft offered, the one that is most important is whatever allows the franchisee a means to make decisions faster for buying into what the franchisor is selling.

Saving Time

The main "pain point" from franchisors depends on what you're using mapping for. Such as this post relating to Microsoft going away is one big example. As many franchisors have told me, "Franchise territories are the most important things to our company." The feature for territory mapping needs to handle decades of old territories mixed with new territories and edits. In can be incredibly time-consuming for a retailer to manage all of this.

Few Extra Things Needed

Franchisees also have a need related to territory mapping. They want a starter package from mapping suppliers.

Not an expensive product and they definitely do not want a product that they need to purchase a full subscription to use the product.

They need minor demographics, simple site management and one or two territories. Low friction to usage is again a highly desirable feature...meaning "non-technical users".

Uploading a list is still important. Usually any locations of existing or proposed sites.

Routing for franchisors is also desired to generate sales leads.

Again, all for ultimately selling to a potential franchisee.

Lastly, sex appeal. It helps to make it shiny and new.

Summary of Top Desired Mapping Options From Franchisors

Features

  • Quick to use, they don't need to spend all day on it.
  • Easy to use so anyone in the company can use it.
  • Collaborative with decision makers, perhaps even the franchisees themselves.
  • Allows multiple users on the same plan.
  • Demographics, of course, how detailed depends upon its use, but usually not very detailed.
  • Sexy product that looks cutting edge.

Benefits

  • Sell franchisees.
  • Allow franchisees to have faith in the franchisors.
  • Provide strong communication between the franchisor and franchisee.
  • Builds trust between the franchisor and franchisee.
  • Allow franchisees to expand and grow.
  • Sexy product that is cutting edge helps to sell franchisees, shows one's being in touch with the times.
  • Sell franchisees (so important I had to list it twice).

So to sell, sell, sell is the main benefit.

Save time, time, time is the second benefit.

The map is just the means to the end.

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For years I have been working with companies to upgrade, tweak and help with scripts their sales and/or customer service reps.

Fast forward.

Now we're trying to get our clients who ask for help with a script to consider going to conversations with aided recall.

There is danger and pitfalls to both scripts and conversations though. Let me explain.

Scripts were designed for actors. Actors know how to read a script. Most folks don't. It's that simple.

When you give a person a script they tend to 'read' it. Well what's wrong with that Nancy? Aren't you suppose to read a script?

Yes, but it's the old 'HOW' you read it that counts. We have all been accosted by a phone call and someone poorly reading their script. Yawn, yawn or worse.

And in the professional scripts there are words for everyone (all actors) to respond. In your business script there's normally only words for what the rep is saying. There are no words for the customer - the responder (the other actor).

Oh there may be some things like "if the customer says this, you say that;" "if the customer says that, you say this." Do we say, "Excuse me, sir, that's not in my script?"

Here's a big time tip: If you want to continue using scripts, that's fine; however, we suggest you have the person who will be reading the script READ the script to you.

Or better yet, over the phone to you, as well. How does it sound? Tape it. Let them hear it too. Let them go to another room and call in on your cell or another phone. It's not a big deal. And the best time to do this is in the interview.

But what happens if you already have them on board and now after reading this you realize they're just reading the script blah, blah, blah? We can lose a lot of business that way.

DRAMA 101.

That's when you have someone you really want to hire (or is already on staff), but you're not happy with the 'read' or the audition.

Bring in a newspaper or magazine article. Tell them they're being interviewed for FOX News or CNN and have them read the article as they would on the air. It's very sobering.

Scripts are ok and if used right, even great.

But those that use scripts need to be great IMPROV folks. Improv isn't easy. But it's a great exercise in having a conversation. Some of us are good at it; some are not.

Let's face it. The folks coming into the workplace today, the millennials and such, aren't very versed in 'conversations.' After, "Hey, how ya doing?" or "Hey, what's up?" there's not much else. So we're going to need to teach them - show them -

One other thing about scripts.

I'm a professional actress and have worked with some big names over the years. We all memorized a script. What you find when you read a script is a possessiveness from the author. Anyone who has written a script doesn't like you to change the words. And you shouldn't. They were written with a reason.

Take Neil Simon, the brilliant play writer. If we changed his words we might not get the same laughs, the same reaction. So when you're given a script and you want to change stuff, ASK about changing words before you do it.

Changing authors words without permission could cause collateral damage. Like your job!

(Next post, I will give you a quick tip on on converstaions.)

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Pet services have been the fastest growing product segment for the Pet Stores industry over the past five years.* Pet services include full service grooming, haircuts, baths, toenail trimming and tooth.

As the demand climbs and the need to fulfill customer demand grows, a feisty mobile pet grooming business, Aussie Pet Mobile Canada, who was voted #1 in Pet Services category by Entrepreneur Magazine in 2012, came looking for a territory answer.

Why they came to us?

They came to us looking for a better way to manage territories for their mobile franchisee's. They wanted to talk to a person who could listen and strive to fill the need they had. They were frustrated with the current solutions which required a dedicated computer running Microsoft.

What they needed?

1. They wanted to build territories for their franchisee's from any computer.

2. They wanted a way to share and collaborate this information with their franchisee's live.

3. They wanted to add their own list of data to visualize what was important.

4. They wanted something with flexible pricing options and they wanted it to be used for all their franchisee's.

(More information on what Franchisor's have recently been looking for can be found here; What Benefits and Features Franchisor's are looking for)

What we did for them?

We built them a system that is based in the cloud. A true software as a service option that can be run from anywhere and shared with anyone.

For collaborating, they can now have a franchisee watch live as both parties collaborate on the territory definition. They can give the franchisee edit rights and they can build what they think is a rough draft.

We gave them a "master" territory project that could prevent encroachment automatically. We gave them the ability to share each individual territory to its prospective owner.

For sharing, each project can be shared internally or externally with view/edit rights so they had control on who gets do do what.

Does it pay for itself?

A thousand times over in just time alone. The goal was to have a central repository of all their existing and potential territories, something that they can share instantly vs taking screen shots and emailing them.

This is a dynamic system so as time goes by, the franchisee can grow into more territories if needed and see what is available in the surrounding area and make decisions quicker.

It gives that sex appeal that you're using the latest cutting edge tools to your franchisee's. There are easier solutions, but these don't give the answers they needed, aren't collaborative, only run on PC's or roughly on the web, don't update with new data automatically and are overly complicated.

Is there something you need for a better territory solution?

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* SOURCE: WWW.IBISWORLD.COM/2014

When it comes to I-9 forms (you know, the federally required employment eligibility verification forms required whenever you hire someone) a few lucky employers will deal with common circumstances 99% of the time and won't be overly fazed by compliance issues if they are meticulous and well-educated on the law.

But there are a surprising number of nuances that even experienced employers may not be aware of.

For superb guidance, the Department of Homeland Security's U.S. Citizenship and Immigration Services (USCIS) provides an easy to read, 69-page brochure.

Don't be put off by the number of pages. This color brochure, replete with photos, is an excellent reference guide, addressing just about anything you might encounter, including re-hires and the hiring of minors, individuals with disabilities, lawful permanent residents and refugees. The format is well laid out, uses clear language, and provides samples and Q&As.

All employers, but especially those new to human resources, small businesses just starting out, and employers with more unusual hiring and documentation situations, are encouraged to review it thoroughly. Because of its friendly format, it's well worth the read.

We don't want to replicate such comprehensive USCIS guidance here; but the following are a few basic tips to help you avoid compliance trouble:

  • I-9 forms must be completed for all new employees, hired after November 6, 1986, even if just for one day of work. The form is never to be completed by applicants, only new hires or those who've received an offer of employment. Also, don't use the form with bona fide independent contractors.
  • As soon as a candidate accepts your offer of employment, let him or her know the I-9 form is a requirement of employment. Send the form with the list of acceptable documents in advance if there's time. The law says the form needs to be completed within three days of hire but get it done on the new employee's first day. The employee may fill out Section 1 at any time after they receive an offer of employment until their first day of work.
  • Remind new hires, through email or by phone, a day or two before their start date to bring their ID-one from List A will suffice OR they may bring one from List B and one from List C.
  • Acceptable documents must be original, not copies. If the employee has lost a document, such as an original Social Security card, you may accept as documentation a receipt of their application for a one. The receipt is good for just 90 days; after that the person has to show you the newly issued document.
  • Providing a Social Security number on Form I-9 is voluntary for all employees unless you are an employer participating in the USCIS E-Verify program, which requires an employee's Social Security number for employment eligibility verification.
  • According to the law, you don't have to photocopy the documents the person provides but it's a good idea and may demonstrate your good faith effort to comply. What you do for one employee, however, you must do for all. Always apply your policies and practices across the board to avoid any appearance of discrimination. Also, if you retain photocopies, keep them in the employee's file or with their I-9 form.
  • Keep I-9s separate from the employee's personnel file. I-9s can be retained either on paper, microform, microfiche or electronically. See pages 23-25 of the USCIS brochure for the specifics of these various retention formats.
  • If you rehire someone within three years of the date the employee's original verification, the original I-9 may be used by completing Section 3. Otherwise be sure to use a new form.
  • You must retain an employee's completed I-9 for as long as the individual works for you. Once s(he) terminates, the form is to be kept for either three years after the date of hire, or for one year after the date employment is terminated, whichever is later. It's a good idea to weed out I-9s you are no longer required to retain. As long as you remain methodical and meticulous about destroying only those no longer needed, your risk exposure will be reduced in the event of an audit. Fewer forms, fewer mistakes.

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Why is Defining Territories so Brutal?

Building territories is an undertaking that is part science, part art, and mostly psychology. It's typically a collaboration between two parties whose interests are not necessarily aligned to the same goal, but they have to meet in the middle. Defining territories is similar to signing a prenuptial agreement because it involves a lot of passion and stress, yet requires a delicate balance to place the right restrictions on the one you love. Both parties pursue their own interests, but ultimately they want the relationship to work out and last a long time.

Let's look at the issues around a franchisor-to-franchisee relationship.

The franchisor wants to create the smallest territory possible for the franchisee. If the territory is too large, the franchisor may lose lots of potential customers, lots of potential revenue, and open the doors to a competitor capitalizing on what the franchisee can't fulfill, especially when contracts can last a decade. If the franchisor makes the territory too small, they can pinch a franchisee's potential income, or worse, put them out of business. When a franchisee can't make a decent living it's bad PR, looks bad on the franchisor's books, and makes it harder to entice more potential franchisees to join the company.

The franchisee, on the other hand, usually wants the largest territory possible because they truly believe they can sell to and support a customer base of that size. If the franchisee gets too much, they may potentially take on too many customers and fail to take care of the ones they have. Or, the franchisee might have to pass on new customers leaving the market ripe for a competitor takeover. Failure by success, so to speak. If the franchisee gets too little, they may go broke and may need to extend their boundaries. The franchisee may be angry with the franchisor for misleading them or they might feel cheated. None of these situations are good.

Take these four steps to lessen the difficulties associated with defining territories.There are several key issues to consider when defining territories. We'll give a quick summary and go into more detail on each item in separate posts.

1. Understand the demographic and trade area needs of your business model.

Each business has a unique demographic profile for their existing customer base. Doing a simple exit survey can put a physical location to a customer as well as provide insights into customer characteristic (e.g., gender, age, race) without being intrusive in the process. Even an online business has great location data. Match this data to the demographics that the customers live in and search for correlations against sales. It sounds complicated, but it's easier than you think and highly beneficial for finding out who your customers really are. This step also serves up a huge bonus for defining your territory.

2. Determine the minimum performance requirements relevant to the business.

Based on pro-formas, gut feelings, analogous stores, each business has a minimum performance requirement that must be met.

3. Decide on what rights, if any, a franchisee has for marketing and providing services outside their territory.

This can include a temporary territory assignment agreement. It is especially useful for allowing a franchisee the ability to cover a new market while the franchisor brings on new franchisees to the area.

Keep the territory structure simple.

It is easy to slip and overcomplicate the territory structure, which may lead to confusion by both parties, lost prospects, or drawn out negotiations while competition blankets the market place.

Defining territories is brutal, but with a little forethought and planning, both parties can be transparent and negotiate their "prenuptial" agreement in a calm and loving manner.

What examples do you have about creating territories?

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Is Your Delay Putting Your Franchise Network at Risk?

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The costs associated with slow franchisee ramp-up are many.

A slow ramp-up puts your your franchisee at risk.

Slow ramp-ups affect not only the franchisee in question, but the entire network & your own staff are also influenced by those under-performing franchisees.

The costs of franchisees' slow ramp-ups include:

  1. Unplanned Expenses. When franchisees struggle, more unplanned training and support resources are necessary to remedy their situation. The money franchisors spend in this effort is often syphoned away from resources the franchisor would have invested in strengthening the system, hiring key people, introducing innovation, and improving the long-term stability of the brand.
  2. Poor Morale. As the franchisor's support staff appear to take one distressed call after another from a steady stream of "problem" franchisees, their own morale suffers. They begin to doubt that the system works. They become more detached and frustrated, which impacts the entire system.
  3. Fractured Franchisee Relationships. Struggling franchisees get frustrated and discouraged, and they share their disappointment with other franchisees, bringing down the morale of the entire system and fracturing the franchisee-franchisor relationship.
  4. Halted Momentum. The enthusiasm that franchisees experience during training is thwarted if they can't produce results when they get back home. Once lost, this momentum can't be recovered and a new drive must be created, which is not easy to do.
  5. Poor Validation. As frustration levels go up, validation starts to suffer as under-producing and unsatisfied franchisees share their frustration with prospects. Negative franchisee validation destroys franchise sales, halts growth, eliminates future royalty streams, and decreases the dollars franchisors can spend on tools and support systems to avoid the problem.
  6. Brand Deterioration. Under-producing, unhappy franchisees create negative customer experiences. If the unit or territory fails, customers will remember, and it will be difficult and, in some cases, perhaps even impossible to regain lost traction.
  7. Breakdown in Leadership. Struggling franchisees rally other franchisees or franchisor's support staff to their plight affecting the franchisor's ability to effectively lead the larger franchisee body. In many systems, the frustration engendered by this breakdown in leadership creates a culture of compliance and top-down authority, rather than a participatory culture focused on positive relationships and results.

Unfortunately, some franchisors actually add to the ramp-up problem!

And the the delays are all visible to the world, the Item 20 will show all the sold but not open franchise units. You need to make sure your Grand Opening process works, even if that mean hiring outside professionals to assist.

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The post Is the Slow Ramp-up of your Franchisees Costing You too Much? Is It Risking the Success of your Franchisees? appeared first on InFraSu.

With today's announcement that Google Wallet would be preinstalled in Verizon Wireless, AT&T and T-Mobile USA, it is worthwhile to review this and other changes from the franchise owners' point of view.

My Business Model is Obsolete, in the February 25, 2013 issue of Fortune Magazine by Geoff Colvin describes how an increasing pace of innovation is having a significant effect on the business models of institutions that have been in existence for decades.

Unlike the larger and better known corporations identified in this article, my focus is on how smaller organizations are affected by these same changes.

Without the financial resources of larger and more profitable organizations, smaller businesses are at greater risk of disappearing in a shorter period of time.

Smaller businesses are being forced to adapt to these changes in the pace of innovation and their core business models -how they earn profits- are been strained.

1.Payment Acceptance Systems

Business transactions used to be simpler when paid in cash. Then there was the convenience of cheques. Today we have credit and debit cards, often with reward programs, and Paypal. The sad reality is that most businesses probably do not even know the cost of accepting these varied payment systems.

With these conveniences come costly equipment and acceptance fees. An entirely new middleman has emerged to support noncash transactions in the name of convenience.

Let us not forget, however, that this is an added cost to business. The business cannot always pass on these costs due to the competitive environment which results in reduced profit. Then there are the costs of technology that must be absorbed.

Business accepts these charges as a cost of doing business but many fail to give proper consideration to the implications of taking on these costs - maintenance, support and replacement - to the overall profitability (and sometimes viability) of the business.

The overall result of just these two changes to the business model is twofold. Business owners need to know more about technology and marketing than ever before. They must also charge more for what they offer or accept reduced income. This puts the small business owner, who lacks the knowledge and resources to properly invest in technology or experiment with alternative marketing vehicles, at a disadvantage.

2. Marketing

At one time marketing by smaller businesses was generally limited to Yellow Pages, local newspaper and/or magazine advertising, and/or direct mail. Today the reality of marketing is quite different.

  • Yellow Pages are no longer a primary advertising vehicle.
  • With the advent of cellular networks, phone numbers are no longer centralized so a single telephone directory no longer exists.
  • Add in access to online directories and the value of Yellow Pages advertising is now questionable.

The collapse of virtually all print media in place of Internet options requires businesses to seek out alternate ways to promote their offerings. It also requires a greater level of knowledge into marketing and technology which typically does not exist within smaller businesses. Into the void comes a range of Internet vehicles that include Internet web sites, online advertising, social media and blogs.

These marketing vehicles lack any form of reliable or verifiable results on which to evaluate success yet they seem to be the only alternative for the moment. Businesses feel they must have a presence in these areas to remain viable.

The amount of time and money spent on these marketing vehicles is a significant change in business model typically not considered by businesses using the traditional cost-benefit analysis.

In fact, many promoters of these new age vehicles argue (incorrectly, in my opinion) that traditional measurement systems do not reflect the value inherent in these investments. This is not to suggest that online marketing is not effective when done properly. Only to beware of the high tech snake oil salesman promoting unproven methods without a means of measuring results.

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There's no question that experienced workers in their trade want the ability to run their own business and take their skills in a new direction. Being able to run your own business means you're in charge of what direction your company goes in and you get to make all the calls.

Who gets hired, what equipment is used, where you're located: it's all up to you. You get to set your own hours and go at your own pace, meaning everything is up to you, which is both a blessing and a burden.

You have full responsibility over whether your company succeeds or fails, meaning you have to put quite a bit of work into your company if you want to be successful in the long run, you need to mange every aspect of your business in such a way that you can truly be successful. This involves making sure your finances are completely in order all of the time.

That's where financial services come into play, but getting these services and being able to afford them can be another matter entirely. All businesses need bookkeeping and accounting to keep track of their finances and allocate any and all funds you have accordingly.

However, hiring these services is a full salary's worth that you may not be able to afford. Many business owners will try for the alternative of doing their own books, only to find that a full-time job along with something as demanding as running a business will hurt your business more than help it.

Companies need a way to get their financial services handled without issues, but how can they do so effectively?

Why you should Outsource your Bookkeeping

There are countless reasons to seek out the alternative of hiring an outsourced bookkeeping business, mainly through the benefits of getting financial services taken care of for you without you overspending.

1. Remote bookkeeping is also extremely convenient for you because you don't have to deal with the clutter of paperwork or having all of your information scattered about; everything is organized and managed for you to easily access. The team of outsourced bookkeepers handles all of your information, completes financial services for you, and places the resultant data on a secure, remote server.

That server is very easily accessible for the business owner, as they get choice of how secure they want access to their data to be. They can restrict access to a work computer, or get access via their smart phone, tablet, laptop, or even give other employees access pending a password or other form of security.

However you choose to secure access to the data, you still get 24/7 access to all of your data, organized and very convenient to access. There are countless other reasons why you should outsource your bookkeeping, like the variety of services offered to you.

You don't have to worry about paying for bookkeeping, accounting, and payroll workers; instead, you can choose get all of the services your business needs from remote bookkeeping. Outsourced bookkeeping offers you a huge variety of services, from getting your bills paid for you and getting financial reports sent to you to CPA services, bankruptcy services, payroll services, and reconciliations completed.

Everything and anything your business needs financially can be done, so you can just pick your services and how you want to access the data and the rest is done by the remote bookkeeping company.

2. Behind the Scenes with Outsourcing your Bookkeeping

Outsourced bookkeeping businesses make sure that their hires are as efficient and competent as possible to ensure that your precious financial data is handled accordingly. Potential hires that are considered must have some previous experience in the field, whether they've done some bookkeeping or accounting for a business, and must have a fairly clean record.

All potential employees are vetted and undergo a background check for any discrepancies, and they all go through multiple interviews before being hired. To fully ensure the security of your data and let employees know how serious their job is, all new hires sign a three-page non-disclosure policy stating that they will be held accountable for anything that goes wrong as far as them handling your data.

Whether they're new hires or experienced workers, all employees work together on tasks for clients to make the process much faster and more efficient. Plus, the server they use is highly secure and has countermeasures designed to keep your information safe no matter what happens.

Of course, remote bookkeeping companies work to make sure their servers are as efficient and airtight as possible, following state cyber security laws. Still, it doesn't hurt to have a backup like a cyber insurance policy or an offsite backup of your data just in case anything goes wrong.

There are many reasons why you should outsource your bookkeeping, but many business owners worry about security of their vital data in the hands of a server or in the hands of employees. However, remote bookkeeping businesses strive to cover every potential issue, building a secure server with countermeasures as well as only hiring the best possible workers.

3. Financial Reasons as to why you should Outsource your Bookkeeping

There are countless reasons why you should outsource your bookkeeping, but it always boils down to how much money it costs versus what you have. It doesn't matter how great a service is; if you cannot afford the service then you cannot hire them.

However, it's a surprise to find out that not only is remote bookkeeping inexpensive, but it means you save tens of thousands of dollars versus your alternatives!

Hiring in house bookkeepers or accountants means a salary of at least $35,000 annually with some in the $50,000 range, meaning you're paying almost six figures to get these services.

However, remote bookkeeping will not cost more than $20,000 a year, and that's every possible service offered by the outsourced bookkeeping business. Just bookkeeping costs $300 a month or $3,600 a year, ten times less than what in-house bookkeepers charge!

It's very easy to see why you should outsource your bookkeeping, as you get all of the advantages of a good service with no downsides and at an affordable rate. To learn more about why you should outsource your bookkeeping through companies like Remote Quality Bookkeeping™ of Massachusetts, click here.

The post Three Reasons why you should Outsource your Bookkeeping appeared first on Cloud Bookkeeping Services|Remote Quality Bookkeeping.

Most franchise territories are created by some "defined" geography.

Most franchise territories are created by some "defined" geography such as a group of Zip codes, a ring dimension or a described area.

Since all political geographic boundaries are readily available including block groups, Zip codes, census tracts, counties, states, designated market areas, and Metropolitan Statistical Area-Core Based Statistical Area, these are mapped and viewed within a global information system (GIS) and are a great foundation for the beginning step in defining territories.

GIS tools allow the franchisor to draw or create the territory in digital format.

For some franchisors, this may be enough, having a digital database of existing territories. There may not be a need to understand the demographics of the area, just be able to see it on a map. This allows them to print a hard copy of the maps to include in the franchisee agreement, be able to identify potential overlap issues with new territories, and to map out potential future territories.

Counting the Customers

Some franchisees choose to enhance their mapping capabilities by including geo-demographics, both consumer and business related. Adding demographic data to the geography (block groups, counties, DMAs) dramatically enhances the ability to identify or "target" groups of desired customers. The franchisor may know that their targeted customer base is a household with a certain level of average income.

Using the mapping-demographics, every block group in the United States can be found and mapped that meets this criteria. The process of creating the franchisee boundary will now include a count of potential customers. Having these counts leads to the development of defendable, equitable territories.

For those who may not know their true customer profile, mapping tools can include geocoding (assign a latitude-longitude coordinate based upon an address) that places the customer on the map.

Once the customers are on the map, attaching their location with the corresponding demographics of their block group to create a customer demographic profile is easily accomplished. By mapping your best customers and developing a "target" profile, you can go find these targets anywhere in the United States and develop intelligent franchisee territory searches.

Some franchisors are business-to-business rather than consumer oriented.

The same process applies, but by using a different set of geo-demographic data. Business population counts are available by North American Industry Classification System/StandardIndustrial Classification codes by their address or summarized at any geographic level (block group, Zip, county). Either way, this data can be viewed as information on a map.

If a franchisor targets a specific business population, this targeted group can be mapped and territories developed based upon desired levels of business counts and potential.

Understanding and documenting the potential customer base of a franchisee territory will also benefit the franchisor by allowing them to effectively maximize the potential number of territories in a given market area.

The Goldilocks Problem

Franchisors wouldn't want to "give away" too much territory or on the other hand not provide an adequate customer base.

By understanding the demographic customer potential and using a defined minimum criterion for these customer levels, one can map the optimal number of territories per market assuring that each is sufficient with the potential customer base.

When you need help in creating territories for your franchise, please contact us at:

IntelleVue LLC 11102 East 75th Place Tulsa, OK 74133 Longitude: -95.853451 Latitude: 36.054777

Contact: Jeff Davis 918.250.5561 [email protected]

The bottom line for any company is the money: after all, you're in the business to make as much money as possible, and your company can't keep running if you're not at least breaking even. Businesses deal with quite a few different expenses, from paying for their employees to owning a building to acquiring equipment and stock and paying any other taxes and such that are necessary.

It's tough to make enough of a profit to cover all of your expenses, and you want to be able to make enough of a profit to put money into improving your business as well. Equipment needs to be upgraded, more employees need to be hired while others need a raise, stock needs to be increased and improved, and more, but that all requires money as well.

Your business is dealing with finances on a daily basis, spending or earning, paying off bills or receiving checks or determining what to spend when, and that's why financial services are so important for a business. With the right services, business owners can easily get all of their financial information organized and determine how to spend money appropriately at any given time.

With these services, you will know at any given time how much money your business currently has, and you can easily see all of the different trends of spending and earning your business goes through as well. All of that data is used to help you determine when your business should be spending and when it should be cutting back, as well as helping your company make the right decisions in the long run.

Affordable Bookkeeping

Running a business can be incredibly challenging, and having the best possible financial services to help you can be extremely beneficial; however, paying for these services can be another matter entirely, especially considering the implications of spending all of that money on those services.

You already have so many different expenses, and paying full salaries for financial services can be tough to deal with, especially when your business is still fairly new. Bookkeeping involves keeping track of all of your business's finances, which is a very complex and involved task, and affording your bookkeeping can be difficult enough.

Along with accounting, affording your bookkeeping can be incredibly challenging to deal with when it comes to your business's finances. Accounting takes all of that bookkeeping data and uses it to help you make the right decisions for your business financially, helping you spend all of your money on the necessaries in your business along with determining where you can allocate any of your remaining funds.

Accounting can help you determine whether you should be cutting back and budgeting or you can spend more money on improving your business, but you can't get accounting without good bookkeeping. If you are having trouble affording your bookkeeping, you may think a better alternative arises through doing your own bookkeeping, but it's not very viable.

Many business owners believe they have no choice and end up doing their own bookkeeping while running their business, only to run into problems by focusing too much on one task or another. Falling behind on bookkeeping can be bad enough as your business needs that data to be financially efficient, but what if you aren't focused enough on running your business.

You need to be at the helm of your business taking it in the direction you want, and you can't do that while you're simultaneously running a business. You need a better way to go about affording your bookkeeping for your business.

What Remote Bookkeeping does for You

Outsourcing your bookkeeping can be considered one of the best choices for a business, as you can get the financial services your company needs at a reasonable rate and there are countless other benefits to remote bookkeeping as well. Outsourced bookkeeping services means you're affording your bookkeeping and not having to worry about any other issues financially.

Outsourced bookkeeping is simple: you get your pick of financial services, bookkeeping and more, and the remote bookkeeping business completes everything for you remotely and electronically. All of your data is easy to access and extremely secure on high speed, well-running servers used by the outsourced bookkeeping business.

The server used is very safe, following cyber security laws to the letter and using resources like cloud to store and transfer data effectively. There are also countermeasures in place that allow remote bookkeeping businesses to completely ensure that no matter what, your data is as safe as possible, like a cyber insurance policy.

Offsite backups are also used to ensure that your data is secure virtually and physically, backing up your data on a data center and server that are both separate from the original.

Outsourced Bookkeeping

Outsourced bookkeeping businesses also offer a huge variety of services so you can get any and all of the financial services your business needs for a fraction of the price, making it easy to go about affording your bookkeeping.

You can get CPA (certified public accountant) services, like getting your reconciliations completed and checked, getting preparation for your taxes every year, getting your bills paid for you, and more. You can get financial reports sent to you; get irregularities in your bank account flagged, getting bankruptcy services, getting audit/forensic accounting, and more, all making life easier for your business.

It's easy to see how you can afford your bookkeeping; in fact, compared to in house bookkeepers and CPA's, you save tens of thousands of dollars on a yearly basis! In house bookkeepers can cost up to $43,000 a year, and CPA's and other accountants normally cost even more than that, meaning it costs you almost six figures to get just bookkeeping and accounting.

With remote bookkeeping, you can get bookkeeping, accounting, payroll services, and any other services your business needs at a low rate of $19,500 a year, saving you a huge amount of money.

The low price of remote bookkeeping is $3,600 a year, so it's easy to see how affording your bookkeeping can be easily accomplished through remote bookkeeping. To learn more about outsourcing your bookkeeping through companies like Remote Quality Bookkeeping™, click here.

The post How affording your Bookkeeping can be Easy appeared first on Cloud Bookkeeping Services|Remote Quality Bookkeeping.

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Why Franchise Software is Moving Into the Cloud

When somebody says, "the cloud," your first thoughts may be of data flying over your head, a room full of servers or the latest scandal to rock the celebrity world. While "the cloud" may be a vague concept at first, understanding and using it will provide you with access to your franchise anywhere so you can grow your business.

Moving your franchise from software that has a defined physical location (i.e.: your desktop computer) to "software-as-a-solution" (SaaS) that you access via a server (the cloud) means that your franchise can be run from a desktop, laptop, tablet or on-the-go with mobile.

What is cloud computing?

Cloud-Computing

Cloud computing is the centralization of data in a secured location on the web. Since the data is accessed via the web and not from a computer drive, the information is accessible anywhere 24/7 from multiple types of devices.

Benefits of the cloud

Having your business's data in one central location is not only convenient but also cost-effective. SaaS businesses have the ability to offer competitive pricing because they give their customers the exact software needed -- no more, no less.

For example, a traditional franchise software company may have set tiers of pricing that are based on the number of licenses needed. Due to the inflexible pricing tiers, there will always be customers that must purchase more licenses than needed (a waste of money). On the flip side, SaaS businesses are able to provide a more flexible pricing structure to fit the exact needs of each customer, eliminating wasted dollars.

SAAS-Cloud

Last year, 82% of companies saved money by moving to cloud-based software. Why would you waste your valuable budget on a software that isn't providing you with the exact requirements you need?

Creating efficiency for your franchise is another benefit to cloud computing. Cloud computing provides you with greater visibility into all the operations of your franchise, giving you insight into patterns and areas of improvement. Franchise operations shouldn't be so disconnected, especially when the data is easily accessible.

In addition to saving you money and creating efficiencies, cloud computing is environmentally friendly and cuts down on printing (since you are sharing information from one central source).

Is it safe?

With various data breaches at places like Target and Home Depot, you might feel like the cloud would be putting your business's data at risk. While some industries are more at risk in cloud security than others, the vast majority of businesses currently store and share sensitive or confidential information over the cloud.

While there are some risks in cloud computing, there are also risks with traditional franchise software. It is important to remember that traditional software is vulnerable to computer viruses or hardware malfunctions that can cause you to lose all of your data.

The cloud is not where the business world is moving to, it is where it currently operates. By joining other businesses that use cloud computing and SaaS, you will see improvements to your franchise in just six months.

Marketing from one touch point

Customer decisions are increasingly being influenced by online and mobile information (i.e.: "where should we go get dinner?" "Yelp says Joe's Restaurant down the street from here got five stars, let's go there") making it critical that national franchisor marketing strategies support local franchisee online marketing plans.

hierarchy

LocalVox is the leading franchise marketing platform for social, local, mobile, email, directories and more - providing clients with up to 20x the value of traditional advertising dollars. Our cloud solution helps franchisees and franchisors manage their entire local online marketing plan from one-easy-to-use platform.

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This is a very simple question.

It was recently asked in a LinkedIn Franchise Group.

And I bet we all want to know the answer.

It would make it easy to build next years franchise marketing budget for franchise buyers if we just had a short-list.

Even better if it had a performance ranking.

There were almost 50 answers and comments to this important question.

Here's a selection of what franchising people said -

"I speak with franchise development departments every day and have found that they can fork out as much as 60% of the initial franchise fee in order to secure qualified franchisees (using franchise consultants, recruiters, etc.). Are there any databases of open territories for potential franchisees to search? Vice-versa are there any databases of franchisees in the market to open a new location?" Mike Mackin

"It has been my experience that you can "catch the bigger fish" through today's portals. The secret is working with your portal vendor and let them help you on the franchise investment levels that you post on the site. The best experience I have had has been with Franchising.com. There numbers are a little lower, but the quality is very good. And don't forget that most consumers are not going to tell you what they really have in the bank until you get further down the sales process." Phil Mettra

"Portals are just another outlet for reaching your target, I don't think you can narrow down a specific vendor that does better than another. If the opportunity on the portal is attractive enough, the portal also ranks highly on Google for top keywords and it has healthy traffic stats (which the portal vendor can provide to you) then you have a winning vendor. You should always do your due diligence and ask those vendors to provide you monthly traffic to the page you will be listed and can even go as far as asking for the top 3 IP locations to ensure they are based in your market. Remember that candidates can come from anywhere but your digital presence, especially social and reputation, is what will give you the edge in higher investment brackets." Brendon Major

"My experience with the portals is that they sometimes work beautifully and other times they just dont. The exact same advert on one site delivers 10 leads and on another none. To be honest although I have met many "experts" I have never found one that has been able to unravel the mysteries of the portals." Sean Goldsmith

"Just wondering if there are other portals more likely to reach and succeed with the higher investment prospects? I believe in a strategy of creating presence and buzz for your brand, with a wide digital presence probably now being the top tactical priority" Kevin Kruse

"I may have a bit of a different take. If a company is looking for "high dollar" candidates, I suggest the you will find them better using highly target public/media relations campaigns, instead of portals. As noted above, using portals to find YOUR candidate is a bit like fishing in the Atlantic Ocean with a single line, a bobber, a safety pin, and a piece of corn as bait. They simply are not designed to find a specific type of candidate. They have tens of thousands of names/inquiries, but they simply cannot be targeted to YOUR candidate. It is MUCH better to design a PR/MR program that targets YOUR candidate BEFORE the person even starts looking for a franchise. By the time a potential candidate hits a portal, you are already competing with hundreds of other franchise companies. Right? Portals have a role, but not for finding a specific type of candidate." Dr. Michael (Mick) Riddiough

"Before you start your campaigns, it is good if the portal can offer statistics for the locations where you are listing in, because different categories work in different locations. The categories can change every 3 months, so it is important to keep on top of the statistics and results. Another point which might help, is that franchisees don't always come from franchise portals, our web portal is a business and franchise for sale portal, mainly because some people are looking for any business opportunity and inquire about the franchise opportunities on the website. It is a larger net to catch enquirers. I hope this is helpful in understanding web portals and how to run a more successful franchise recruitment campaign." Paul O'Brien

"That is great advice, and I like your approach to testing adverts and then placing the most highly effective ones. The big stumbling block is how forthcoming the portals are with their stats. I know in the UK you would have an easier time asking the Pope for his hand in marriage. Are the US portals more forthcoming?" Sean Goldsmith

"I have sold several franchises for clients with an investment level of $400k-$800k by using portals.Granted, there will ALWAYS be the prospect that overstates the amount of capital they have available and you have to just move on and keep on dialing. There hasn't been one portal that seemed to bring in more qualified leads on a more consistent basis than another. I do seem to spend a lot of time chasing credits for pay per lead sites that claim they "verified" leads before sending them, but by and large every portal site seems to do a fairly decent job for me." Tom Parks

"The biggest issue which all Franchisors are facing about this approach is the cost. Some websites in Australia are offering packages which help Franchisors to do this at a more cost effective price. Keep an eye out for this. Otherwise the only other advice I can offer on this is to keep track of leads and quality of leads which are being generated by the website. One of our clients mentioned to me once, from 1 website they had received heaps of leads, but didn't generate any solid leads, while from another they received only a hand full of leads in the month, but 2 of the lead had converted to solid leads" Paul O'Brien

"How helpful are portals in generating qualified leads? My experience tells me that really depends upon your brands investment range. Generally speaking the top 5 portals basically cost the same amount to advertise on them. However because of my sector "automotive" vs "food" the portal is unable to generate me enough leads to make the potal investment worthwhile. I understand the ratio on portal leads to be 200:1 or even 250:1. It would take years for a portal to drive me that much traffic. At which point I would have spent far more than the inital franchise fee in marketing dollars." Lee Oppenheim

"Portals definitely "had their day", i.e. in the late 1980's through the early 1990's. They were THE way to market one's franchise. Today, however, they have become quite common place in our industry, and while there definitely are differences among the wide range of portals, overall, the range of inquiries to sales, as Lee mentions, is in the 200 - 250 to 1. In some ways, portals have become today's franchise "classified ad" section of the Internet. And, it gets very expensive to hire high quality sales people to field these return phone calls. As Franchise Update points out in its 2013 annual marketing survey, the total advertising placement cost associated with one sale these days(for their surveyed companies) was around $13,000...not including personnel costs. Is it the same today?" Dr. Michael (Mick) Riddiough

"Something to be careful with which you might not know about. Make sure that the website which you are using doesn't use a technique called lead thinning. This is when the website generates 1 lead and farms it off to multiple franchisors on their website. Usually the person making the enquiry doesn't know that this is happening either. The way to identify this is when you start calling a lead, the person will say something like "I didn't inquire about your franchise or business". This makes the website look good because of the number of leads generated, but the quality of leads is decreases dramatically." Paul O'Brien

"Terrific dialogue everyone....... portals? To use or not to use...... I heard a lot of "casting a wide net" as well as "be specific in your targeting, e.g. Veterans" , which leads me to a conclusion I've reached before: we are in a challenging, competitive environment for sourcing qualified leads which turn into franchisees. At least we have a forum for discussing our strategies and tactics. Thanks for the insights....." Kevin Kruse

"The specific answer to Kevin's specific question is "No"...at least not by design and not very productively...and it is likely to be quite expensive for the franchisor. I once had a franchisor client in which the "all in" cost was $1.4MM. We did quite well with it. Did we use portals? Yes, as one avenue, and it was truly "dialing for dollars". We did much better with highly focused PR/media relations in terms of finding "high value" candidates." Dr. Michael (Mick) Riddiough

"I disagree. Portals work. You already used portals for your client, even in light of the reality that it's 'dialing for dollars.' Hey, it still takes 35 tons of ore to smelt one ounce of gold--all you have to do is make 200 enthusiastic dials. Big deal. Get with the idea that selling takes concerted effort, and plenty of money. If the average cost of sale (not including commissions) is around $12,000 or so, the obvious path is easy: pick 3-4 top portals;" Paul Stewart

"Your approach works for you, and that's great. I take a different route, and that works for me and my clients. I don't think one is right and one is wrong, just different...in many ways. I prefer more targeted and efficient ways of finding the right candidates. "Dialing for dollars" is simply not my preferred way" Dr. Michael (Mick) Riddiough

"Yes, absolutely, portals work for generating some quality leads that result in Franchise sales for the Franchisor at the investment levels stated" Ronald Silberstein CPA and CFE

"Portals are only as effective as the sales team that are working them, and the matrix you use to measure. Keep in mind the higher the investemnt the fewer the leads you can expect so it is important that your team devote the necessary effort into follow up with each and every lead that comes through." John Byron

"I would say the portals are only as good as the marketing team who works them and and the adverts. If the proper research hasn't been performed before the advert goes up, there is no guarantee of success" Paul O'Brien

"Simple answer to a simple question.. The answer is yes, you have to be in portals. You can add filters to any portal to try to catch the investor you are looking for. Portals are one leg of a triad that you need to build to reach your target customer." Dale Waite

I am glad we solved the riddle of getting high net worth franchise web portal inquiries.

Okay maybe there wasn't a simple answer to the simple franchise web portal question.
Here's some of what I think about the topic.

Franchise inquiries from web portals are minimal expressions of interest.

They are not leads.

You can't designate an Expression of Interest a Franchise Lead until you've qualified them.

The most reliable way to qualify them is to talk with them.

Franchise-Info has some ideas for you to work on this problem.

If you call me we can discuss two things -

  1. What to do with all your inactive inquiries who have expressed an interest
  2. How to attract Franchise Buyers online

I am easy to reach at 443.502.2636 and [email protected]. I answer my own telephone. And I call people back.

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It's no secret that finances are considered one of the most important parts of anything, especially a business. After all, if you want your business to really be successful, you need to keep track of the amount of money you're earning versus spending so you can make good decisions for your business.

How can you decide whether or not to upgrade equipment, or whether it's a good time to tighten your budget, if you're not financially informed? Dealing with finances can be difficult however considering your business spends and earns money on a daily basis, and it's hard to know exactly how much money you have.

From invoices and utility bills to checks and bank transfers, businesses deal with quite a bit of money flow and they need a good way to keep track of all of those finances. That's where bookkeeping comes into play, strictly keeping track of every financial transaction your business makes, incoming and outgoing.

That way, businesses not only can see trends in how their spending and earning goes, but they also get to know their company's current net profit/loss at any given time. This data is extremely essential for the success of your business, as accountants use bookkeeping data to allocate any and all funds appropriately and help you determine whether you have funds to spare or you have to tighten your budget.

Financial allocation is very important in the overall growth of your business, but affording these financial services can be incredibly difficult considering both of those are financial services that cost full salaries. Looking at services like outsourced bookkeeping is very important, as remote bookkeeping businesses can save you money while providing you the best possible services with no real catches.

Process of Remote Bookkeeping

Hiring an outsourced bookkeeping business is simple and convenient for you as you get your pick of various services that are offered, making life easier for you. With an outsourced bookkeeping business, you get all of your information handled by a team of professionals who put all of the resultant data on a secure server that you can readily and easily access.

With outsourced bookkeeping, you get your fill of services as well, being offered much more than just the bookkeeping services. You can get accounting and payroll services as well, like getting your bills paid for you, getting preparation for your taxes, getting your reconciliations completed and checked, getting financial reports sent to you on a weekly/monthly basis, and more, all for your convenience.

You can even get some rarer services as well like bankruptcy services and audit/forensic accounting in case you'll ever need them, and all of these services are run down with you to add up to your very low quote. Once you get a quote, the outsourced bookkeeping company copies all of your data down and, in turn, gives you a file or multiple files.

For your convenience, these files give you direct access to the server pending some kind of password system, and you get to choose how many of them you want or where they go. You can restrict access to a work computer to keep your data safe, or you can make access as convenient for you as you'd like.

You can get access off a home computer, laptops, get an app for a smart phone or tablet, or even give an employee access pending their own security system. Once you set up services and access, the rest is up to the remote bookkeeping company, which completes services for you and gives you immediate, 24/7 access to your data which is constantly being updated.

Outsourced Bookkeeping with Cloud Security

There are many reasons to hire a remote bookkeeping business, but one of the bigger advantages is you get heavy security setup for your data and overall efficiency in the process. With outsourced bookkeeping with cloud services, your data is stored and transported efficiently without any loss of security.

The servers used by outsourced bookkeeping businesses are designed to keep your data as safe as possible, also upholding cyber security laws in the process.

Plus, outsourced bookkeeping businesses are so concerned with the security of your information that they create different countermeasures to ensure that even if the worst were to happen, your data will be kept safe, mainly through backups and a cyber insurance policies.

With an offsite backup, your data is protected virtually and physically as the backup is stored on a different data center that runs a different server from the original. Plus, many businesses will set up their outsourced bookkeeping with cloud as a form of backup as well.

Cloud is considered one of the oldest and most reputable forms of online storage, known for security and quick, efficient transportation.

Affording the Best Outsourced Bookkeeping with Cloud Business

Many business owners want that good outsourced bookkeeping with cloud but worry that when the time comes, they won't be able to afford the service. Luckily, remote bookkeeping is easily affordable, and actually saves you tens of thousands of dollars compared to most other services.

With outsourced bookkeeping with cloud, you save quite a bit of money while getting a full team of employees that offer you a wide range of services, quite a few more than you'll get through hiring in-house workers. An in-house bookkeeper can cost you up to $43,000 a year, and accountants will generally cost more, with some CPA's costing over $50,000 a year.

That means to hire a bookkeeper and an accountant for your business, you'll end up paying almost six figures, far more than smaller and even mid-sized businesses can afford! On the other hand, outsourced bookkeeping will cost you between $3,600 and $19,500 a year, depending on the range of services you get.

That means you can get bookkeeping, accounting, payroll services, and much more for half of what one in house bookkeeper would charge you! With remote bookkeeping, you can save quite a bit of money on a yearly basis while getting the best possible services and you can get the best outsourced bookkeeping with cloud business as well.

Remote Quality Bookkeeping™ of Bridgewater, Massachusetts offers you decades of experience through their outsourced bookkeeping with cloud experience. To learn more about outsourced bookkeeping with cloud through RQB, click here.

The post Why Should you get Outsourced Bookkeeping with Cloud? appeared first on Cloud Bookkeeping Services|Remote Quality Bookkeeping.

Everyone has some field they are experienced in, and eventually they reach that point where they would like to take their skills to the next level and run a company.

After all, it's one thing to be a high-ranking worker in your company, but it's quite another to completely control what direction you want to take your business in.

Running your own business means you get to determine your own success and build yourself a legacy, but the initial work with a business is another matter entirely. Starting your own business is incredibly challenging because you need to build up a good reputation as a business that can deliver, and do so while having the best financial setup possible.

Getting this setup can be another matter entirely considering all of the expenses companies have to deal with and the lack of capital they have to pay for them all. From the location you get and the utilities attached to the employees you hire, stock you acquire, equipment you purchase/lease, and more, businesses need so much in order to be successful, and they want the best quality possible.

That means allocating your finances by saving as much money as possible while still getting the best setup, so you can provide the best services while making a profit.

All of your finances tie back into financial services that you employ, which keep track of all of your spending and earnings and use that data to help you determine when and how much you can spend for your business.

However, getting financial services for your company can be another matter entirely, especially considering how much capital smaller and mid-sized businesses make.

Employing Financial Services for your Business

It is a complete necessity for businesses to get financial services, as they use these services to help them determine their day-to-day decisions. Every day, your business spends and earns quite a bit of money, and you need to know how much you have at any given time so that way you can decide on making smart decisions that are based on your finances.

For instance, say you're looking to upgrade equipment, or improve stock, and need the funds to do so; your financial services help you determine whether or not you can do that. Also, what if you're low on funds and need to tighten your budget so your business can not end up losing money?

Your company needs to know how much money they have at any given time, which is why both bookkeeping and accounting are necessary for the success of your business.

With bookkeeping, every transaction related to your business is recorded and added up so you have a final total of where your business is financially as far as profit or loss. From invoices and payroll to checks and utility bills, your company spends and earns quite a bit of money and all of that data is used by an accountant.

Accounting involves allocating all of your finances appropriately based on your bookkeeping, allowing you to get taxes done, pay bills, and make other financial decisions for your business. You need both of these services for your business to run appropriately, but affording them is another matter entirely.

Smaller and mid-sized businesses generally don't have the funds for these services, which is why companies are sometimes stuck trying to do their own bookkeeping.

Doing your own bookkeeping and running a business at the same time can be extremely challenging, which is why business owners oftentimes seek an alternative to getting their bookkeeping and other financial services taken care of.

Hiring an Outsourced Bookkeeping Service

Many businesses will seek out the alternative of hiring a remote bookkeeping business, not only because the outsourced bookkeeping rate is so much more manageable, but the service is also extremely convenient and beneficial for a business.

When outsourcing your bookkeeping, you get the ability to get any and all financial services you need at a reduced price in a very convenient way. All of your information is handled by a team of professionals, who complete any and all financial services you require and putting the data on a secure server that you can easily and readily access.

You can even choose how you get access, restricting access to your precious information to one work computer or setting it up so you can access your information using a smart phone, tablet, laptop, and more. With remote bookkeeping, you also get the convenience of both security and efficient workers completing any and all services that you request.

The server used is extremely secure as remote bookkeeping companies follow cyber security laws to ensure everything is in place, and they also use countermeasures as well to assure that nothing goes wrong with the security of your data.

They use cyber insurance policies, offsite backups, and even back up data on the cloud to ensure that no matter what happens, your data is safe. Plus, all employees hired have some previous experience with handling financial services and are cleared as far as security before they are hired.

All workers work together to complete tasks for you, so you always have multiple employees doing work for you at any given time.

Is the Outsourced Bookkeeping Rate Affordable?

For most business owners, as great as a service is the bottom line always ends up being the cost and whether you can afford a service or not. The same is the case with remote bookkeeping, as the outsourced bookkeeping rate is much more manageable for business owners while providing you a lot more as far as services.

With outsourced bookkeeping, you don't just get bookkeeping services; you also get accounting and payroll services, and any other financial services your business could possibly need. In house bookkeepers will generally cost up to $43,000 a year, and accountants will cost even more, with some CPA's costing over $50,000 a year.

This means you'd pay almost six figures just for financial services, a price many smaller and even mid-sized businesses cannot afford. The outsourced bookkeeping rate, on the other hand, will cost between $3,600 and $19,500 a year depending on what services you get, saving you tens of thousands of dollars a year!

With the outsourced bookkeeping rate, you get the best service at the best cost, making life easier for you when running your business. To learn more about how you can get the best outsourced bookkeeping rate through hiring companies like Remote Quality Bookkeeping™, click here.

The post How does the Outsourced Bookkeeping Rate save you Money? appeared first on Cloud Bookkeeping Services|Remote Quality Bookkeeping.

We had a client who was seriously considering buying a business & had to explore all financial avenues to complete the purchase. The client understood financing quite well.

To secure financing was quite complicated not only in light of the 7 figure purchase price but also because of the intricate structuring. We explored with him using his 401(k) monies to assist in the capitalization of his purchase.

Done properly, this transaction could be accomplished without penalties or taxes.

Both the client and his wife were CPAs. The more we taught them about about this structure the more they became intrigued and ultimately decided to include ROBS. The client compared us with another firm doing similar work.

And now, I want to toot our horn. Mine and the Walker Business Advisory, who I work with.

"I made contact with both firms and it was abundantly clear to me that after several conversations, Walker Business Advisory was hands down the better of the 2 firms. My questions were answered in a concise and clear fashion.

They had an in-depth knowledge of the structure, the laws and the process. They have a platform that is unique i.e. they shoulder all responsibility and liability for matters that relate to the plan. Their process is totally turnkey. There are two real important parts of their plan.

1. They have a Safe Harbor 401(k) with 15 different investment options and 5 asset allocations.

2. They are the fiduciaries and trustees of the plan.

All of this is can be accomplished for the same price as their competitors. If you take into consideration all that they do, they are dollar for dollar less expensive. I would like to thank Brian for introducing me to Fred Whitlock and Monty Walker. Fred was exceptional in explaining the product, service and process."

As previously referenced, my wife and I are CPAs and Monty, also a CPA, shed light on areas we were not familiar with and provided the solutions................nothing short of amazing!

Now it is great to have clients like this.

Why does that matter to you? Because if you are as smart as these two CPA's, you probably still don't know why is it important to design a plan with: a Safe Harbor and why being a fiduciary is necessary.

If you think that you need to know more, then just ask for more.

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As Winter arrives, it's time to prepare for winter weather. Storms are an expected part of northern winters but even southern states have experienced snow and icy conditions more frequently in recent years.

It's important, then, to make sure your employees know what to do when severe weather strikes. A good policy provides a helpful road map.

When you create or review your inclement weather policy, think about:

1. Employee Communication.

Who will make the decision to close early, delay opening or close operations for the day? You may wish to designate a backup decision maker.

Consider how the decision will be communicated. Good ways are to provide a phone number and web site employees can check for information in the early morning. Other methods are an internal Facebook page, intranet, or phone tree.

2. Smooth Operations.

How will operations be shut down properly? Who is needed to do what? Identify which employees or departments, if any, must continue working. Who else needs to know?

Consider the best methods to let clients know of changes relevant to their needs (e.g. voice mail, web site, email.)

3. Safety First.

Even if you remain open, you may wish to allow employees to make their own weather-related decisions about whether to risk travel conditions based on their circumstances.

Allow employees who are set up for it to work from home or to use sick or vacation time, if available.

4. Obligations with Federal Wage and Hour Laws.

Know your pay obligations under the Fair Labor Standards Act (FLSA.)

a) The FLSA does not require that you provide sick or vacation time off benefits nor that you pay non-exempt staff for time not worked.

b) It does, however, require that exempt staff, in order to retain exempt status, be paid their regular weekly wages except in rare instances. If the employer chooses to close for a day or two, exempt staff must be paid their full weekly salary although you may deduct the time from their accrued leave bank.

c) If exempt staff run out of accrued leave or go negative, you must still pay their full weekly wages.

d) If, on the other hand, the exempt employee, rather than the employer, chooses to take a full personal day off for any reason, you do not have to pay for that day, unless your personnel policies say otherwise.

e) Be careful, however, that it must be a full personal day off in order to reduce wages; working a partial day negates that option.

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Pet services have been the fastest growing product segment for the Pet Stores industry over the past five years. Pet services include full service grooming, haircuts, baths, toenail trimming and tooth.

As the demand climbs and the need to fulfill customer demand grows, a feisty mobile pet grooming business, Aussie Pet Mobile Canada, who was voted #1 in Pet Services category by Entrepreneur Magazine in 2012, came looking for a territory answer.

Why they came to us?

They came to us looking for a better way to manage territories for their mobile franchisee's. They wanted to talk to a person who could listen and strive to fill the need they had. They were frustrated with the current solutions which required a dedicated computer running Microsoft.

What they needed?

They wanted to build territories for their franchise operators from any computer. They wanted a way to share and collaborate this information with their franchisee's live.

They wanted to add their own list of data to visualize what was important.

They wanted something with flexible pricing options and they wanted it to be used for all their franchisee's.

What we did for them?

We built them a system that is based in the cloud. A true software as a service option that can be run from anywhere and shared with anyone.

For collaborating, they can now have a franchisee watch live as both parties collaborate on the territory definition. They can give the franchisee edit rights and they can build what they think is a rough draft.

We gave them a "master" territory project that could prevent encroachment automatically. We gave them the ability to share each individual territory to its prospective owner.

For sharing, each project can be shared internally or externally with view/edit rights so they had control on who gets to do what.

Does it pay for itself?

A thousand times over in just time alone. The goal was to have a central repository of all their existing and potential territories, something that they can share instantly vs taking screen shots and emailing them.

This is a dynamic system so as time goes by, the franchisee can grow into more territories if needed and see what is available in the surrounding area and make decisions quicker.

It gives that sex appeal that you are using the latest cutting edge tools to your franchisee's. There are easier solutions, but these don't give the answers they needed, aren't collaborative, only run on PC's or roughly on the web, don't update with new data automatically and are overly complicated.

Is there something you need for a better territory solution?

Connect with me on LinkedIn, then. Let's talk about what you need.

For the 5 Most Fascinating Stories in Franchising, a weekly report, click here & sign up.

You decided to become a newly minted franchisor.

And when that day finally arrived how exciting was that?

You were going to conquer the world with your franchise brand.

Here's what you did right.

Started with a tested business model with a verifiable proof of concept.

Hired a competent and experienced franchise attorney to develop your franchise agreement and franchise disclosure document - FDD.

Your franchise attorney strongly suggested (or insisted) since you have a strong proof of concept for your franchise model that you include an Item 19 Financial Performance Representation - FPR and you did it.

Developed an operations manual, training system and support system that is scalable as you grow your franchise system.

You had a reasonable budget to market for franchise recruitment.

But, after a while, you will hate being a franchisor. Here are your 7 biggest beefs.

  1. Early franchisees you selected seemed very passionate about being franchise owner/operators but they are not living up to what they promised and you're more than disappointed.
  2. Multi-unit franchisees are not current with their development objectives and they expect you to not hold them to what everyone agreed to. They want some or all of the following extensions, refunds or credits against franchise fees and in return you get nothing. Not even what you originally bargained for.
  3. You have a great training program and franchisees are shortcutting what your program offers and requires.
  4. Franchisee local market success depends on local store marketing, your franchisees don't make the investment in it. And they complain to you that sales are too low and your brand is not well known enough in their area.
  5. Franchise owners expect you to fix their unit level problems with employees, landlords, suppliers, insurance, local municipality, their business & operating partners. You had no idea that you'd be expected to do so much hand holding and babysitting when you set out selling & opening franchises.
  6. Franchise recruitment for a new franchisor is tough. However you couldn't have imagined how difficult generating and managing leads would be. And the cost per new franchise recruited is far more than you anticipated.
  7. You discovered that your management team had a much greater learning curve for transitioning your business to a franchise development and operations company. And now you're faced with some tough staffing decisions as you move forward.

This is not an exhaustive list of awful franchise things and readers can feel free to add to the list.

Good news is that you had a good underlying business at the outset. And all these franchising challenges can be remedied.

If this sounds llike your franchising story & you want some help solving your problems call me at 443.502.2636 [email protected]. Lease the talents of 20+ year proven franchise executive, who has seen and solved these problems before.

The biggest feature I hear from franchise owners about mapping is: something they can use quickly, get decisions fast and have it be on the cloud for collaboration with team members and ultimately to the franchisee.

The main benefit of all that is to allow the franchisee a means to make decisions faster to buy into what the franchisor is selling.

The main "pain point" from franchisor's, depends on what your using mapping for.

Many franchisor's have told me, "Franchise territories are the most important thing to our company". The feature for territory mapping has to handle decades of old territories mixed with new ones and edits. It can be incredibly time consuming for a retailer to manage all this.

Franchisee's also have a need related to this topic. They want a starter package from mapping suppliers. Not an expensive one and one they definitely don't want to buy a full subscription too. They need minor demographics, simple site management and one or two territories. Low friction to usage is again a highly desired feature...meaning "non-technical users".

Uploading a list is still important. Usually locations of existing sites or proposed.

Routing for frachisor's is also desired but more for sales gen leads. Again, all for ultimately selling to a potential franchisee.

Lastly 'sex' appeal. It helps to make it shiny and new.

Summary of top desired mapping options from Franchisor's:

Features:

* Quick to use, they don't need to spend all day on it.

* Easy to use, so anyone in the company can use it.

* Collaborative with decisions makers, perhaps franchisee's themselves.

* Allow multiple users on the same plan

* Demographics of course, how detailed is dependent on its use, but usually not much

* Sexy product that looks cutting edge

Benefits:

* Sell franchisee's

* Allow franchisee's to have faith in the franchisor.

* Strong communication between franchisor and franchisee

* Build trust between franchisor and franchisee

* Allow franchisee's to expand and grow

* Sexy product helps sell franchisee's, shows one's being in touch with the times

* Sell franchisee's (so important I had to list it twice)

So Sell, Sell, Sell is the main benefit.

Save Time, Time, Time is the second benefit.

The map is just the means to the ends

Do you have all 7 Traits to do what it takes to be a great franchise leader?

An expert in customer service and engaging the customer, Nancy Friedman, the Telephone Doctor is back at IFA this year with a unique session for both the franchisor and the Franchisee. A bare bones bottom line lady with a flair for humor and fun, this session will give you the common sense tools to get you thinking.

How do you handle growth and change? What about bad news? Or other obstacles that come your way? Does "Apathy" sound familiar?

In this program, Nancy shares how to handle these things, with grace, style and humor. She uncovers the strategies behind these 7 leadership traits:

• Choose Your Attitude In Advance

• Visualize Success

• Demonstrate Humor, Energy and Enthusiasm

• Resist Negative Tendencies

• Be a "Whatever It Takes Person"

• Embrace Change; Expect It and Accept It

• Be Grateful For What You Have

You probably have many of these traits - few folks have all of them. Nancy helps you find how we can recognize these traits in others as well as ourselves. Don't leave early prizes and surprises run throughout the program!

Save the Date Monday February 16, Las Vegas, IFA/ Mini Session 10:30-12noon. Engaging Within Your BRAND

Presented by Nancy Friedman, Keynote Speaker, Author & President, Telephone Doctor Customer Service Training

I don't know whether genetically modified potatoes are a good idea or not.

But, given the recent divergence of views, it is worthwhile remembering how we got the frozen french fry.

Ray Kroc and the McDonald's executives from the 1960's -1980's are rightly praised for their brilliance in selecting McDonald's managers, franchisees and suppliers.

But today, Kroc's vision about the importance of suppliers is overwhelmed with legal talk of franchisor's standards.

Kroc understood that the supplier community was not a source of rebates, but rather an active partner with the franchise system in bringing about rationalization and change to the supply chain for the betterment of the brand.

The best example of this is the "simple" french fry and Simplot Foods.
 
For those of a certain age, the magic of McDonald's was its French Fry.  Even the best home cooks could not match McDonald's.  And I know - my mother who is an excellent cook would allow my father to buy the family "chips" from McDonalds.
 
But in the early 60's, McDonald's had consistency problems, in part because the supply chain consisted of several hundred local suppliers, some who shipped potatoes of lower quality than the specified Russets.
 
Simplot convinced Kroc that moving to frozen fries would allow better consistency and control over their potato supply.
 
And, in 1960, the usual method of creating frozen french fries, blanching, freezing, and finish frying, produced fries that were not crisp or flavorful.
 
So, Simplot invested $3.5 million for an experimental process to produce frozen french fries - all on a Ray Kroc handshake with no guarantee of success.
 
Yet, Simplot took the risk, and was richly rewarded for the success.  (Even though today, McDonalds and Simplot are at odds about Simplot's new genetically modified potato.)
 
So, If you want to be a franchise supplier or consultant, find solutions to the problems that the franchise system faces and implement them.  On a handshake.
 

Get the Real Stars on TV

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Nobody doubts that a professional athlete has superior skills.  They are stars.

The average employee working at McDonalds doesn't have it.  They are not stars.

But, here is a surprise, as related by Jerry Newman in his My Secret Life on the McJob: Lessons from Behind the Counter Guaranteed to Supersize Any Management Style : that major leaguer might have a hard time keeping up with the skill players at McDonalds.

"The McJob ain't easy".

Here is Jerry's full description.

"It's my third day at Krystal, and James the store manager, wants me to learn how to assemble and wrap the different menu items.

He points to an item, on the point-of-sale (POS) screen that looks to me like "s. gr. scrams."

He then whips out a cup and starts putting ingredients in -following a prescribed order that I know I should try to pick up.

Eureka!

It's got sausage, gravy, and eggs.  I'll bet those words on the POS screen mean "sausage, gravy scrambler".

Before I can pat myself on the back, James is on to the next item.  For the next 10 minutes a whirlwind of activity produces half a dozen different items, some assembled multiple times, others only once.

James then says, "Jerry, why don't you try the next one?".  I can read the disappointment on his fact when I grab for the wrong cup, open the wrong warmer bing, and generally mess up the order. If you give me 10 minutes to learn 6 different things by watching rather doing by watching rather than doing, I guarantee I will fail.  In retrospect, I attribute the failure to poor training, but I suspect more than a few newbies wonder what is wrong with them.

Yet even for those new employees who learned quickly, there is little ego gratification.  After all, they should have done well.  The job is McEasy, isn't it?"

So, here is my suggestion.

Those lovely new menu boards which have TV's in them & play commercials, let's put them to good use.

Cut to the real pros in the preparation area once in a while - give those sandwich artists their due.

Cue applause & buy Jerry's book for more great insights. My Secret Life on the McJob: Lessons from Behind the Counter Guaranteed to Supersize Any Management Style  

I have been fortunate to meet with over 3,000 businesses over the last ten years - from start-up restaurants with big dreams, to mature chains facing tough decisions. No matter what stage a company is in, payroll is constant; it is that big number that you have to hit 26 times a year.

These days, margins are getting pinched and cash flow is tighter.

Here a few reasons why using a service company may help you sleep better.

1. Peace of Mind - You are paying two important groups of people that frown upon mistakes - The IRS and your Employees. A service bureau takes full liability and responsibility for calculating, depositing, and filing all payroll taxes. If there is ever a payroll-related tax penalty or you get a love letter from the IRS, you are protected.


2. Back-up/Support - If you or your payroll clerk are out, sick, on vacation, etc. - you know you'll have an on-time, accurate payroll with no special arrangements. Also, by outsourcing, you're putting a tax and human resources expert on staff - protecting you from a broke government and a litigious society.
 

3. Cash Flow - By ACHing the funds for you directly to the IRS, you spread out your tax payments equally throughout the year. No surprises at quarter or year-end.
 

4. Time - Printing and signing checks, making multiple tax deposits, filing quarterlies, accurately preparing W-2's and other time-eaters. All non-revenue producing tasks - tangible hours that can instead go toward growing your business.
 

5. Other Features - Once the payroll engine is in place, you open up possibilities for direct deposit, time and attendance/POS integration, human resources assistance, pay-as-you-go workers compensation, archived electronic reports and pay-stubs and much more.

In the end, not only can you focus on what you do best, you can shift energy toward learning and embracing new revenue-producing tools such as social media, that brings money in, so you're ready for when it's time to send it back out.

Businesses promote "free" for the promise of greater revenues. Presumably those taking advantage of "free" will purchase other items at the time or revisit an establishment in the future. In practice, however, the intended or desired consumer behavior often differs from the reality.

A free slice of pizza or drink will certainly increase business. After all, there is unlimited demand for "free".

Most businesses simply assume that those taking advantage of "free" are likely to purchase other items either now or in the future. These businesses do not consider that it is more likely those who frequent a business because of "free" do not do so because of anything other than price.

As such, they are more likely to simply seek out the next "free" or lowest cost offer. Within some industries there is a constant battle among local businesses to one up each other in offering free or cheap. To these operations "free" becomes a cost of doing business rather than a way to build business. A race to the bottom, in terms of price, rarely provides positive results for any of the participants.

Another approach, often utilized by operations which offer higher cost products and services, is to offer a significant dollar or percentage discount for new business.

While the intent of this may be to attract new customers, such an approach could easily alienate regular customers who feel that newer customers are receiving a better deal. The end result is more likely to be a loss of business from past customers upon which success of the operation is dependent.

Successful businesses tend to increase traffic in other ways. McDonalds, for example, may reduce prices on select items (sometimes through couponing) but does not simply give away their product. Starbucks rarely discounts. They do, however, provide patrons with product samples in order to stimulate sales of certain items.

Many businesses lack the management control systems to understand the actual cost of "free" and also to track and evaluate the results of their marketing efforts.

Investing in good management control systems is the foundation upon which successful businesses are built.

This foundation allows businesses to better understand what marketing efforts result in improved results as opposed to costly giveaways that do not result in improved profits or sales.

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My last article ("Site Selection Basics") focused on the importance of distinguishing between your trade area (geography, demographics, mixed uses) and site attributes (such as type of shopping center, access, parking and co-tenancy).

How do you develop your customer profile so that you locate your business in a trade area with a significant number of your customers? 

If you're buying a franchise, you'll be given the customer profile so that you can target the right trade area as well as the most desirable site characteristics for that type of franchise.

There are franchises that focus on attracting customers during particular day parts. For example, fast-casual restaurants that cater to customers in early morning and during lunch will recommend locating in trade areas with a nice mix of residential and employment centers. 

They will recommend picking sites that are perceived as convenient by the target customer, such as being within a short distance (due to time constraints such as a limited lunch hour), good access and sufficient parking.

Some uses are "mass market" businesses. By definition, a mass market business is one where the majority of people in the trade area are potential customers, such as fast food establishments or florists.

And while some demographic segments might provide more customers than others, these businesses depend on being in areas with a lot of activity to bring customers to their door. Here the trade area demographics might be less important than the quality and number of competitors and the particular site location characteristics.

A franchisor will (or should) provide you with both a customer/demographic profile as well as recommended trade areas, types of shopping centers that are better for the franchise, recommended site characteristics and space requirements (size, dimensions of the space, required utilities, etc). 

 If you're buying into a franchise that has other national competitors (and most do), go online and research what the competition is recommending with regard to trade area and site requirements. It's often listed under "real estate" or "submit a site" sections on their website. 

Compare it to what you're being told by your franchisor and ask questions if the requirements differ. A franchisor should be able to explain differences, and this will be a good double check on the quality of the franchise concept.

Franchisors will often have a few franchisees (likely the most successful and happy franchisees in the system) that they refer to prospective franchisees as examples of the business operation, location and potential. 

It's good to spend time looking at a few of the higher volume locations for a variety of reasons:

(1) Talking to an experienced franchisee who's willing to discuss the pros and cons of their business is always worthwhile
(2) It will give you an opportunity to review their trade area and site characteristics so you can see how it conforms (or differs) from the franchisor's recommendations
(3) You can then take what you learned and apply it to your target trade areas.

It's good to visit at least one average store and one poor performing store so you can see what those look like as well. Sometimes you'll notice weak operations (spend some time observing, on different days and at different times), or you might observe problems with the site (such as limited parking) or other issues with their trade areas. This will be time well spent.

If your franchisor doesn't provide trade area, site and space checklists, develop them for yourself using the information from the franchisor as well as other tips you've learned from the competition. 

When looking at different locations, it's easy to get confused so making notes and using a checklist will allow you to keep track of your observations so you can review them later. 

And it goes without saying that reviewing the sites of your potential competitors is critical. Be honest with yourself regarding their strengths and note their weaknesses. This will help you to position you franchise business for success.

What Never to Say to Your Franchise Operator

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We all have said it at some point. Many of us have even used the phrase frequently. And, if you have not said it, you definitely have heard it. In most cases, it comes from the purest of intentions. The bottom line is that we want franchisees to succeed and we believe that these words somehow have the magic power to turn around the performance of a struggling or disgruntled franchisee. Other times we use it because we seek to protect the integrity of the brand and the investment of all franchisees. The fact is that many of us use these words almost like a mantra.

YOU ARE NOT FOLLOWING THE SYSTEM!!!

Intuitively, from a franchise relationship angle, many of us know that these words are not very effective; in fact, the word 'compliance' which is implied in the above statement hurts more than it helps our relationships with franchisees. However, these words and their message are ingrained in franchising to the point of being used automatically and without thought of their consequences.  The danger is that from a brain science perspective these are the worst words we can use because they produce exactly the opposite results we seek. Let's explore why.

The Short Answer Is FEAR

The sentence: "You are not following the System" is one of the most fear-producing phrases a franchisee can hear. Think about it. What does it mean? It is an accusation more than a statement of fact; and franchisees, consciously or unconsciously, hear different messages. Here are some examples of the possible interpretations franchisees may give to those words:

  • I'm a failure.
  • I will never get this right.
  • I'm a disgrace to my family and my peers.
  • I will lose everything... all of my savings and my investment-all that I have worked so hard to get will be gone. My franchisor will take it all away from me.
  • Can I be so dense? I thought I was following the system. What do they mean? What am I doing wrong?
  • The franchisor is out to get me. They want me out. They want to resell my territory.

The Science

Our brains are designed to constantly scan for danger. We are always in survival mode.  That's how we are wired to protect our lives. However, the dangers we encounter today are no longer the beasts we had to fight thousands of years ago. Instead these dangerous creatures have been replaced by things we interpret as threats to what we hold most dear. To franchisees, losing their franchise means they will lose their investment, livelihood and social status; in their eyes, they won't be able to survive such a catastrophe. Facing such a possibility, their brains think they will die. They signed an agreement and thus they know that not following the system gives the franchisor legal standing to take away their franchise rights. This is very scary; and fear is the worst motivator to use in franchising.

Additionally, when franchisees hear these words applied to their performance, they feel that their reputation and social standing within the organization is also threatened. Research has shown that such a threat activates similar networks as the threat to one's life (1).

Moreover, when we use these words without giving specific examples of where a franchisee may not be following the system, the phrase is construed, rightly so, as unfair. Research also shows that we seem to have a happiness reaction when we process experiences as fair and a disgust or protest response to unfairness (2).

The Technical (Geeky) Stuff

The limbic system of the brain is composed of structures that process emotions such as anger, happiness or pleasure, as well as fear.  The Amygdala is one of these structures and it's often called the fear center. When this portion of the brain gets activated, it prevents the engagement of our prefrontal cortex where our cognitive functions reside--it highjacks our ability to reason.

The job of the amygdala is to prepare the body for emergency situations. And, as such, it has a three-pronged reaction to a threat: flight, fight or freeze. When a real or perceived threat is encountered, energy is diverted to that part of the brain that needs to get us ready to deal with the threat and danger in order to save our lives. This means that there is very little energy going to the prefrontal cortex. In other words, in a state of fear, the orchestration between thought and action, planning, problem solving, complex thought, goal-centered mind activities, and the ability to respond in a logical and cool manner all escape us. 

When we use the words "You are not following the system" we send franchisees into a fear response. They will react by getting angry (fight), avoiding us or the issue (flight), or simply by not doing anything different (freeze). In essence, these words activate their amygdalae and the consequence is that they take away, or at the very least, highly diminish the franchisees' cognitive ability to implement the franchise system. The result: we achieve the exact opposite of what we wanted.

Why do we use these words in franchising?

There are many reasons why we have come to use this phrase so often in franchising. And, most of these motives are well meaning, even when misguided. For example:

  • We may believe that this phrase has the magical power to produce franchise success.
  • We may believe that non-compliant franchisees make a conscious choice and act like teenagers by rebelling against the system, and thus we use the phrase in an assumed paternal role to scold or punish them.
  • We may believe that these words will create the awareness franchisees need to make the necessary corrections and to change their behavior and their results.
  • We may believe that not following the system is the only reason a franchisee doesn't achieve the results he or she seeks.
  • We may believe that our most important role as franchisors is to protect the integrity of the franchise system and the investment of all franchisees, and furthermore we may believe that these words will help us accomplish that.
  • We may believe that our attorney's insistence on system compliance is so critical to our success that we create an organization where the franchise relationship is solely defined and upheld by the legal agreement and not by the values of the company; or
  • We may believe we have not followed our own system, and thus feel guilty and ashamed. 

Yet, perhaps, just perhaps, our own fear center is triggered when franchisees fail. Perhaps we make their struggle mean that we have completely failed or that what we have created or have faith in (i.e., the franchise system) may not be as effective as we once thought. Perhaps we use these words to point the finger in the other direction because our brains have gone into a fight mode.

Why don't franchisees follow the system?

There are many possible reasons that cause a franchisee not to follow the system. They include: lack of understanding, lack of clear instructions and procedures, lack of a coherent message and directions across the company, weak training programs and/or support systems, level of difficulty or required change in the way a franchisee thinks and/or behaves.

From a brain science perspective, a franchisee engages in, or disengages from, the franchise system according to his or her perception of whether the system is rewarding or threating. Assuming that the franchisor provides strong training and support programs, clear messages and directions and a safe environment for learning to take place, a franchisee who does not follow the system basically has encountered something in the system that is a threat to him or her.

An Example

A franchisee of a fast food restaurant may decide to change a recipe to reduce the amount of the most expensive ingredient. Upon examination you find that the franchisee believed that her profit margin would be significantly reduced. This may be a true fact; but the franchisee is most likely unaware that her decision was led not by that fact but by her fear that a lower profit margin was going to jeopardize her ability to make a decent living for her family. It's this fear that is leading the decision and interfering with her reasoning abilities. She is focusing so much on a single indicator and what she is making it mean that she can't see the consequences of her decision. The fact that she soon will start losing customers because her quality has decreased eludes her. She can't see that her fears permeate all she does and her entire business, or that it will result in exactly what she fears most. If her franchisor's representative were to tell her: "You are not following the system" her fear and thus her inability to solve her problem will just get worse.

So, what can we do?

  • Think before you speak!
  • Create a safe space where you can have honest communication.
  • Don't use blame or guilt tactics.
  • Know that each franchisee is different and so is the meaning they attach to the world; therefore there is not one answer that applies to all struggling franchisees.
  • Help your franchisees discover what meaning they are attaching to the part of the system from which they have disengaged.
  • Explain to them how the brain works and how it can help us and also how some portions of our brains can highjack our ability to solve problems and use reason.

You don't have to get technical or geeky; a general explanation suffices. When people understand what's happening to them, what's prompting their behavior, when they realize that this is how we humans are wired and that is not them personally, they can start to make changes. Awareness is a key; in addition, repetition and coherence are also critical to make the change sustainable.

 References

(1) David Rock, Your Brain at Work

(2) Melanie Greenberg, The Mindful Self Expression

The post What's the WORST Thing You Can Say to Your Franchisees appeared first on InFraSu.

Like most trainers, I frequently engage participants in interactive activities that hopefully shift their paradigms. With one such activity, I give participants a list of like-hotels in a location they've never been to, and then have them each place a group sales or reservations inquiry call. Afterwards, each participant reports back to the overall group on their experiences and observations.

Recently, while training the reservations team of a four-star hotel, the results were especially interesting when two participants in particular described their call experiences.

The first participant had a glowing report for the agent she'd spoken with, and raved about how he was so enthusiastic and hospitable that the participant actually felt bad about not booking with him!

Interestingly, the second participant reported the polar opposite experience in calling another four-star hotel in the same area, as her agent did little more than check dates, quote rates and described rooms as being "your basic hotel room with one or two beds."

It is interesting to see how two different hotels within the same location, serving the same hotel market segment, recruiting from the same labor pool, and probably paying about the same base wages can have such extraordinarily different levels of hospitality and guest service.

How was it that these two employees of similar hotels performed so differently that day? Was it luck? Did we just happen to catch their best employee at their best time of day? Or was it a factor of the choices the employees made that day?

Two alarm clocks went off at approximately the same time of morning. Two employees woke up and readied themselves for their workday. Both traveled about the same distance, to work about the same shift, for about the same pay. Yet one employee made the choice of delivering hospitality excellence to the best of their ability in every guest interaction that day. The other made the choice to do their job exactly as it is outlined in their job description; doing nothing more and nothing less.

So why is it that associates at some properties make the choice of hospitality excellence while employees elsewhere choose to be average, or to put it another way at the risk of being blunt - mediocre?

Is it that one hotel has a better luck of the draw when hiring new staff? Do they have a better applicant screening process complete with pre-employment testing and peer interviewing? Or is it more a factor of the overall culture that starts with ownership and executive level management and is reinforced daily at the supervisory level?

Based on my observations as a hospitality industry trainer, it is more than a mere coincidence that some hotels can succeed in even the toughest labor markets, while others squander in mediocrity even where the unemployment languishes in double digits. Instead, hotel guest service teams that make "extraordinary" guest services experiences an "ordinary" and daily event tend to have:

  1. Owners who are willing to invest in the physical product and the technology systems necessary to facilitate service efficiency. It is hard to deliver hospitality knowing you are about to sell a guest a sub-standard accommodation, and just about impossible to satisfy guest needs without the proper systems support.
  2. Engaged, involved leaders who lead by example under the tightest of scrutiny. Real-world operational standards don't exist in training manuals; they are set by managers who can be observed in action themselves creating hospitality excellence daily! Interestingly, these same managers treat both employees as well as their guests with authentic warmth and generosity, the hallmarks of hospitality. They know that hospitality starts in the heart of the house when they greet their first staffer in the back hallway upon entering the building.
  3. Managers and supervisors who coach versus command. Great hotels have supervisors that closely observe each employee transaction, and who know the job well enough to help each staff member tweak, revise, and maximize their performance. Even the greatest so-called "superstars" all need continuous coaching to maintain hospitality excellence.
  4. Visionary leaders who see the actual level of hospitality and guest service as it really is being delivered daily in the lobby. They don't relay on the opinions of one quarterly mystery shopper inspection report, nor post-departure guest surveys, nor TripAdvisor reviews alone, nor any one metric to tell them where service is at. They observe firsthand how guests are treated and how efficiently things are working (or not).
  5. Managers and supervisors who pitch-in during inevitable bottle-necks. The best managers always seem to appear at just the right moment when the staff is nearly overwhelmed; they not only provide that extra set of hands to get you caught up but help you gain confidence that things will work out. I can still recall how over two decades ago as a bellman of a golf resort I greeted the PGA Senior's Tour Bus only to watch all the famous golfers parade off the bus and directly into their rooms, leaving the absolute biggest pile of luggage and golf bags imaginable for our team of just two bellmen. Minutes later there was our Resident Manager taking off his suit jacket and humbly asking our bell captain "How can I help you guys get through this?"
  6. Leaders who honor and understand the frontline perspective. You can always distinguish visionary leaders in the field of hospitality by the way they talk about their frontline employees. Those who appreciate them the most speak with respect, admiration, and appreciation. Those who don't just complain about how hard it is to find good people these days, and that "Millennials just aren't motivated."

Indeed, it is a thin line - a razor thin line - between hospitality excellence and mediocrity that employees in our industry traverse every day. In the end the same number of hours are worked, the same number of calories are burned, and the same wages are received. Yet those who choose to walk the path of hospitality excellence are rewarded daily as well.

While their counterparts elsewhere go home each night complaining about how many rude and nasty guests there are out there these days, those who make the choice of hospitality excellence enjoy their work everyday, and mostly go home raving about how many nice, interesting, and appreciative guests they met that very same day in the very same area as the competitor down the road.

This has been a guest post by Doug Kennedy. Doug Kennedy is President of the Kennedy Training Network, Inc. a leading provider of customized training programs and telephone mystery shopping services for the lodging and hospitality industry.

Doug continues to be a fixture on the industry's conference circuit for hotel companies, brands and associations, as he been for over two decades.

 

Ordering via tablets is making its way into restaurants and the quick serve industry, and it has proven successful.

Panera is one that a tablet was recently spotted - after watching customers, it seemed that customers were receptive to the concept and turned to the tablet to place orders versus waiting in line.

The system allows customers to place their order without waiting in line. After their meal, the receipt is sent to the customer via email, and a quick feedback survey consisting of three questions is included. This is a great example of how Panera is making the most of the tablet technology.

In sit down restaurants, the increased sales and tips are being realized.

According to a recent study, the use of tablet ordering cuts the meal time by seven minutes - not only is this more efficient for guests, but it also allows for tables to be turned over more quickly.

For servers, that is good news: more tables can result in higher tips.

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To add to the increased efficiency and resulting guest satisfaction, tablet based ordering can take things to the next level with restaurant guests, if tablet based consoles are used to their maximum potential.

For example, the Customer Engagement Console allows for a robust program that can incorporate customer feedback, encouragement to sign up for loyalty programs, and a gateway for guests to join the restaurant on social media while they're still at their table.

Throw in a feedback survey and restaurants have a quick, efficient way to truly engage with the customer on various levels while ensuring customer satisfaction and loyalty.

Technology is making improvements for the restaurant industry. While retailers may be a bit slower to adapt to the tablets in their locations, I anticipate that this will increase significantly in 2014.

If you want to know more about how a modern customer loyalty program would work for you, drop me a line on LinkedIn.

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Your passion for your business is most critical because it will drive your eventual success."

So said an "expert".

Who comes up with this stuff? It reminds me of the "expert" who said that most businesses fail for lack of cash flow. Huh? Most businesses fail because the business operators had no clue (no system) about how to operate the business successfully. They had plenty of money, but they ran out because they didn't know how to invest it.

But I bet they had loads of passion?

And what did that get them? A huge financial loss and the despair that follows.

First thing prospective franchisees and others who plan to start a business should know is to avoid and ignore the "experts". At least some of them. Instead, seek the advice of people who actually worked in the trenches, who built businesses, who failed a time or two, who made a payroll over and over again, and who understand the basics of how to succeed in a business.

And understand that passion can lead to success . . . or failure. 

Early in my entrepreneurial career, I rented a small office from a guy who owned an insurance agency. Every so often as he was leaving the office at about 6 p.m. he would stop by and say, "If you continue working this hard for another year or two, you're going to be a great success."

I know he meant well; I know he was merely encouraging me, but he was clueless.

You may have loads of passion for what you want to do in your business, and you may work 7 days a week at it, but here's the most important point: If you don't know what you are doing, and why, and how to do it over and over again, you are not going to succeed.

Work your tail off, tell everyone how passionately you love your business, your products, your service, but don't for a moment think any of that bull translates to financial success.

You want to succeed? Buy a system for success. Or develop a system for success. Of course, there too, you must be careful because all systems are not created equal.

By the way, I've identified 12 successful systems in my forthcoming ebook: 12 Amazing Franchise Opportunities for 2015. You can still get a free copy just for asking.

Employee retention can be impacted by a number of different organizational forces, which start the moment the employee steps in the door to interview for the job.

One of the most important things to remember is that first impressions can set the tone for the whole experience.

You want to make sure that both the employee and the organization are on the same page and know what to expect from each other.

Some effective steps:

Start with the Interview

  • A successful retention strategy starts with the first interview and continues throughout the employee's career. The interview is an essential tool for both the prospective employee and the interviewer to gauge each other's needs, abilities, and future plans. An employee's career starts with interviewing, it is their first impression of the company and how they operate.

Employee Orientation

  • The employee orientation provides a chance for the new hire to become familiar with their new surroundings. This should be a time of low stress for the employee, giving them the opportunity to meet co-workers, learn the layout of the office, and further their understanding of the vision and mission for that organization. Why do you need to do an orientation? It sets expectations for both parties at the beginning of the job and helps to develop positive attitudes, job expectations and job satisfaction.

Designing Your Orientation Program

  • The first thing you want to do when creating an orientation program is to define what you want to accomplish with the program. In doing this, keep in mind what kind of impression you want to make on the employee, in other words what are the stories they will be bringing home to their families after their first day/week on the job.

Get Them up to Speed Quickly

  • Have their email address, phone number etc already set up prior to their arrival. Give them a glossary of common terms, all orgs have their own language. Pre-arrange a "buddy" who will be there if they have any questions or concerns. Prepare a quick "help" card listing contacts for different questions.

Tips & Tactics

  • Who is doing the interviewing? Are they up to speed on the job? Do they understand the legal framework for questions? Are they a "people" person? All of these things will impact how interviews are conducted and how effective they are.
  • When designing an orientation program it can be helpful to sit down and make a list of what you need the first day, the second day, the first week, and so on.
  • How can you reduce the first day jitters for new employees? Send them a letter prior to their first day with info in it: What time to arrive, where to go, where to park, who they will be meeting with, what to bring with them (documents for I-9 form etc). Also celebrate their arrival by doing something such as hanging a welcome sign with their name on it by their office.
  • Onboarding: This is the modern term for the process of interviewing, hiring, orienting and successfully integrating new hires into an organization's culture. The best onboarding (orientation) strategies will provide a fast track to meaningful, productive work and strong employee relationships.
  • Who should be Involved: The people who need to be involved in the onboarding process include the HR department, team members of the new hire or a "buddy" from that area, and members of other functional areas they will be working with on a regular basis (ex: payroll/finance), their direct Supervisor, and a member of the management Team.

A Lasting Impact

  • A well thought out orientation program, whether it lasts one day or six months, will help not only in retention of employees, but also in productivity. Organizations that have good orientation programs get new people up to speed faster, have better alignment between what the employees do and what the organization needs them to do, and have lower turnover rates. Which translates into dollars.
  • For a comprehensive online Human Resource Compliance service that provides support in areas including employee hiring and orientation, check out HRSentry.

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Reputation marketing isn't something to be improvised. I always encourage my clients to take the offensive when it comes to their reputation. Most companies have an area or two where they operate in the crisis management mode and can get away with it.

Given today's connected society reputation marketing is an area that can have the greatest impact in the shortest amount of time.

Every company from a major corporation to a solo entrepreneur working at home has to have a solid plan for managing its reputation. There are five steps to doing this effectively.

Step 1 - Brainstorm Possible Reputation Damage Scenarios

Sit down and make a huge list of all of the different things that can happen. Imagine everything from a small bump in the road to a major emergency. The most obvious problem would be a negative post somewhere complaining about your company's service. There may also be a situation where a customer doesn't understand your company's policies and the complaint comes from this misunderstanding.

Brainstorm each place where a comment could appear so that you can create a plan for dealing with each. Examples would be personal blogs, your blog comments, social media sites, online forums, review sites, etc.

Step 2 - Determine the Best Response

For each item on your list, decide what would be the best response. Consider it from the point of view of other customers who will be watching. For example, you might respond to a complaint on Facebook by engaging with the customer, asking them to clarify, empathizing with them, and then offering them a solution.

To other users who are reading the thread, your company shows that it cares about customers and not just its own reputation.

Included in this plan should be a chain of command notification. When a problem is discovered, how will it be communicated to everyone in the company who needs to know?

Step 3 - Set up a Plan for Monitoring

You know what to look for. The next step is to decide how to monitor. One way to monitor all online content is through alert notification programs like Google Alerts.

You may also routinely check Twitter using hashtags and Facebook by searching posts or using HyperAlerts.

You might identify certain online forums, review sites, and other sites where you're likely to be mentioned for monitoring.

Step 4 - Delegate Monitoring

Put someone in your company in charge of monitoring.

You may want to delegate to several staff members. For example, if a certain staff member handles your Facebook account, put them in charge of monitoring Facebook for comments.

Make sure everyone is on the same page with all procedures for dealing with negative comments.

Step 5 - Create Positive Content

This step is often forgotten. In addition to doing damage control, reputation marketing is also about creating content that shows your company in a positive light.

Seek testimonials and reviews from your customers and create fresh content on your website, social media sites, and blog. Positive content will off-set any negative content.

This is an ongoing job, so make things like soliciting feedback from customers a regular part of your sales process.

Many companies and online professionals decide to outsource reputation marketing to a company that specializes in this field. These companies have experience and tools to manage a company's reputation comprehensively.

Look on what on your strategic plan for the next 6 months? Do you have a plan? Make this a priority.

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It's no secret that the restaurant sector is a very competitive segment of the service industry to survive in for full-service restaurant concepts. Most restaurants struggle to make it past the first, second, and third years of business; the U.S. Bureau of Labor and Statistics reported that only around 25% of the restaurants that opened in 2004 were still in business eight years later in 2012.

With such an intimidatingly high failure rate, this business is not for the faint of heart or those who fear change.

We were lucky to have Tom Prince, founder and owner of Tomasso Trattoria start using On The Spot's mobile survey tool in February 2011 to improve customer satisfaction and loyalty based on real-time feedback.

What follows is a very nice testimonial from Tom - which should help everyone in this space improve their loyalty programs.

Prince believes that the addition of On The Spot's mobile survey tool has had both tangible and intangible benefits that have played a key role in the success and profitability of Tomasso Trattoria.

It is so essential in this day and age to use real-time survey tools because it supplies a depth of beneficial knowledge to restaurant operators specific to their business and customer base. The company administers the surveys during "available guest time(TM)" -- the time when a patron's check is being processed -- by providing guests with a survey board.

Pioneered by On The Spot Systems for use in the service industry a 'survey board' is an iPod touch programmed to run the survey that sits atop a lightweight bamboo board and can be easily handed to guests at the table. Tomasso Trattoria also offers an iPad kiosk programmed to run the survey at the front of the house so that patrons can also take the survey and sign up for the newsletter club as they leave the restaurant.

Impressively, 91.3% of Tomasso Trattoria guests that are offered the option to skip the survey and just sign up for the email club will voluntarily opt-in to take the survey. This validates the value of the data that the restaurant is receiving and they are extremely proud of because it shows that guests value the opportunity not just to stay in touch for promotions, but also to give their feedback.

Whether or not customers choose to take the survey, they're asked to join the Tomasso Trattoria newsletter mailing list to receive special promotions and offers. Over 3,500 customer email addresses have been collected from the survey and are automatically fed into their email-marketing database; the ability to e-market and promote restaurant specials to this list drives foot traffic and revenue, increases social buzz and the likeliness of customer recommendations.

In fact, the National Restaurant Association published their findings from a survey conducted on dining habits in 2012, which showed an industry standard of 45% of diners say that they respond strongly to promotional advertisement via email.

This high conversion rate from marketing to purchase intent means that a growing email-marketing list will continue to enable Tomasso Trattoria to strengthen their customer base and encourage repeat visits.

Prince reflected on the intangible benefits of the survey data, stating,

If a customer has a poor experience with their meal, they have the opportunity to vent and give feedback directly to the restaurant instead of running home to post their opinion on a social network. We've seen a noticeable decrease in customers airing their grievances on public forums such as Yelp!, which could be seen by any interested diner.

Tomasso Trattoria isn't the only restaurant that should be worried about the negative effects of poor comments on peer-review websites for their business;

The National Restaurant Association conducted research on dining habits and found that 34% of diners base their decision on what restaurant to go to from peer comments and reviews on forums and social network sites.

Another benefit of switching to the service was realized through the level of engagement of the staff. As the restaurant industry remains fiercely competitive, it has become increasingly important that the staff members in the front of the house are truly involved in enhancing the guest experience and contributing towards positive impressions of the restaurant's service and atmosphere.

With the addition of the mobile survey, Prince has been able to realize a significant improvement in the awareness and recognition of customer feedback as a driver of success. Prince said,

The survey has made it more apparent to the staff that customer feedback is the ultimate evaluation of their performance.

When asked how using a mobile device to take the survey improved the process of data collection Prince answered enthusiastically.

As he said, "The mobile devices are fun and easy to use. For some of the older clients who don't have as much experience with modern technology, the survey gives them a chance to explore and have fun with something that they don't regularly see. Using mobile technology not only improves the process of data collection, it is also infinitely more responsive.

In Prince's words, "Our response rate from our previous paper survey forms was miniscule as compared with the high response rate we get from On The Spot Systems."cognition of customer feedback as a driver of success. Prince said, "The survey has made it more apparent to the staff that customer feedback is the ultimate evaluation of their performance."

"In an industry like hospitality, whenever you are given the opportunity to get customer feedback you need to jump on it. That is why On The Spot Systems is so useful; the survey is quick, efficient, and innovative," said Prince. He continued, "The specific comments we get about food and service allow us to make quick and effective changes in either product or people."

On The Spot Systems allows Tomasso Trattoria to constantly change and innovate to suit customers' needs, likes, and dislikes in a modern and convenient manner. We are thankful to Tom for such a fulsome testimonial!

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Have you ever wondered just what goes into figuring out where to locate a restaurant? Certainly there are hungry people everywhere, so why is one site better than another? That question is one that Dave O'Brien, real estate manager at Culver's, a successful Wisconsin-based quick-serve restaurant chain, asks himself every day.

  click to enlarge
GIS helps Culver's do better comparable store analysis by allowing staff members to focus on the most appealing trade areas.

A growing franchising business, Culver's specializes in frozen custard; a premium ice cream; and the ButterBurger, a juicy hamburger so named because of its lightly toasted and buttered bun. The restaurant cooks everything to order, including making the namesake frozen custard, fresh on the premises throughout the day.

Though the success of Culver's stems a great deal from the delicious ButterBurgers and frozen custard, the company also works hard to help franchisees choose great locations for their restaurants. To do this, Culver's uses GIS.

Having discovered the potential of GIS, O'Brien uses a combination of Esri's desktop and online software. ArcGIS Business Analyst, including the Segmentation Module, provides in-depth customer analytics, while Business Analyst Online is used for creating boardroom-quality maps and easy-to-understand reports. The company can compare and contrast new sites by analyzing the demographics of existing restaurants and pinpointing new areas that are similar.

"We are a family company, and this is apparent in all our daily efforts," stresses O'Brien. "We want our franchise partners to succeed. Without them--the local owners and operators in their own communities and hometowns--we would not exist."

Selecting the Choice Sites

With nearly 400 restaurants that stretch from Wisconsin's heartland south into Texas and west to Wyoming, existing franchise partners and franchise candidates are continually looking at possible new sites. "The best way to determine a good site versus a bad site--besides understanding its access to customers, how to place signage, how good visibility is, and the location's prominence in a particular market--is almost certainly going to be comparable store analysis," says O'Brien.

Whether by existing franchise partners or new franchise candidates, new sites are always being scrutinized for potential. "Working with franchisees requires a lot of time; we're either on the phone discussing locations or viewing prospective sites in person," explains O'Brien. He goes on to add that ArcGIS Business Analyst helps everyone focus on trade areas that are more appealing before going out to visit prospective restaurant locations, helping decrease the time it takes to narrow down choices.

  click to enlarge
Using ArcGIS Business Analyst, Culver's is able to easily compare and contrast new sites by analyzing the demographics of existing restaurants, then pinpointing new areas that are similar.

Culver's analysts define areas being serviced by existing restaurants by creating locations on a map of their restaurants and using tools within ArcGIS Business Analyst to delineate market area boundaries around sets of customers. Next, Culver's uses the ArcGIS Business Analyst Segmentation Module to mine valuable customer profiling information.

Culver's uses the Segmentation Module's Tapestry Segmentation data, which consists of 65 segments broken down by socioeconomic and demographic variables. Operating on the theory that people with similar tastes, lifestyles, and behaviors seek others with the same tastes--"like seeks like"--Culver's uses these segments to predict where other restaurants can successfully be opened. Using the intuitive wizards, analysts are guided to answer questions about customers, such as, Where are other neighborhoods that look like neighborhoods we are currently in that tend to have higher sales volumes? What do they buy? How can I reach them? and Where can I find more like them? Using these spatial analysis tools, Culver's is able to segment the demographics of a restaurant location and find new areas that have similar attributes.

To quickly share this information with corporate managers and new franchisees, the Culver's Real Estate and Franchise Development team uses Business Analyst Online. Business Analyst Online is a Web-based solution that combines GIS technology with extensive demographic, consumer spending, and business data to deliver on-demand analysis and presentation-ready reports and maps. Reports and maps are easy and convenient to use, with more than 50 templates readily available for Culver's analysts to use for presentations to their board members and potential franchisees.

photo of a Culver's restaurant"We want to give our franchise partners the support they deserve," says O'Brien. "GIS technology gives them the ability to maximize their potential at Culver's."

Today, GIS is seen as a strategic business solution that helps businesses continue to grow. Culver's plans to open 22 new restaurants by year-end and almost 30 in 2009. Two have already opened in Phoenix, Arizona, a new market for the company. "GIS is a tool to help us make even better decisions as we continue to expand," says O'Brien. "GIS doesn't replace anything we have now, including people. Instead, the software has become a necessary tool that complements our existing business process."

Sponsoring morning or afternoon traffic updates on local radio stations can be a great way to reinforce your grand opening message.

If you have ever listened to radio on your way to or from work, you're already aware of the benefits of traffic updates. In metro areas and even large towns, stations have added traffic to their morning and afternoon programming as a "public service" to their listeners.

The sponsorship of these updates represents a revenue stream to the stations. But, used correctly, they also represent a great opportunity for you to increase awareness of your new store opening, and deliver a call-to-action to your potential customers.

Here are three advantages to having traffic packages as part of your grand opening media mix:

1. Frequency

Stations deliver their traffic updates multiple times, every hour, during standard "drive times" in your market. In turn, your message is being delivered multiple times to the same radio audience over that same compressed period of time.

Plus, many sponsorships are structured with both a "billboard" (e.g., "this traffic report is brought to you by _________") and a 10 or 15-second commercial message. So, within each report, you're gaining double the exposure for your brand.

2. Reach

Traffic reports are usually implemented consistently across entire station ownership groups, and sometimes even across multiple station groups. That means your single sponsorship can be heard on numerous stations in your market.

Sponsorship packages, from providers like Clear Channel's Total Traffic Network, will admittedly include placing your message on both powerhouse stations as well as those with much smaller audiences.

But, you're extending your reach in the marketplace. And, you can (and should) negotiate the sponsorship costs, to make sure the pricing is fair for what you're getting in return.

3. Cost

And, speaking of costs ... they obviously vary, depending upon your market and the size of the overall radio audience you're reaching. But, fortunately, the traffic format doesn't require (i.e., allow) the use of a traditional 30 or 60-second commercial.

Advertisers usually provide the copy (usually 30-45 words) and the station either pre-records your message or reads it "live" within each traffic update. Regardless, you avoid the cost of audio production, voice talent(s) and music.

Traffic radio sponsorships are definitely not appropriate for every brand message. It's hard (if not impossible) to introduce a complex new program or offer within the format.

But, traffic packages can be a great complement to an established message, or one that is spelled out more completely in another medium.

If you're opening a store, they can be the perfect way to invite the public to your new location. With some careful writing, you may even have enough time to hint at the fun and excitement you have planned for your grand opening.

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Steve Jobs often said that making things simple is hard. The same can be said of training.

Training franchisees or their employees is simple, but it takes a lot of hard work to make it that way.

Here are ten training tips to keep in mind:

#10: Respect people's time. If you're going to ask people to spend the time and possibly money to attend a training session, it should go beyond valuable to indispensable. This is especially true of classroom or other in-person training, which are typically longer and more expensive.

#9: Utilize online learning. This helps you achieve #10. Using online learning wisely allows you to make the most of in-person. One way is to present the concepts in an online delivery and then practice the needed skills in-person, thus reducing the amount of classroom or coaching time but increasing its effectiveness.

#8: Invest in an LMS (Learning Management System). There really is no excuse not to have an LMS. The franchise structure makes them the perfect tool for your training. There are too many good, inexpensive LMS options out there right now not to have one. This should probably be #1. It can be the foundation for all the training you do.

#7: Don't overwhelm. Know why M&M's are great? Because they're so small you can eat either 5 or 50. Break training into itty-bitty bits. If people want more, than can always combine bits.

#6: Spread it out. Relates to #7. Eating a whole bag of M&M's in one sitting might make you sick (who's up for some hands-on research?!). Building skills takes time, so should your training.

#5: Be holistic. I don't mean eating tree bark to cure a cold. I mean develop a strategy for your training based on an analysis of your franchisees' and employees' needs, and create a curriculum plan utilizing multiple delivery methods. Don't slap together several workshops from outside experts and call it a day.

#4: Speaking of outside experts, how about inside experts? You will be amazed, shocked and stupefied by how much your people know, if you just ask them. Trust me on this.  Plus, you'll save a boat-load of money on consulting fees. 

#3: Social media. Yes, you've been told that social media can cure every ill that ails your company but in the case of training, it is a powerful tool. That doesn't mean you need a complicated system. Do you know what social media is? Knowledge Sharing. Do you know what knowledge sharing is? Bob has a problem. Julie has a solution. Julie tells Bob the solution. Done. I've seen it in action, my friends, and it is amazing.

#2: Training should not be just fun. I always get push back on this, but I don't understand the obsession to make learning fun. Training should not be boring, agree. Training should be useful and relevant, agree. Training should be engaging and experiential, agree. There's nothing wrong with some levity, but most, if not all, people will choose good training over fun training.

#1: K.I.S.S. Keep it simple, stupid. It's easy to get distracted and swayed by fancy talk and one-size-fits-all solutions. Remember the ultimate goal of training. Your company has business goals. In order to meet those goals, your employees and franchises have to perform. In order for them to perform, they need skills. Determine which of those skills are lacking and train them. Done and done!

If you want improve your  franchise training and onboarding, connect with me on LinkedIn and let's talk.

Everyone's busy, stressed out and short of time.  

Are we forgetting some people?  

We usually remember to thank our customers.

And we probably don't have any trouble thanking family.

However, there is a group of folks that are often left out of the "thank you" pile. 

And that would be our co-workers. 

Known as our INTERNAL customers.

The folks we spend most of the day with side-by-side. The folks that are thought of as our 'home away from home' family.  

Sure, we argue and disagree with co-workers just like our family. And that's OK, because most of us have a family environment in our office. We understand that.

It's our office family. 

Our word of the day is: WACTEO.  

No need to look it up . . . we made it up. Here are the ground rules for WACTEO: We Are Customers To Each Other: 

 

1.    Understand Your Role - Each employee should know the mission of their organization and the role they play. Those of us who are in a small department of a large company can often times miss the big picture. If you don't know the mission of your company, ask for it. Keep it at your desk. It will help you with the big picture. You may start to understand the 'why' of the things you're asked to do sometimes and 'why' internal customer service is everyone's responsibility from president to maintenance. If management isn't doing their part, often times the entire customer service program will go out the window. We don't want double standards. Remember it starts at the top!  

2.    Respect Employee Differences - Cub fan? Cardinal fan? Republican? Democrat? Rock music, classical, whatever. Just because we don't agree with someone doesn't make us right. Differences are crucial for an organization. Differences are key to understanding people. If everyone thought the same way, most of us wouldn't be needed. It's not healthy to argue just because a co-worker isn't doing it the way you would or thinking the way you do. Learn to respect the differences. That's why we have chocolate and vanilla ice cream.  

3.    Recognize the Personal Space of Others - Simply put, this boils down to the golden rule. Those who can work with a radio playing music may disturb others around them who aren't able to concentrate. Loud voices around someone who's on the phone with an external customer can be annoying also. If you're working in a cubical or sharing an office or area, we need to recognize there are others around you. Be sensitive to their wishes, as you would hope they would be to yours. 

4.    Work to Resolve Conflicts - Who hasn't had unkind words with another employee? Or perhaps you and a co-worker strongly disagree on a project or idea. Not trying to make it work can only lead to more stress and frustration. Learn to work it out (notice I didn't say 'try' and work it out), even if you need to call in a professional in the area. Normally someone from HR or another trusted employee can usually be of help on conflict resolutions.  

5.    Show Appreciation - We saved this for last because being appreciated, showing you care with a genuine 'thank you,' is critical to WACTEO. It can be a note, a phone call or just stopping by an office and letting someone know they did a great job. This makes a huge difference in our internal relationships. There are surveys upon surveys that show how much a genuine pat on the back of appreciation is thought of as a way of special compensation.

 

A recent IFA Annual Conference speaker, Nancy speaks at franchise meetings across the country.

Her passion for the small business is second only to her techniques on sales and customer service.

Her reviews at IFA were off the chart. Contact Nancy personally about your meetings.

Document, document, document! It's the mantra of the human resources profession.

Create timely and thorough documentation for all employment decisions.

On the other hand, supervisors and managers often view documenting as a chore they simply don't have time for.

But do they have time for the following all-too-common scenarios?

  • Rebecca, has performed her data entry job poorly for several months. She is consistently late and her work is often inaccurate. The manager has spoken with her and given deadlines for improvement but the deadlines have come and gone. The company decides to fire her but wants to wait a few days until the manager returns from a business trip. Before he returns, Rebecca suddenly goes out on leave under the Family and Medical Leave Act (FMLA) for a problem with her back. Upon her return, the company fires her for poor performance. She claims the company retaliated against her for taking FMLA leave. Without documentation of her performance problems, the coaching efforts or the timing of their termination decision, the company has no defense against her claim of retaliation.
  • Joe, performs some aspects of his graphic design job well but is often slow to get back to customers. Co-workers pick up his slack. Resentful, two of the best employees quit so the supervisor knows she needs to fix the situation quickly. She approaches Human Resources about firing Joe. The HR administrator check's Joe's personnel file and finds several years' worth of good performance evaluations. So she says, "You can't. At least not yet." The supervisor and HR work together on a coaching and performance improvement plan that will take a couple of weeks to implement. The turnover adds pressure until replacement staff can be hired and brought up to speed. Staff members grumble louder than ever.
  • A supervisor in a retail store, Marcus, asks employee, Kaitlyn, out on dates every day. She tells him, "No, thank you" but he keeps asking and makes comments about her body that make her feel uncomfortable. It is Kaitlyn's first job and she doesn't know how to handle the situation so she quits. She was given a copy of the company's sexual harassment policy on the first day, along with a stack of other papers. No one told her what was in the policy, she never read it, nor did she sign an acknowledgment that she received it. Her mother helps her contact the EEOC. They decide to pursue two claims: one for sexual harassment and one for constructive discharge. (Constructive discharge is when an employment situation is made so intolerable that a reasonable person would quit.)

All of these scenarios are preventable surprises.

Supervisors and managers and those responsible for handling human resources need to understand that creating timely documentation is a critical part of their role.

Here's 5 reason why:

1. Documentation is vital in an employer's defense against discrimination and other employment claims;

2. Memory alone will serve poorly in court. The lack of documentation will be a glaring omission and could paint the employer in a potentially suspicious light, particularly in a jury case as juries are notoriously pro-employee;

3. Documentation can explain how a situation was handled when an individual involved is no longer available to testify;

4. Documentation can verify that employees have read (or heard) and understand information they were given;

5. Documentation helps supervisors provide accurate and constructive performance feedback to employees.

When you need help implementing your HR audits, connect with me on LinkedIn and let's talk about how we can help you. 

Why Are Your Franchise Operators Slow Out of the Gate?

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In a perfect world, all franchisees would follow the system exactly as intended; they would all ramp up quickly without struggle; and, they would all be successful and happy.

You wouldn't have to answer distressed calls or have tough conversations with under-performing franchisees who blame you, the franchisor, for their failures. However, reality never seems this easy. To some degree or another every franchisor deals with dissatisfied and under-performing franchisees.  

Yet, the sustained growth of franchisors is directly related to their ability to have training and support systems that produce positive results quickly and minimize franchisee dissatisfaction.

A quick ramp-up is the key to keeping a franchisee's head in the game and to eliminating operational and cash flow problems today in the future.

Why don't franchisees who receive the same training and who are being taught the same system have the same results? Why is it that some "get it" right away and run with it while others struggle, and others even fail? 

There are many reasons behind franchisee success-failure statistics, yet they can all be boiled down to the fact that all franchisees are not equal.

Each franchisee fits somewhere in the scale between the ultimate entrepreneur and the ultimate employee with their own unique combination of the traits and characteristics from both ends of the entrepreneurial spectrum.

Additionally, they bring with them different experiences, learning styles, preferences, levels of expertise, beliefs systems, and habits that can work for or against them. And, the challenge lies in effectively addressing this diversity.  

Furthermore, investing in a franchise is such a drastic change that for most people it engenders chaos, similar to a personal inner revolution with much emotional upheaval affecting all facets of the life of franchisees, including their ability to learn.

If training and support systems are not properly structured, if they don't account for franchisees' innate differences and for their emotional reactions, you simply end up with longer learning curves, slower ramp-up, increased franchisee dissatisfaction, and smaller franchisor's royalty stream. 

The bottom line is that franchisees who don't ramp up quickly create more organizational challenges and contribute fewer dollars to help the franchisor fix them.

If franchisees don't experience some early wins, they lose confidence; and, if franchisees' attitudes start to decline before they achieve system mastery, they can slip into "survival mode," which leads them to wrong decisions, panic, and frustration.

Getting them back on track becomes harder and harder until eventually they become part of the statistics we don't like to discuss-they fail.  And, we failed them.

The post Franchisees' Ramp-up Too Slow? Why? appeared first on InFraSu.

Training isn't the only thing a franchisor does, but it is one of the most important things!

A franchisor that fails to transfer knowledge to franchisees is a franchisor to avoid.

Unfortunately, there are more of these franchisors than the public knows.

Rarely will you discover a franchisor that doesn't have a huge ego. I never fault them for that -- I like big egos -- but sometimes, as they say in Texas, these franchisors are "all hat and no cattle."

Beware of the franchisor with no (or too few) cattle.

Clever Isn't Enough

Just because a franchisor is clever enough to develop a new or competing concept, doesn't mean he or she is a trainer! And that's where the cattle hit the road.

Why would a franchisee pay a franchisor $15,000 to $75,000 upfront?

There are numerous reasons, but one of the most important is this: To learn how to operate the business successfully. And by successfully I mean in a manner that the franchisee finds to be both personally satisfying and profitable.

Franchisors Rarely Admit Weaknesses

And not all franchisors can fulfill that expectation . . . but the bigger the ego, the more difficult it is to admit that they're not as good as they need to be at training.

It doesn't help that trainers aren't considered to be all that special. Many people assume that training doesn't require extra special skills.

Anyone who can read the Operations Manual can lead a training program!

That's the same as saying that anyone who can read a textbook and the publisher's slides can be a college professor. In that case, we should turn the classrooms over to the students.

But franchisees aren't going to buy that. (Students shouldn't either, but they often have no choice).

Before you buy a franchise, test the franchisor's ability to train effectively. How do you do that? Easy! Ask 10 existing franchisees to rate the franchisor's training skills.

The post Ask This: How Good Are The Franchisor's Training Skills? appeared first on How To Buy a Franchise.

One of my favorite boss's of all time Mike Jenkins taught me a great deal about business and life.

Mike was big guy towering over 6'3" and the size of a linebacker with a deep booming voice. If Mike was in the room you knew it. He was very intimidating when you first met him.He was brought in to turn around Diedrich Coffee and Gloria Jeans where I was VP of Development. 

Now Mike was not new to fixing what was broken with a company since he had just finished taking Boston Market through bankruptcy and selling it to McDonald's.  Before Diedrich and Boston Market Mike had been at Steak & Ale, Bob's Big Boy, T.G.I. Friday's, Metromedia Steakhouses, El Chico Restaurants and Vicorp Restaurants. 

He started as a waiter at Steak & Ale. And he probably got great tips given his physical stature and presence. I would have tipped a guy like that generously. 

Mike told me his story about fixing Boston Market before selling it to McDonald's.

As Mike described it Boston Market was out of control with food costs and labor too high and sales too low. 

Now his solution seemed very simple. Boston Market was addicted to discounting and thought their competition was McDonald's, Burger King, Pizza Hut, Domino's, etc...Mike told his team they were wrong and proclaimed that the deep discounting would end. And not only that the big advertising spending was over too.

He got Boston Market back to 3 basics:

1. A focus on customer service;

2. Selling food at a full and fair price, and;

3. Simplifying the menu so the restaurant team could serve great food hot and fast.

The average unit volumes decreased but the units became profitable.

Mike said to me that there's way too much silly talk about strategy when what really matters are the tactics.

What Mike believed was that you take the business one piece at time and look at what's working well and fix or get rid of what isn't.

He told me the biggest challenge weren't the actual fixes. It was getting people to buy into them. He believed if you didn't get the buy in you were inviting failure before you started and doomed.

I remember what got Mike started in telling me his Boston Market stories. You see we had the Orange County Register delivered to the office and every time he saw deep discounted Boston Market free standing inserts it would get him going that the handpicked McDonald's team was going down the wrong path.

Was he right at the time? Well, McDonald's did eventually sell it.

(Mike did great things at Diedrich Coffee too. About 6 weeks into the job there we were faced with being put in the recovery group with Fleet Bank, threatened NASDAQ de-listing and a huge accounting nightmare with an unrealized material loss of close to $17 Million. 

Mike got us together and we got through that too. However that's another story.)

Mike's story ended May 2, 2002 after less than a year's battle with gastric cancer. I miss Mike and I will be forever grateful to have learned from him. He was one of the kindest and best people I've known in my career.

How Franchisors Hurt their Franchise Operators

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There are many reasons why some franchisees struggle while others succeed.

Unknowingly and, in most cases with the best of intentions, franchisor too often fail to help franchisees get back on track.

Frequently franchisors actually contribute to their franchisees' struggles by:

  1. Blaming franchisees. Franchisors add to their franchisees' ramp-up problems by assuming franchisees are refusing to follow the system rather than asking, "What is it about our system that results in so many franchisees not following it?"
  2. Targeting symptoms. Franchisors often spend a lot of energy and resources trying to eliminate symptoms instead of identifying and targeting the real issues. Franchisors tend to focus on the outer factors that contribute to success or failure like, telling the franchisee to spend more money on advertising or to make more calls, rather than looking at the problem such as the poor quality of the calls due to the mindset of the franchisees, their lack of confidence, or the poor skills and habits they have.
  3. Lack of understanding. Many field staff and support professionals have never been trained in adult learning principles and performance coaching techniques as they specifically apply to franchising. Because of the emotional turmoil franchisees go through when they invest in a business, training principles that work well in a normal environment fail to do the job in franchising.
  4. Forgetting what it's like to be a novice. Many franchisors expect franchisees to be proficient after a week or 10 days of training; they make their training programs all about process and forget to teach the essence of their business. They continuously add more tools to their system and are surprised when franchisees don't use them or when they don't seem to produce the results they should.
  5. Separating operations, training, and support functions into silos. When duties and responsibilities are split among different departments, continuity accountability, and effectiveness are lost.
  6. Delegating training and support functions to non-qualified personnel. Many franchisors utilize non-qualified personnel to fulfill training and support functions. Regional and area developers most often lack the skills to train franchisees, especially during the first year.
  7. Over utilizing e-learning. Franchising is all about relationships and these relationships are being formed during the first six months of the life of a franchisee. Franchisors relying on on-line training as their primary vehicle for training and supporting franchisees forego forming the deep connections that are  critical to the franchise relationship.

What are you doing that may be contributing to the struggles of your franchisees?

The post 7 Ways Franchisors Add to Franchisees' Ramp-up Problems appeared first on InFraSu.

Fred; I have been pitched over the past 25 years in franchising all manner of snake oil for "profiling" and many have said that they can measure top performers and we could use the model to recruit high caliber and similar franchisees and employees. 

What do you say to a franchisor who wants a reliable predictive performance tool, other than buy yours? 

How should they approach it practical manner?  What should they expect from using such a tool?

fred berni1.jpgJoe - Let's start with the 5 basics of all good design.

1. Predict Performance:

Make sure that whatever system you're considering was actually designed to predict performance for the job, in this case, owning a franchise.

2. Designed for Selection or Recruitment

Make sure the system under consideration was designed for selection. Several of the most common personality profiles specifically state on their websites that they were not designed for selection.

One even goes so far as to say it's unethical to use it for selection. Even so, people are out selling these profiles for selection purposes.

3. Don't Discriminate in an unreasonable manner.

Third, make sure that the system you're considering does not discriminate. Even unintentionally. See Griggs v. Duke Power Co. A good summary is at http://www.answers.com/topic/griggs-v-duke-power-co#ixzz32NTJOd4J

4.  Verify Performance Carefully, using an Independent 3rd Party.

Unfortunately, there's no simple way to run an analysis between performance and "profile scores". No matter what you're told.

There's a fair amount of complexity involved in comparing scores and actual performance.

And by performance, I don't mean simply a gut feeling of they're good or bad.

That's subjective criteria because the ratings can change depending on who's doing the rating and their relationship to the franchisee. That's not to say you can't use subjective data, just that if it's available, use objective data with subjective thrown in.

Objective data is something to which you can relate to hard numbers.

Things like actual $ sales per location, % increase one year over the next etc. I've even had clients in auto repair use $ sales per bay.

It all works as long as you can put a hard number on it. Then you have to use rigorous scientific methods to analyse the relationships between "profile" scores and performance. Hopefully this analysis is done by a 3rd party with no stake in how the results turn out.

5.  Include Everyone and Increase Sample Size.

You'll need to include good, bad and average performers.

Here's an example of what I mean: Let's assume you've just made a movie and want to project what your ticket sales will likely be.

If you only include good reviews you could say that 100% of the people that saw the movie like it.

True, but not accurate. Only by adding the bad and average do you get an accurate idea.

In the same scenario, how many people would you need to ask before you are comfortable with a projection? Five? Ten? Twenty-five? One hundred?

Generally accepted sample sizes are a minimum of 100 before you can accurately predict performance. Anything less than that and the best you could do would be to assume you've identified a possible trend.

As far a reliability is concerned, my definition is to be able to say with 95+% confidence that the there's a definite causal relationship between performance and profile scores.

With larger sample sizes, our confidence level could be 99.5% or even higher.

Having said that, it really boils down to what you're willing to accept as being reliable. Being able to predict accurately 50% of the time? 75%? 95%? What's your comfort level?

The bottom line is that it's simply not appropriate, accurate or legally defensible to just pick your  1. or 20 franchisees and base your decisions on that small a sample. Even if you include poor performers in the mix.

Having said that, if the system you're considering was developed to predict performance of franchisees in similar type of franchises, and can provide you with documentation of such, in all likelihood you'd be safe just going with the "template" already designed by the developer of the system.

Hope that answers your question Joe. Did I miss anything?

Capital Area Franchise Association founder and well known franchise attorney Warren Lewis led the important panel discussion:

How to Improve On Your Franchisees' Unit Economics, on July 16th, 2013.

Joining Warren on the panel were Gregory Plotts, CPA of Yount, Hyde & Barbour an expert in franchisor/franchisee audit, accounting and consulting services and John A. Gordon of Pacific Management Consulting Group an analysis, advisory, expert witness and business intelligence aggregator focused on the franchise restaurant sector.

 

1.  The Problem - Lack of Timely Reporting

There is great opportunity for better franchisee unit level performance reporting and corresponding franchisor support.

However, the audience concluded that less than 40% of franchisors get meaningful and timely reporting from franchisees.  

Warren also pointed out that in 35 years of franchising, he has never terminated a franchise agreement solely because the franchisee wasn't reporting on a timely basis.

 

2.  Why it Matters Even More

John Gordon pointed out that the U.S. restaurant marketplace is overbuilt, yet  still growing.

So, the competition for sites is intense pushing rents up for prime locations and requiring franchisee and franchisor operators to be focused on unit level performance like never before.

Those franchise systems that are better at getting their data have a competitive advantage. Popeyes is out muscling KFC, for example.

Greg Plotts emphasized that creating dashboards with Key Performance Indicators - KPI- in as close to real-time as possible enables both franchisees and franchisors to be nimble and act on what the KPI reporting is telling them.

 

3.  The Opportunity for Franchise Systems

The audience asked how do you get to a point where a franchise system can get the reporting and KPI platforms built and adopted?

Every franchise systems need a Standard Chart of Accounts.  (Restaurants can start with the National Restaurant Association's uniform chart of accounts.)

 

Here are the 6 takeaways from the experts and CAFA audience: 

A. Franchisors should:

1. Produce reports that are valuable to both the franchisor and franchisee.  Franchisors need to find out what reports their franchisees need.

2. Get the franchise field consultants focused on the franchisee's unit level P&Ls. To have onsite in the field meetings without good numbers with franchisees is not the best use of franchisee and franchisor time.

 

B. Franchisees should:

1. Understand that some of them will want to know how they rank, and that group should be the first to work on a standard chart of accounts together with the franchisor and service providers.

2.  Understand that money spent on accounting platform now will pay off in future growth.

 

C.  Service Providers/Suppliers Should:

1.  Not push the franchise system to a cloud based platform or even dashboards until there is sufficient buy in by the franchisees.

2.   Understand the different needs for reports, by franchisee and franchisor and tailor the product accordingly.

 

CAFA's next Lunch and Learn on Unit Economics will be Tuesday, July 15th, 2014

 

During the heart of the 2008 economic downturn I was the manager of the Franchisee Assistance Program for a large sandwich restaurant chain.  

My job was to work with distressed franchisees to help them put together a plan to save/fix their businesses.  

Unfortunately most people reached out to our team when it was already to late: they often had accumulated a lot of debt and their weekly sales could not support their costs.

Our options to help our franchisees were limited and to their dismay we were unable to give franchisees cash or reductions in fees to help them solve their issues. 

The following are some take always from that time and my interactions with our franchisees:

  • Know when to say when:  

    • Don't wait until you have already lost a lot of money to try and turn it around. If you start to notice a downward trend take proactive measures immediately. 

    • Often times people would reach out to our program as a last resort when it should have been their first call. As a franchisee you should know and avail yourself of all the support that your franchisor offers.

    • If you are going to buy a franchise and make that kind of investment; you need to push yourself to achieve great success but also set an amount you can afford to lose.  If you hit that loss amount then you need to take action and close your business. You are responsible to yourself and your family; don't let your business go from a calculated risk to a financially devastating life event. 

    • I was constantly amazed talking to people who were thousands of dollars in debt, had given up on their business, but were not doing anything to shut it down or fix it. They were business zombies going through life accruing more debt every month with no end in sight.

  • Franchisees cannot abdicate their responsibility for their success to the franchisor:

    • You are the business owner and financially responsible for your it's success or failure.  

      • It is your name on the lease and the loans. 

      • It is your credit rating that will be hurt if you default on your obligations.

      • It will be you that is paying off this mistake for years to come if you don't make this work. 

    • The franchisor is responsible to give you a system and a model to run a business and to help you help yourself. 

      • Help you help yourself is one of the core concepts of franchising.  Here is a business in a box, now you focus on execution. 

      • I can't tell you how many people I spoke to, that spent all of their energy focused on how their franchisor had: lied, cheated, and manipulated them, instead of taking some action to solve their problems.  It is hard to look in the mirror and and accept that you aren't doing well but it doesn't change the fact that you aren't doing well and something needs to change.

    • Here is an an example of abdicating responsibility; I would ask distressed franchisees what marketing they were doing and they would site their ad fund contribution. 

      • Those of you in a franchise system know that very few companies can do national advertising every single month.  If you are lucky they have several events a year.  

      • National advertising is a big plus of becoming a franchise owner, being able to pool your money with all of the other franchisees to get more exposure is a big appeal of franchising but that can't be your only marketing.  

      • Local store marketing is a bigger factor in individual location success than national advertising.   

      • If you don't want to local store market then don't own a franchise. 

  • Don't buy a franchise in an industry that you don't have any experience or access to experience in:

    • Everyone thinks that they will just hire a manager.  That is fine until the manager quits or gets fired and then for some period of time you are running your business.

    • If you are interested in owning a restaurant; before you buy the franchise you should go work in a similar restaurant for 6 months to a year to learn on someone else's dime. 

    • I was constantly surprised when I would talk to franchisees that weren't restaurant people who were surprised at how hard running a restaurant was. 

  • When times are tight cut the right costs:

    • If your business is really slow and you are having a hard time breaking even or you are loosing money, you need to cut the right costs.

      • Don't cut:

        • Bookkeeper - that was an expense that most people would cut first because their bookkeeper was giving the franchisee bad news.  You need to know your businesses finances.

        • Cleaning service - unless you are willing to clean your restaurant as well and as frequently as your cleaning service don't cut them.  Dirty restrooms are the fastest way to sabotage your current business.

        • Local marketing efforts - don't cut them completely, you can change them if they aren't working. 

      • Costs to reduce: 

        • Ask your landlord for a temporary rent reduction or some relief.  The property managers will want to see your plan for growing your business and a reasonable time frame for execution. 

        • Manage your variable costs tighter, specifically food and paper cost. Conduct more inventories and do your best to forecast your needs on a weekly basis trying to reduce waste and excessive stock. 

        • Labor:  take a pay cut if you are paying yourself.  Manage your shift labor tighter - cut people when it gets slow or better yet use those labor dollars to do more work. Send your employees out to coupon cars or drop off catering menus at local businesses.  No one should ever be standing around when they are on the clock.

There is so much that goes into running a successful franchise business.  

These points were based on my personal experience working with our franchisees and they may not be applicable to your situation. I hope they were helpful to you. If you have any questions, please feel free to email me through LinkedIn

If you are a restaurant owner or manager, my company has developed an operations and sanitation inspection tool named Mobile Inspector.

I invite you to watch a short two minute video at http://mobileinspector.biz

What are the key terms that a prospective tenant of a commercial lease should consider prior to signing a commercial lease?

A prospective tenant should consider negotiating the following key terms in their commercial lease:

1. What are the Common Area Maintenance charges in the commercial lease that will be passed through to you, as a commercial tenant? Are they going to be capped?  Do you have a right to review the books and records of the landlord to ensure that the calculations are correct?

2. When does rent commence in the commercial lease?  It is not unusual, even in this day and age, to negotiate a period of free rent and/or tenant improvement allowance to be used towards the build-out of the premises. Clear definitions of when the commercial lease commences and when rent commences should be identified.

3. What is the original term and rent and renewal terms and rent? Is rent increased as a percentage each year or by a specified dollar amount each year?

4. What warranties will the landlord provide? Will the landlord warrant that both the premises and the shopping center are compliant with the Americans With Disability Act?  Will the landlord warrant that the premises and shopping center are compliant with all hazardous substances laws, federal, state and local?

5. Will the landlord provide a reduction in rent for various contingencies such as the anchor store of the shopping center remaining empty for a specified period of time or a certain number of the other stores in the shopping center remaining empty for a specified period of time?

These are just 5 of the many types of lease clauses that should be negotiated prior to signing a commercial lease.

Last month the Philadelphia Franchise Association (PFA) had a terrific meeting at Maggiano's in downtown Philadelphia.  I want to again thank our terrific panelist, Tom Monaghan, Steve Beagelman and Mr. Ade Lawal.  Each brought excellent stories and practical advice on how to recruit, hire and train key employees.

I believe the most insightful part of the presentation was the insistence by all the panelist that the hiring process must be exactly that, a process.  If a company can define what steps it needs to take and then follow those steps they will have a much better chance at being successful than those companies that wing it each time they have a need for a new team member.

Having a defined process will enable companies to refine and improve that process over time.  Key elements to a good process that we discussed were:

- Written and consistent interview questions

- Simple outside and objective tests such as background, IQ, personality test, etc. (I was intrigued to learn that some really helpful tests can be done for very little money)

- Hire for attitude, train for competence

- Hire slowly and fire quickly

The key of course is to actually implement what you have learned at a session like this and to be disciplined enough to be objective about your own systemic shortcomings.  The first step is to write down what you are doing, and then look at it objectively and write down what you ought to be doing. 

The final remark I heard after the meeting that really resonated with me is that a company is only as good as its people, no more and no less

1. Take Advantage of $500,000 Section 179 Deduction for New or Used Assets

For tax years beginning in 2013, the maximum Section 179 deduction for eligible new or used assets other than heavy SUVs is a much larger $500,000.

For instance, the larger $500,000 limit applies to Section 179 deductions for things like new or used machinery and office furniture, computer equipment, and purchased software.

As explained earlier, the up-to-$500,000 Section 179 deduction privilege is also available for new and used heavy long-bed pickups and new or used heavy vans.

Warning: Watch out if your business is expected to have a tax loss for the year (or close) before considering a Section 179 deduction. The reason: You cannot claim a Section 179 write-off that would create or increase an overall business tax loss. Contact your tax adviser if you think this might be an issue for your operation.

2. Benefit from Bonus Depreciation for Other New Assets

Your business can claim 50 percent first-year bonus depreciation for qualifying newequipment and software that is placed in service by December 31, 2013. Used assets do not qualify. For example, this tax break is available for new computer systems, purchased software, machinery and office furniture.

There is no business taxable income limitation on bonus depreciation deductions. That means 50 percent bonus depreciation deductions can be used to create or increase a net operating loss (NOL) for your business's 2013 tax year. You can then carry back the NOL to 2012 and/or 2011 and collect a refund of some or all taxes paid in one or both those years. Contact your tax adviser for details on the interaction between asset additions and NOLs.

Deadline: The December 31 placed-in-service deadline for assets eligible for 50 percent first-year bonus depreciation applies whether your business tax year is based on the calendar year or not. So time is growing short if you want to take advantage.

 

The smartest marketers are able to understand which customer segments are most valuable to their business and how each of those segments prefer to receive communication.

 

 

We've noticed there are 3 primary buckets of engagement: The Overt, The Personal, The Money Talker. 

 

 

  1. The Overt customers are the ones that post on social media, tell their friends where to go and are generally "the loudest".  They want to feel appreciated when they share love for your brand.

  2. The Personal customers are the ones who will communicate with your brand when you reach out to them.  They tend to be the most engaged email subscribers, enroll in loyalty programs, answer surveys and claim promotions.

  3. The Money Talkers let their wallet give all the feedback they need.

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The key to identifying who customers are and what they want is collecting data on them.  You can start collecting data immediately:

  • Send a feedback survey via email to your email subscribers
  • Invite people to try a new menu item
  • Run a promotion for your social media fans only

More data = better segments.

As you collect more customer contact information and additional data on who these people are, you will start to see some trends and consistencies - these will comprise your customer segments.  

It's easy to fall down a rabbit hole and make arbitrary segments so, when you get to creating your segments, it's important to think about the drivers of your business first.

For casual dining businesses, increased online engagement increases the average frequency of visits. You should create segments that help you understand how to engage that segment to do what will drive your business.

Segments for casual dining restaurants that can encouraged to come more frequently might be:

  • Facebook Fan + has spent money in-store before
  • Filled out a survey + on email list
  • Enrolled in loyalty program + social media follower + has been to website in the past month + filled out a survey

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There are nearly unlimited different segments you can create and maintain, the key is starting somewhere and tailoring as you go. Once you create segments, you can send targeted and custom messaging that relates to what that segment cares about. They will appreciate the tailored messaging and you will benefit from them coming and giving you more of their business.

 

Jake Cohen.jpgTo see how Privy can help you create and maintain segments, click here.

 

 

 

Julie Ricchuito.jpgTo see how On The Spot Systems can help you collect in-store surveys and apply them to your segments, click here

 

Scenario: Your candidate arrived for her fourth and final interview.

Having passed a lengthy assessment process with managers and executives, the candidate was confident the company would offer her the senior management position. You weren't so sure, yet.

Your are responsible for this candidate's final assessment and your company has been under pressure to fill this role - it has been open too long.

Thirty minutes into the interview, it was clear to you that the company was poised to make a costly hiring mistake. Both candidate and company had invested time in the interview process, but your additional review at this critical juncture saved time and money for all concerned.

Had this candidate been hired:

• The department would be led with 20% of the experience required for the job.

• Operating procedures would fail and progress would be reversed.

• The team would take a beating due to lack of leadership.

• The company would lose money and time, only to start the recruiting process over 3 - 6 months down the road.

• The new hire would be frustrated, disrespected by peers, and faced with a significant career mistake.

How could you avoid this costly mistake?

• Practiced Active listening.

• Gathered specific, factual examples of experience, which had been missed.

• Assessed real experience against job requirements.

• Avoided hiring a manager because of time pressures.

Let's focus on the first two, practice active listening and gathering specifics.

1. Practice Active Listening.

The right candidate means he/she meets the minimal requirements for the position and will be a "high performer", a huge success, in the role.

Your mission in an interview is to listen carefully and get factual examples that will confirm you can match the right candidate to the job requirements.

It's natural for candidates to come to an interview ready to sprinkle strategic words across the conversation in order to impress the interviewer.

Most candidates have enough experience or general knowledge about the position to make use of words and phrases that will make your eyes sparkle.

The key to success is to gather facts and examples that support the candidate's knowledge and "fit" for the job. Does the candidate have solid experience or is he/she simply throwing around key strategic words to impress you?

2. Gathering Specifics - whenever you hear something that sounds "great" you must determine if it's good or not.

Here's an example:

Candidate: I was often recognized for my abilities in product development. (Sounds great!)

Interviewer: How so?

Candidate: My colleagues knew I was the person to talk with for product development expertise.

Interviewer: How did they know?

Candidate: Well, they knew that it was my responsibility.

Interviewer: Just so I'm clear, when you say, "recognized for your abilities", did you receive an award, or a thank you letter from your Manager, or a public acknowledgement on your abilities for product development?

Candidate: Well, no. I mean, I wasn't actually 'recognized' but people knew I was responsible for the job.

Most interviewers stop at the beginning of this dialogue, making a note that the candidate was "often recognized for his accomplishments in product development."

In the example above, we ask what the candidate did instead of assuming that "recognition" was a specific accomplishment.

Here is another example:

Candidate: That year, the whole team went above and beyond the call of duty. I was proud of the team spirit and everyone's hard work. Of course, there were some challenges along the way; but we pushed through and met the deadline.

Interviewer: What kind of challenges did you meet?

Candidate: We hit a few quality issues, recognized them quickly, and took action to improve?

Interviewer: What kind of quality issues?

Candidate: Well, normally, we averaged 2% variance and at one point we hit 8%; but we got it down quickly.

Interviewer: What happened?

Candidate: Honestly, in pushing for the deadline, we lost control of quality. Unfortunately, we also lost a key client; but we learned a lot and improved for the future.

Interviewer: That's certainly a challenge. Were you able to recover the client?

Candidate: No, and it was one of our largest, a 10 million dollar account. It was not a good period for us.

Again, most interviewers would have stopped at the beginning, taking a note along the lines of, "Wow, this candidate is a team player, cares for his team, and was able to meet the company's deadlines in a challenging environment".

When "digging in" and getting more specific, candidates will almost always share details surrounding the actual situation. From there, you can determine if the experience is a good match for the position you need to fill.

Stop making up stories for your candidates! Get the facts.

By slowing down, listening carefully, and backing up examples with facts, you gain data that helps make a more informed decision.

You saved your company, your team, and the candidate from a costly and painful 'mis-hire' experience, by following the right interview steps. Congratulations!

For the 5 Most Fascinating Stories in Franchising, a weekly report, click here & sign up.

If you need to brush up on your interviewing skills, contact Michelle at Management Success China, especially if you are hiring managers in China.

She can help your company avoid the cost of mistaken hires. When you need this type of advice, connect with her on LinkedIn.

If you haven't heard the ever increasing buzz about worker misclassification yet, you will.

The issue of whether a worker should be classified as an independent contractor or an employee is a hot topic and getting hotter all the time.

The following provides key information to help you assess what you need to know and the steps you should take.

There are many parties interested in proper worker classification ranging from the IRS to the U.S. Department of Labor (DOL) to state governments to workers themselves.

It's much cheaper for employers to use independent contractors over employees because they avoid paying the following: employer portion of payroll taxes, workers' compensation and unemployment insurance premiums, overtime payments and the expensive benefits that often go along with hiring employees.  And franchise owners are known to be attracted to cheaper employees, especially with the costs of complying with ACA.

On the flip side, there's a growing financial risk if you misclassify employees as independent contractors, especially if you do so willfully.

In addition to the possibility of owing back pay (if minimum wage requirements haven't been met) and overtime, you could also face paying: back taxes, including the employee portion; penalties and interest; fines; retroactive employee benefits; costs of staff time and effort; and possible legal fees if faced with going to court.

Additional costs, less quantifiable but important nonetheless, include negative publicity for your organization and possible employee morale issues.

Even inadvertent misclassification can be expensive but imposed fines and penalties grow increasingly severe the more willful the nature of the violation. Both state and federal governments are paying greater attention to this issue than in years past. The IRS and DOL have even teamed up with at least eleven states to share information and resources in a joint effort to uncover violations.

So there's strong incentive these days for employers to do their best to get it right.

But, the IRS makes is clear that there is no magic formula or simple test as to whether or not a worker is an independent contractor. They emphasize that each case is fact specific.

In general, however, the best place to start is to consider whether your franchise owners have the right to control, not just the outcome but also how the worker performs the work. Whether or not you actually exercise this right is irrelevant to the worker's status. There are many times, for instance with highly experienced employees, when organizations provide little guidance or oversight. The real question is whether or not you have the right to do so.

So, how does the IRS decide upon the degree of control an employer has over how the work is performed? It comes down to looking at a number of factors that comprise three main categories: Behavioral Control, Financial Control, Type of Relationship. Remember, no one factor is decisive as circumstances differ; the totality of the situation must be evaluated. IRS guidance is abundant on IRS website for the control test.

You should also take a look at the DOL's Economic Reality Test. This test relates to whether the Fair Labor Standards Act (FLSA) applies. The seven factors it contains overlap those that the IRS looks at and likewise consider whether or not the worker has a bona fide business that does not provide services integral to yours. Be sure to familiarize yourself with all seven factors of this test in addition to IRS guidance.

So how do you prove that someone is indeed an independent contractor and not your employee? The best documentation shows that the person has a bona fide business quite separate from yours; that control over how the person does the work resides with the worker; that the work being contracted is not an integral part of what your business provides and the worker is free to make a profit or loss and be hired by others.

Keep a vendor file for each independent contractor just as you would for any other vendor or supplier, such as the folks who deliver your coffee supplies or service your copier machines.

Here are four important items that should be kept in that file:

A written contract--Always a good idea, the contract should outline the nature of the relationship, although saying the person is an independent contractor doesn't make it so. Indicate the project's expected results, the fee and date(s) of completion. Note that you don't control how the results are achieved; the worker uses his/her own equipment/tools; is free to hire others without your approval and that the person provides liability insurance to his/her workers, and is not eligible for benefits with your company. Note that the person has their own business and tax I.D. number. Make sure it is signed by both parties and create a new contract if the worker takes on a new project for you. Each project should have a separate contract.

Proof of a real and separate business--Keep any letters on business stationery, business cards, brochures, or newspaper advertisements. With so much done electronically these days, print off a copy of an appropriate page of the worker's web site, online advertisement of services or copies of emails detailing services offered.

Invoices--Every payment to an independent contractor should be based on an invoice. The worker should never submit expense reports to you as that would point toward the person being an employee. The worker's mileage or purchase of equipment or supplies should be part of their own business expenses, not yours. Keep every invoice and make sure it ties in with the Form 1099 you issue to the person for that calendar year.

Form W-9--Obtain this form when hiring an independent contractor and make sure it is filled out properly. If the person does not check the box exempting him- or herself from tax withholding, you are legally obligated to withhold taxes at 28%. An independent contractor should check the box file their own self-employment taxes on their own.

Due to lots of bad practices that organizations got away with in the past, businesses may think they are classifying workers correctly when they are not. Increasing scrutiny demands that the facts of each situation be reviewed.

Here are some seven red flags to watch for:

  1. After an employee terminates, you hire the person back to do work that resembles their old job, even on a temporary, project basis;
  2. If an intern is doing actual work, not just shadowing or learning; be sure to check DOL Fact Sheet #715 for the six criteria related to interns. In order to not pay interns minimum wage and overtime, all six criteria must be met.
  3. When you provide the equipment, supplies or office space the worker uses;
  4. If the worker replaces one of your employees or supervises any of your employees;
  5. If the worker receives any benefits or perks your employees receive, gets paid on a regular basis, or submits expense reports;
  6. If the relationship is ongoing and long-term;
  7. If a supervisor hires a worker and pays the person through Accounts Payable unbeknownst to human resources or payroll.

The last item happens more often than you might think, especially in larger organizations, but all organizations are vulnerable without proper communications and procedures in place. If the person administering payroll also issues 1099s and is thus aware of all workers, misclassification can be avoided. But if your organization is too large for that, make sure there are good channels of communication among payroll, accounts payable and human resources and train managers to get approvals from human resources when engaging any worker.

A final caveat is that state laws may differ from federal laws in important ways. It's possible for a worker to be classified as an independent contractor for IRS purposes, yet, by state definition, require workers' compensation or unemployment insurance premiums paid on his or her behalf. So be sure to check your state laws as well!

If your franchise system needs help with informing its franchisees about how to comply with myriad of Federal and State employment Laws, then connect with me on LinkedIn, Dean Haller.

Give your franchise owners the best tools to run their business is paramount to their success which, in turn, translates into yours.

While out-of-the-box software solutions are abundant in this day of modern technology, customized software solutions, tailored to your business model and strategy, will give you optimal results.

Consider this - software needed to run a successful sandwich shop is very different than a solution needed to manage a pest control franchise.

The sandwich shop will rely heavily on the system to manage their inventory and employee scheduling, while the software for the pest control business may need to focus on managing the customer's information, schedule and communication needs.

These two Franchises will require very different and very customized solutions to manage items such as their inventory, customers, employees, ROI.

Imagine how customizing your software can help you more efficiently manage your business. While there are many different ways to customize your software solution, it is important to remember that at its core, there are three very basic requirements that any solid software solution for a Franchise will provide:

  • Consistency - it is important that your Franchise Owners are operating as consistently as possible and that you as a franchisor have access to the data and reporting needed to ensure that their performance is meeting your expectations.
  • Control - while Franchise Owners are responsible for their own destiny, they could potentially have a negative impact on yours if you don't control their business practices to conform to your business model.
  • Communication - what makes a successful Franchise? Successful Franchisees. And how do you encourage growth and success in your Franchisees? Communications are key and one of the best ways to communicate is via the very software the owners use day-to-day.

To best protect its interests, an employer who suspects that one of its employees is stealing should immediately consult the company's attorney for advice.

Investigating Employee Theft

Typically, the attorney will advise the employer to take steps that include the following:

1. Commence the Investigation Promptly: A small business owner should initiate the investigation of a purported theft by an employee immediately. This prevents the employer from running afoul of criminal and civil statutes of limitation.

2. Place a Third-party Employee in Charge of the Investigation: A management employee other than the supervisor who first observed or reported the theft should perform the investigation. This avoids the taint of bias that a more involved player would bring to the investigation. In addition, the employer should interview the accused in the presence of a witness.

3. Maintain Strict Confidentiality: Maintaining strict confidentiality throughout the investigation is essential. Failure to act discretely in handling an employee theft can subject the company to defamation claims by the accused employee.

4. Document the Investigation: It is also important to document all interviews when investigating the claimed theft. The employer should gather evidence that sufficiently assures that the theft from the company occurred and was committed by the employee. This evidence will be useful in several arenas: in furthering a criminal or civil prosecution of the accused, in collecting from an insurance company if the company is insured against employee theft, and in defending against a possible wrongful discharge action against the employer.

5. Notify the Bonding Company or Insurance Company: If the company maintains a fiduciary bond or employee dishonesty insurance, then the company must notify the bonding company or insurance company immediately upon finding out about the loss.

6. Notify the Authorities: The employer may wish to file criminal charges against the former employee. If the company files a criminal complaint, an investigation by the police or other governmental agents would occur.

If the prosecutor decides to pursue the case, the employer can seek restitution through a criminal proceeding without having to file a civil action.

Regardless of whether a criminal action is maintained, the employer should consider filing a civil action against the former employee to recover the value of the stolen items.

Preventing Employee Theft

To proactively help a small business owner control employee theft, an attorney will counsel the small business owner as to what is permissible under the law. Several deterrent steps can be taken, such as the following:

1. Supervision: The employer should have in place regularly scheduled reviews, reporting processes, and other forms of checks and balances which enhance the likeliness of discovering any breaches of honesty. A small business owner is wise not to concentrate supervisory responsibilities in any one employee, but rather to create a structure designed to assure a business ethic of cooperative and appropriate teamwork.

2. Audits: In the fiscal realm in particular, it is prudent for an employer to have audits and other financial oversight procedures in place. Both external and internal financial controls should be a routine part of the company's management.

3. Video Surveillance: The small business owner may consider other, more creative ways of supervising the work area, such as maintaining video surveillance of its employees in the workplace. However, the video surveillance cannot include sound, as surveillance using sound recording has been found to violate an individual's right to privacy. Video surveillance must be limited to areas which are not inherently private in nature, such as a dressing room or a bathroom.

4.  E-mail Access: Additionally, employers should have an employment policy allowing them free access to all employee e-mails. The attorney will advise the business owner as to how to protect its interests without infringing on the constitutional rights of its employees.

Has this happened to you: after a few years into a lease, your successful store ends up with much higher than expected occupancy costs?

The costs (rents and NNN provisions) were hard fought in negotiations, and the tenant ended up with a good solid lease. The sales are great.

Everyone should be happy, but the store is netting less than expected.

It appears that the problem is the occupancy expenses which are significantly higher than expected. The center was not reassessed and the landlord's CAM, and insurance costs have not unreasonably increased.  We know this because the LOI included a request for the center's prior 2 years NNN reconciliations.

No one on the tenant's side has an explanation. The proforma just didn't get it right. Or is there another explanation?

In my experience, there are several potential explanations. With the higher sales, the tenant hit the breakpoint early and began paying percentage rent. Unfortunately, the breakpoint was not calculated correctly, nor did the tenant taking advantage of properly reporting sales.

All those exempt sales, the credit card processing and bank fees, uncollectable debt, gift card sales, employee sales, were included in the reported sales. The incorrect sales represent a potential increase in %rent expense of near 10%, not to mention the wrong calculation of the breakpoint. Although the landlord's expenses were within reason, the Tenant never verified the NNN reconciliation against the lease.

The square footage was checked, but that's it. Upon audit it was discovered that the landlord had included several expenses which were not supported by the lease.

The landlord broke several expenses into "pools," also not supported by the lease, which increased tenant's share of the expense. The landlord adjusted the center's GLA based on vacancies, again, not supported by the lease and increasing the tenant's share.

The landlord had types of insurance coverage that the tenant had negotiated out of the lease. Lastly, the admin fee was 15%, rather than the agreed upon 10%, was charged on insurance, which along with tax was exempt.

None of these mistakes were caught in house, and they were symptomatic of the tenant's other locations as well. The only person for whom this hypothetical story had a happy ending was the auditor. His contingency was the industry standard of 40%.These mistakes, resulting in way too much wasted money and time, were completely avoidable.

When I start working with a new client, in order to assess their needs, I ask, "What does you lease say about your CAM bill?" The response is almost always the same. "It says I have to pay it."

Sometimes they add "it comes in April," or "within 30 days," but there is rarely any depth to the answer. It doesn't matter if it's a corporation with multiple locations, or franchisee with one store, the right answer is that your lease tells you EVERYTHING you need to know about your CAM bill, and how to protect yourself or your company from paying too much.

The lease is a word problem--the answer is how much of your money you get to keep. 

For over a decade the Fast Casual and Quick Service Restaurant industry has debated extending hours of operation.  

The advantages of staying open later are to cater to the nocturnal crowd that work and play during the wee hours of the night and to gain a competitive advantage in the marketplace.  Many locations extended closing time by an hour or two while others ventured into the arena of staying open 24 hours.

The unknowns were how to generate sales to cover labor and operational expenses and make a profit, and effectively educating the public on the open later concept.  

If locations were staying open 24 hours, another issue was to effectively and efficiently close out sales for the day and prepare for the opening of the next day's business while keeping track of sales during the transition time. 

Claims to Rescind Extended Hours

There have been varying levels of success in extending late night hours. Some corporate mandated extended hours have come under the scrutiny of franchisees.  Labor costs and security and safety of employees working the late night shifts have been cited as reasons to rescind extended hours.  Both are certainly valid reasons.  

Profitability is always a key issue in determining hours of operation.  Citing the security and safety of employees - who can argue with that?  

Loss/Crime Prevention Considerations

Late night operations are particularly challenging.  Adequate staffing can be a problem, and dealing with an increase in "drunks and punks" is particularly unpleasant.  

Let's look at the issues from a security, safety and loss prevention perspective, which unfortunately, is frequently left out of the equation in the decision to extend or cut back on the hours of operation. 

Analyzing Profitability

In analyzing the profitability of extended hours, the handling of cash, counting of deposits, securing funds, auditing of cashier performance including average check, no sales, price reductions, under ringing, and the security of the back door are important factors - as important as transaction counts and sales.  

The supervision of employees must be strong.  Many times the younger, less experienced managers run the late and overnight shifts. Profitability may be adversely affected by internal cash and food thefts, undocumented waste, lesser food quality, and poor customer service.  The overnight shift may not be as effective and efficient as other day segments. 

The late night operations must be routinely reviewed to make certain that sales are rung properly, and managers are upholding the highest standards of employee conduct and food quality.  Monitoring and managing these components may increase profitability during late night hours.

Employee Safety Concerns

The two hours before closing is the "critical period' in robbery prevention. Extending late night hours requires increased efforts in effective security policies and procedures, background checks of applicants, handling cash and deposits, drive-thru window and perimeter door control, entering and exiting the building according to best practices and trash removal. 

Formal training classes should be conducted to educate managers and late night crews in dealing with conflict, cash management, crime prevention, and proper robbery response.  Without this due diligence for those working the late night shifts, the increased vulnerability to crime is not fair to them. 

Claiming that employees working late into the night are in more danger at 2 AM than at 10 PM, while hiring crew with violent criminal pasts, no back door security, poor supervision and providing no training on what to do in the event of a robbery or how to enter or exit safely is a disservice.  The employees are more vulnerable in these conditions, no matter what time of day or night it is.

Validating the Issues

So, the extended hours debate rages on.  Can locations afford it or not? Those questions may be more easily answered with careful analysis and review of late night operations.  Sales are not likely to reach desired results simply by adding hours to the closing time on the hours of operation sign. Are employees exposed to more danger in the extended hours' time frame? 

Maybe - maybe not.  Police reports, analysis and anecdotal information of violent crime in the area occurring during late night may substantiate the claim.  

Playing to emotions by claiming increased danger is not valid without empirical information to support it.  In locations open 24 hours, instituting proper security and safety measures may even make the employees less vulnerable to robbery and other violent crime.

Make your claim in whether to extend late night hours or cut back on them, but do so with accompanying investigation beyond sales and transaction counts.  

Make certain that security and safety policies are in place and the staff is trained in crime prevention procedures.  A thorough analysis will make your decision more relevant.

When it comes time to sell a business bad practices become costly.

The general rule of thumb is that a business is valued at three times income or one time sales then adjusted according to circumstances.  While this appears to be a clean and simple method of valuing and selling a business it is unrealistic based on my experience and, I suspect, those who have successfully sold or assisted in the sale of a business. 

At the most basic level, why should the potential buyer of a business actually believe that the seller is providing realistic and reliable information?

How does one get around this tendency to mistrust the other party in such a transaction?

Selling a business involves a high degree of trust between buyer and seller.  A seller must provide information (particularly financials) that are real, indicative of the business and presented in a manner that exudes confidence.  A potential buyer of the business must be trusted not to use confidential information provided to them to damage the business. 

Mutual trust requires a level of compromise and openness that is not easily given.  It is necessary to the successful sale of a small business.  Overcoming this hurdle is the responsibility of the seller of a business.  It typically involves preparing for the sale of the business at least three years in advance to ensure that financials (a key component of achieving this trust) are ready for disclosure at the time of sale.

I was recently involved with two businesses where this trust was compromised.  Failure to obtain this trust resulted in early termination of negotiations for the sale of each business.

In one instance, the business lacked even the most rudimentary Profit & Loss Statement.  They provided two years of revenue by month and "estimated" the cost of goods sold as a standard percent of sales.  There was no reference to operating costs - a complete lack of even the most rudimentary accounting systems. 

A prospective purchaser of the business had no understanding of the profitability or operations of this business.  While the business was may have been profitable, lack of reasonable disclosure made this difficult to determine.   

This sale failed to due to a lack of disclosure.

The situation of the second business was quite different.  It had extremely effective management control and accounting systems.  The owner provided a comprehensive set of financials that allowed a prospective buyer to fully understand the business.  Unfortunately, the business was unprofitable.  To compensate, the seller provided a "normalized" set of financials that showed what a new owner could earn. 

This seller was relying on a level of trust that enabled a prospective buyer to purchase based on potential rather than actual results.  Perhaps this was considered necessary in order to justify the desired selling price. 

Nevertheless, the necessary trust between both parties was never established.  Discussions on the sale of the business were terminated.

Many business owners consider management control systems are an unnecessary expenditure.  Perhaps this is because they do not understand how to use the information gleaned from these systems to improve their business. 

This approach may increase short term profitability but at what cost?  The success of any business is determined by its profitability and a lack of adequate management insight is a serious liability.  When this same business is for sale and exposed to a potential buyer, a lack of management insight is likely to result in a reduced valuation by an outside party.  Perhaps this is why many owner operated businesses fail to survive to a second generation of ownership.

Investing in good management control systems is the foundation upon which successful businesses are built and maintained.  Maximizing the valuation of a business is important to the owner selling the business. 

It is only through effective management control systems that this value can be determined and reliably documented when the business is put up for sale.

If you like this tip, and want more from Perry Shoom, click here to subscribe to his newsletter!

A rising tide lifts all ships: Consumer discretionary stocks are doing well, leading the pack with the highest forward PEs in May, as FactSet reported last week.

Same store sales: Despite some same store sales headwinds caused by the so called 2013 same store sales cliff, the theme noted early this year that sales comps would be down versus mild winter weather in 2012, the industry is doing fine. There are no large publicly traded restaurant companies in real trouble, although one could argue Ruby Tuesday (RT) is, but not any of the major players from a liquidity or default basis.

The industry was at +2.5% SSS (per MillerPulse) in May, almost all driven by ticket. McDonald's (MCD) May sales gains reported Monday were foreseen and no surprise. Yum's (YUM) -19% May China same store sales decline was not moderate but met the Consensus Matrix number.

With many non-casual dining brands, the two year and five year comps trends are solid; if that was the Street metric we'd all be celebrating. 

Forward PEs and Earnings Standouts: FACTSET noted Chipotle (CMG) (31.1X), Starbucks (SBUX), (25.3X) and YUM ($21.2X) have the three highest restaurant forward PEs in the consumer discretionary space.

Only one of these (SBUX) showed upon my list of earnings standouts, restaurant companies that have all of the following fundamentals going the right direction:

· Positive same store sales and traffic, both, with no major geographies negative.

· Meets or beats on revenue consensus, beats EPS by $.01 or more, with no downgrades within 90 days.

· Positive sequential momentum, early peek SSS current period, if revealed, positive.

· No gimmicks with adjusted, proforma or restated EPS values, and as validated by the operating income beat. A publicly traded track record of one year.

YUM has refranchised so much it's a China story. CMG is a nosebleed story.

Standouts: SBUX, with new product new news every quarter, the only restaurant chain growing traffic at a greater rate than average check. Also, Ruth Chris (RUTH), Texas Roadhouse (TXRH) Domino's (DPZ) and Popeye's (AFCE) are on the standouts list.

Both Ruth Chris and Mitchell's in the RUTH house are moving, ahead smartly.

AFCE is building company stores, capturing U.S. KFC units and reflagging them, and touting its US stores franchisee 20% EBITDAR margins, in addition to new flavors/new product news.  AFCE was the first franchisor ever to report franchisee profitability in a quarterly call that I can recall.

Investor Implications: My number one concern going forward is that the industry not shoot itself in the foot via over discounting.

NPD noted that after a time, customers see discounted prices as the new normal.

Restaurants that don't play in the ever discounting spiral space are at an advantage. Think: Del Frisco (DFRG), Cheesecake Factory (CAKE), Panera (PNRA) and CMG. Also: the noted Earnings Standouts group above, are fundamentally attractive.

Restaurant marketing tends to be copycat in nature, and like a battleship, takes forever to turn. Darden (DRI) has reset to the $12.99 television price point, doing Red Lobster and Olive Garden $3/$4 off coupons too. US Pizza Hut is doing $5.55 anniversary pizza price (one large) undercutting even Domino's and weaker QSR players are at or under the "my $.99" at Wendy's (WEN).

We wonder what customers must think of the long term pounding on price. NPD presented five year data that shows that restaurant deal sales mix is flat and declining. This means more discounting is chasing even fewer deal consumers.

Customers come in daily, revenue is growing and your business is thriving.  Why, at the end of the month, are you not able to show a profit?  Do you need greater volume?  Or is something else going on?

I once owned a Business Centre offering more than 20 individual services. 

Some services were sold each day while others were infrequent. 

One offering was postal services which included the sale of postage stamps.  This was a convenience offering also available at any post office.

Within my industry the sale of postage stamps typically resulted in little to no profit but considered to be a necessary offering.  It was seen as a way to increase traffic flow and demand for the more profitable services that were offered.

After evaluating this area of business for two years I concluded that the sale of postage stamps was too costly.  Transactions were frequent, of low value and low margin. 

After factoring in overhead and staffing, I concluded it was not possible to profit from offering postage stamps. 

More importantly, I noted that virtually all postage customers had no interest in anything else offered in the store.  I discontinued the sale of postage stamps.  The result was reduced staffing, fewer customers, improved cash flow, a higher average sale and improved overall profitability.

My decision to discontinue the sale of postage stamps would not have been possible without the ability to track sales and expenses by profit centre.

Many businesses operate with an inadequate understanding of how their business makes money.   They lack the management systems and controls to evaluate the profitability of their multiple offerings, isolate those that result in the most profit and focus more acutely on how to build those more profitable areas of the business.

Investing in good management control systems is the foundation upon which successful businesses are built.

Bart Golub, Manager of Slot Marketing for Tropicana Las Vegas, explain how The Tropicana Las Vegas re-invigorated their Players Club by using emerging mobile data collection technology to grow their loyal customer base our On The Spot Systems' mobile survey tool.

As part of an initiative to re-market the Tropicana Hotel and Casino in Las Vegas to younger generations to come, the Trop had to look closely at the ways that they were communicating with their target audience.

"We just began a large-scale marketing campaign on the Las Vegas Strip to drive new enrollments to the Trop Plus Players Club," said Bart Golub, Manager of Slot Marketing for the Tropicana Las Vegas. The Trop took the opportunity to look at other areas of their marketing and customer loyalty operations and decided it was also time for a much-needed facelift to the Trop Plus Players Club enrollment process.

The Trop began using the On The Spot Systems mobile survey platform in early December 2012 and have already received over 3,000 submissions for the Trop Players Club in under 4 months. 

Although Golub's responsibilities at the Trop fall under the marketing department, he has been able to see the effect that real-time data has on daily operations at the hotel and casino.

Golub noted, "Given the ability to now sort through survey results instantaneously, with On the Spot Systems, taking notice of and responding to customer trends has become quick and easy." From an operations perspective, the Trop was immediately pleased with the advanced features offered by the On The Spot Systems tool such as scheduled automated report delivery and trend reports for analyzing marketing effectiveness.

"A report is automatically sent to my inbox every morning with the prior day's aggregated survey results (one of the questions asks customers how they heard about our loyalty program), so I know right away what's driving people to our property: which marketing initiatives are working, and which may not be working as well as we'd hoped," said Goblub.

Among the programs that Golub uses the survey to monitor is the Hilton HHonors program. As a member of the Hilton alliance, the Tropicana Player's Club enrollment survey is another opportunity to assess if the hotel meeting the expectations of the HHonors members. 

The ability to react and see results in real-time was another value-added benefit of the On The Spot technology. Golub added, "Gone are the days where I'd have to wait weeks or months to realize there might be a problem, because now that information is literally at my fingertips."

The Tropicana marketing manager quickly realized that he was not the only ones impressed by the transition to a mobile automated signup process.

Golub recounts, "When we used to hand people a photocopied piece of paper and a pen, they were at worst extremely annoyed and at best mildly reluctant.

It's amazing how much more willing customers are to use an iPad, even since the questions haven't changed at all.

We now see almost no hesitation, sometimes even excitement, when our Players Club Representatives ask new customers to complete the four- to six-question survey electronically."

The Trop was also aware of some additional benefits when switching to the mobile survey tool. "Beyond the obvious cost savings in paper and toner, switching to a fully electronic system has already saved us hundreds of dollars in labor.

Before, it took dozens of employee hours each month to manually input data from our paper surveys into Excel (some questions also prompted write-in answers, which took even more time to input and later analyze). On the Spot Systems provided us with instant data aggregation and comprehensive reporting tools, immediately saving my team a significant amount of time and money," said Golub.

Thanks for this Client Testimonial Received February 2013 from Bart Golub, Manager of Slot Marketing for Tropicana Las Vegas! 

Are you an entrepreneur, a business person or successful business person?

Entrepreneurs are risk takers in business. They often lack the experience of successful business people who know how to effectively manage the businesses they start.

The difference may be in the management control systems that are so important to success in business.

While this may seem obvious to some, the reality is that many get started in business without a clear understanding of what needs to be done in order to be successful.

Certain business skills and knowledge are important to business success. These skills can be learned or purchased (in the form of employees.) When one at first gets lucky in business, they lose the opportunity to acquire these skills.

The business grows in the absence of these skills until, at some point, luck runs out. A business lucky in choice of location or in obtaining key customers may find that this is not enough.

They may expand the business.

They may not clearly understand where the money is going or a trusted employee may be stealing from them. The business owner often considers these events to be out of their control or just bad luck.

In reality, they are more likely the result of poor management control systems that should be in place for any business.

The ultimate goal is to understand your business. You may work in the business or manage it from a distance. There may be a single location or multiple locations. It is important to understand what works and does not work within the business, and to have sufficient information to improve the overall results.

This usually means that the business should be capable of being operated without the daily presence of senior management but with an ultimate end result of increased profitability.

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Strategic placement of a security camera on your cash register or POS terminal provides protection against both fraudulent claims AND dishonest employees.

Many problems can frequently be prevented by directing a security camera on the cash register or POS terminal.  This is the area where business is transacted and where the majority of customer disputes occur.  It only makes sense to focus security on this area where the greatest financial loss can occur.

Theft of funds from a business, if occurring, is most likely at the point where financial transactions occur.  There are many ways for this to happen.  Perhaps a cash transaction occurs which is not being recorded, too much change is returned to a customer or cash is not being placed in a cash drawer. 

These are just are some of the ways in which a financial fraud can occur. 

A lack of security and proper financial controls can result in a theft that is never noticed by management or the owner of a business. 

A security camera presents employees with a visible reminder that the area is being monitored and is likely to discourage theft.  Should the need present itself, a security camera can provide solid documentation of what may or may not have taken place at a particular point in time. 

It can also allow an absentee manager or owner to monitor (in real time if desired) interactions between customer and employee.

Most businesses experience customer service issues that include poor treatment or incorrect change.  These can frequently be verified and resolved through use of security footage from a security camera.

Usually, franchisors don't plan for franchisees who are exiting their system.  But, it could be great growth opportunity for the franchisor.

Without a formal resale program in place, franchisors can be at the mercy of local business broker, real estate brokers or landlords for the continuity of their locations.

When a franchisee is looking to exit the system, they should be embraced and helped in their exit strategy. Many franchisees who want to leave the system are no longer putting forth the effort they they put forth in the first year they opened their doors.

By helping a new franchisee take over the location, they can reinvigorate the market and increase their royalty stream from the location.  And, if they aren't careful, the location can flip to a competitor or just close.

Franchisees should be told that leaving the system is part of franchising and they can help with the transition that will enable them to get a fair purchase price. This is especially true for franchisees that are in trouble and behind in debt or rent payments.

By coordinating the efforts and negotiating with the banks and the landlord a potentially disastrous situation can be turned into an opportunity.

The key is to line up professionals who have done franchisee transitions before, on both profitable and unprofitable units.

No two situations are the same, but a professional who can understand the landscape and the needs and desires of all the stakeholders (the bank, the landlord, the franchisor and the franchisee) a deal can typically be struck that will put everyone in a better position.

As a law firm, we have structured many of these deals and would welcome the opportunity to help formalize a program that many times is an after thought for franchisors.

Menu Testing - In Real Time

Menu testing is a vital aspect of any food service business. To attract and maintain customers, restaurants must ensure the menu meets their customers' expectations and is continually evolving with new, innovative choices. Menu R&D should be a creative but efficient process, with the two-part goal of creating value for both the business and the consumer.

As food prices continue to rise, finding ways to cut costs without sacrificing quality is especially urgent. R&D projects can determine how to utilize already available materials and equipment to create new menu items, as well as cutting out unnecessary steps that might be reducing efficiency and wasting money.

However, new menu items will have zero value for the business if its customers are not on board. Customer feedback is an essential aspect of R&D and is at the forefront of the entire process. Consumers are evaluated during the first step when researchers analyze market trends and focus groups to identify what's popular and what's important to consumers. They are evaluated again at the final step when potential new menu items are tested in the restaurant.

Though it can be enormously beneficial, R&D is costly for businesses in terms of hiring professionals and creating testing facilities.

Introducing new menu items can be a financially risky gamble if you're not confident new menu items will be well-received.

Make sure the time, effort, and financial cost is worth it by using a system like ours here at On The Spot to gather feedback directly from customers. Rather than estimating what consumers want through market research analysis, why not eliminate guesswork and save steps by simply asking them directly, in real time?

While you're starting to think of the answers to all these hard questions, here's some more food for thought:

The Small Restaurant Advantage

So, if all this time goes into Menu Testing, why is it that smaller restaurants are usually the ones that have the best new items that really excite you?

There's a small pizza place across from our office building in Boston - they specialize in, well, pizza and there's only about 20 seats in the whole place. But, that doesn't stop them from coming up with a new pizza that will really knock your socks off- using ingredients you didn't think would taste good together and ones that you'd never picture on a pizza.

What's so cool about this place is that they have great food and it'll cost you about as much as a Subway sandwich at lunchtime. So, how do you think they do it?

Thave the advantage of operating with a very small gap between the company and their customers. The time between introducing a new menu item and being able to gauge the customer's approval or lack of enthusiasm is miniscule in comparison to a conventional restaurant chain with many locations all rolling up to a corporate decision maker.

In this highly competitive industry, food is still the most valuable asset in attracting new customers. Bring your customers into the conversations you're having during the menu testing process. Remember that the industry experts you have at the corporate level can't substitute for actual feedback from guests. To your guests it's not all about what hot new ingredient is stirring up chefs in kitchens across America.

Your customers are the only people who can tell you what you're doing right and wrong with a new dish.

And, if you use a location based menu testing platform, you can identify patterns in different markets across the county.

If you don't get close to your customers on a location to location basis, you're losing out on valuable insights that can guide you towards a new approach that will throw the "one size fits all" menu type out the window.

Get accustomed to accepting feedback and critiques of your menu items at the local level- don't worry if the aggregate national data doesn't show much. For example, if customers in Idaho think the new pasta dish is too salty, and customers in Maine think the dish could use a little more salty richness, don't average the two together and decide not to change the dish. Use the local menu testing feedback to better inform the chef and staff at each location how they should adjust the dish to be more appealing to the market where their customers live.

Franchise Examples

Domino's Pizza introduced a successful new pizza recipe in 2009. Tate Dillow, Domino's "Chicken Chef," attributes the success to customer feedback. He suggests, "Find out what's in their heads. We actually asked them and we found out our pizza wasn't good. We had a challenge we needed to fix. Once we did that, we started selling twice as many pizzas as we used to."

Most people would strongly prefer the taste of a fresh, oven-baked pizza made from a local shop over one made of highly processed ingredients. Domino's will always lose to local stores when it comes to taste, and therefore those stores (or the concept of eating at local shops) are major competitors to the brand.

Luckily for Domino's they still have the advantage of their price and convenience- elements of a business that can be standardized for greater returns at a national level. So, you can see that there are different approaches to menu testing based on a restaurant's business model- larger chains that thrive from sales related to low prices and high convenience don't necessarily claim to compete on the taste scale- they make a pizza that's appealing to the majority of consumers and stick with it.

But, if you really want to get the maximum value in menu testing, try taking it down to the local level to help guide the decision making process.

Incorporate R&D questions into the mobile menu testing survey that you already give customers at your restaurant. After they've weighed in on their dining experience, continue the survey with specific questions about what they like and do not like about your menu, as well as more general questions about their personal food preferences.

Your R&D team can use data gathered from customers' responses to come up with new, innovative menu items that you can be sure your customers want - no focus group needed. This allows larger chains to compete with those small, boutique restaurant concepts- being in touch with the local flavor can make a big difference at the national level too.

During the testing phase, add survey questions regarding the potential new menu items. You'll hear directly from customers about how they liked the items, with valuable feedback on what to improve or whether to scrap the items completely. Keep in mind that adding a new dish to the menu in only the part of the country that responded positively is okay too- use the data you gain from the menu testing process to rationalize the decision at the corporate level.

Conclusion

So, I challenge you to think twice before adopting a one-size fits all menu- when you listen directly to customers on-location you're getting a more accurate idea of what your customers want and what they think of your menu, greatly reducing the risks associated with introducing new menu items and saving significant time and money.

How often have you heard of an individual or company achieves success without accomplishing a single stated goal? Typically, it is the other way around; no goal achievement equals no success. Consider the philosophy of fewer goals yield greater success, in other words less is more.

The following is a brief outline of what I use during executive or team leadership training.

3-year picture: What does it look like? Simply, what does the individual, or organization look like in 3 years? This is not a 25-page strategic plan document; it is the visual "day dream". What does the future revenue look like, how many locations do you see, how many employees do you want etc. The visual 3-year picture does need to be written down.

Now make a list of all the issues that stand between you and the 3-year picture. Get them ALL out in the open.

1-year plan: now that the picture is in place, write down no more than 6 issues from the list that must be resolved over the next 12 months that move you or your organization towards the 3-year picture. No more than 6, remember we are achieving with "less is more".

90 days: From your one-year plan, build a 90-day world.

From the issues selected, select no more than 3 or 5 that must be resolved over the next 90 days (your true GOALS are now established). Once goals have been established for the 90 days you CAN NOT add additional "something came up goals". Just as important, you cannot add a new goal once one is accomplished.

Give you and your team the feeling of accomplishment. Do not be discouraged if a goal is not accomplished over the next 90 days, it just rolls to the next.

Repeat this process over the next 12 months and watch you or your organization take off!

To your continued success...of your choice.

Hello, my name is Andrew and I am a principal of Synergy Sales & Marketing (an outsourced, more results based executive sales and marketing leadership team) and I have a confession to make...

I am a failure.

In fact, I am the CFO - the Chief FAILURE Officer for many corporations around the world!  

Seriously, I am.

Rewarded more for the results rather than the services my firm provides and time it takes to render them, we have an extraordinary high tolerance for failure.  A tolerance that over the years has enabled us to look at the very concept of failure in a different way.  A way that has taught us a whole new truth.  A truth that at first seemed implausible.

For those who are not in the sales and marketing profession, you should know that our profession is riddled with failure.  In fact, it is more about failure than success.  This is an indisputable fact. For example, well done direct mail campaigns yield a 3% conversion, social media advertising, less than 1/2 of 1%, sales, dozens maybe even hundreds of no's before you get your first yes.  

Also, very often (an no matter how talented your marketing team is) website messaging is notoriously never right the first time or the second or the third... not resonating with its hyper-specific audience and buyers.

So, if this is the case, then why is every consultant, every book, every coach, every sales and marketing pro focused solely on how to do things the right way?  Why are they all instructing us how failure is averted even though that "right way" still statistically yields a terrible result?

Well, something amazing happened.  Or, should I say, I allowed it to happen.  By allowing myself to have this intimate relationship with failure for over 10 years now, through the good times and the bad, I came to realize something.  Something of paramount importance.  Something that will cause you to at least pivot and very likely make a completely shift.

In the never ending process of always trying to "figure it out" I realized that predominance of our best solutions, our largest paydays came from those lessons in failure.  I learned that:

  • the faster and more frequently we failed,
  • the better we emotionally detached from those failures,
  • the better able to objectively observe the process of what failure could provide (give back), and,
  • the faster and more frequently the solutions came to us.
  • the fast solutions came, the faster the incremental, measurable results.

Ultimately what I observed is that failing, failing fast and failing often helped us find a way to significantly improve upon the present statistical paradigms.  Most importantly, I realized that failure is not only a good thing, but if you can actually change how you (and everyone around you) feels about failure and control that process, the reward is almost limitless.

At Synergy, we change not only how our clients look at failure but how they FEEL about it.  Leading by example we not only interrupt the corporate culture, we change how they all collectively feel about failure.  And, what that new feeling engenders (spread person by person, task by task) is a collective willingness to fail.  

A change in cultural behavior that renders the collective:

  • Smarter than most,
  • Faster than most, and
  • Better than most.

Through massive yet compressed (expeditious) failure, our clients know better than anyone in their space how NOT to do it.  They also know however, better than anyone else, how TO do it.  How to figure it out faster; find that sweet spot faster.  Succeed faster!

Success today, or scaled conversion as I like to call it (aka getting customers to buy in mass) has really become less about the practice of "here's how" and more about the science of "here's how NOT to".  The science of allowing measured, controlled failure to reveal key learnings that ultimately allow for rapid and advanced solutions, adaptation and evolution.  And by fundamentally changing how we all feel about failure... now that's where the real magic happens!

So yes, I am now a failure scientist.  I like to call it that because I really am a former (environmental) scientist... a university adjunct professor in fact.  I am, and always will be... a recovering geek!  A recovering geek who realized that his talent was never actually doing the science but communicating it.  Taking difficult subject matter and making it more easily digestible for people to understand and BUY!

I realized this because I started landing huge clients for the firm for which I was last employed many years ago.  Then I landed MANY huge clients.  It was at that time when I knew my calling was of all things, not science, but sales!

Now, I am a business man.  An entrepreneur.  A chief sales officer.  And yes, the geek in me will tell you, a failure scientist.  Sales and marketing departments are now my laboratory.  Companies, leaders, hire me, hire us to figure it out.  To actually figure out how to get people to buy... and buy in mass.  They hire us not just build it and orchestrate it, they hire us make what we build and orchestrate WORK.

Leading my client's sales and marketing efforts, I have an awesome responsibility.  A responsibility to pass on my wisdom.  To lead them down a road less traveled than mine.  And that responsibility has taught me more about courage, specifically the courage to not only say I fail but, I am actually good at it... and you should be too.

If you and your company truly embrace failure what you will find is that you will create an entirely different culture.  A culture that embraces rapid change, adapts to it and reaps the rewards by creating incredibly inventive and rapid solutions.  Something we a Synergy call The Culture Of Conversion.

Hello my name is Andrew and I am a failure and... A Chief Failure Officer.

---------------

For more about me, Synergy and Creating The Culture Of Conversion for your business go to my Linkedin profile at www.linkedin.com/in/resultsnow/

Most of you and your associates probably received the first paycheck already in 2013. It is less than it was last time, right? How much less? Have you multiplied the "loss" by the number of payrolls in 2013?

Well, I just got off the phone with someone making $150,000 a year, gross. The first paycheck in 2013 is about $344 less than the last one in 2012 was. There are 26 payrolls in 2013, so it means losing thousands of dollars this year.

Why?  Because the temporary Social Security tax cut (also referred to as payroll tax cut) will not be extended for 2013. Therefore, everyone will see the Social Security withholding increase from 4.2% back to 6.2%.

In a nutshell, what does it really mean to you, a solo or small business owner?

- If you are a solo or small business owner who also made "capital infusions" or "loans" to your company, you will have less to lend.

- You have to spend wiser.

- Since other people are getting less money on their paychecks as well, they will spend less - or at least look closer before they buy goods or services. It means you have to focus on what you do best and spend more time with current and future clients.

What may be some reasonable steps to consider in 2013 bringing change to the way you do business but in a good way! Take a close look at your time management. What percentage of your time generates revenue? What are those tasks you do that would not generate revenue? Can you take them away from your list by having someone else doing them?

Would you be able to generate revenue (do you have enough clients or customers) to do revenue-generating activities if you get some or most of that time back?

If your answer to the last question was "yes", than you are looking at "delegating" work.

What type of activities are those you could take off the list? Let me guess: mostly administrative ones.

How would it be the most beneficial to delegate such work? You certainly do not want to spend more on office space or computers. You can't increase your overhead costs further by hiring a part-time full-charge office manager with full benefits to take the tasks over. But you need these tasks to be done, in a professional matter, not to mention ad-hoc tasks.

What is the easiest and most beneficial way to go from here? I recommend a consulting firm offering full-scale back-office services virtually. So you do not need to hire anyone and do not need more space to be rented. You would have your own accountant taking care of the books, who can also do the taxes and process payroll, invoice clients and customers. If you have any additional ad-hoc tasks, HR related (job advertising, background checks, ect.,), web service assistance, just to mention a few, you just pick up the phone and it is taken care of.

What does it mean to you? You are gaining more time that you can charge to clients so more revenue is generated. You have spent significantly less than what additional earnings you made to make it happen - so it was worth doing it. You are less frustrated with business administration because you do not have to worry about it.

You just promoted yourself benefiting YOU and your Clients.

My name is Sylvia Pacher, and I am always here to assist you along the way to grow your business bigger, stronger, more competitive and profitable.

Restaurant sector challenges of negative same store sales comparables, consumer unease, rising food commodity costs and some magnitude of increased heath care costs emanating from Obama Care appeared in 2012. The same issues will be present in 2013.

But all is not lost. There are initiatives that can offset the negatives. Here are thoughts of what restaurants, both chain operators and independents, of all stripes, simply have to fix in 2013 operationally to meet these challenges. None of these opportunities are new news.

Restaurants have been working on reducing food and labor costs since the 1970s. It's time now to look at other areas of the P&L as well as revenue maximization beyond price increases.

Revenue enhancement related:

Unique Store level pricing: US national. zone, region or even DMA level pricing is a relic of the past, representative of a 1960s-1970s more suburban, homogenous US restaurant mindset. With development everywhere and a vastly stratified and diverse US society, why does the price in suburban Philly Bucks County PA need to be the same as in south Philly? It doesn't.

The rub comes in with massive television driven campaign single price points. YUM/Taco Bell has just rolled out its $1.49 grillers on television. Is that really the only price point that will work? Rarely does the promoted item mix exceed 20%, so 80% of the mix remains to be influenced by store level pricing. This route provides for revenue management upside and I'll have a whitepaper on this topic out soon.

New beverage and dessert options needed:

The rise in water only customers and the falloff of soda sales s is epidemic. This is very noticeable at your local Chipotle (CMG), go in and check out how many customers just get water.

But the industry is to blame, as there has been little to no change in carbonated sodas for years other than the new Coca Cola mix machines. What about: flavored waters and drinks around $1? Could a carbonated cranberry, cherry or vanilla fizzy drink be prepared with existing soda/drink/bar equipment? Yes.

Could it be sold profitably for $1? Yes, especially that is aimed at water customers who now carry zero gross profit. Smaller desserts: Jack in the Box (JACK) has recently figured that out with its $1.00 brownie bites, for example. This might not work at a Cheesecake Factory (CAKE), with a $7 flagship dessert that is split anyway, but it could work in other concepts.

Suggestive sell/upsell:

In almost every restaurant type, but especially in chain operations, the order taker generally ends the transaction by asking "would you like anything else? This happens in QSR, fast casual and casual dining operations. Ban the phrase "anything else", and replace it with...."apple pie?" (for QSRs) or "glass of wine?" (for casual dining operators). Bar operators have it covered with..."would you like another", and is often used. The trick is to get new customers.

Cost Containment related:

Obama Care Health Care impact: adapt, stop whining. It's here. The estimates from McDonalds, Wendy's, Dominos, CKE restaurants and the like are in the $15,000 to $20,000 additional expense per store zone. Papa John's was the high outlier, up to $100K per store.

Perhaps John was on a carbo high when he mentioned that. Of course, small pizzerias and huge casual dining restaurants will have different costs per unit. The effect will vary based on many other factors. Test something.

We wonder if a two track wage scale might work: one higher base wage for no benefits due, or a lower wage for where payable. To foil the invariable Fair Labor Standards Act (FLSA, 1938) challenge (The FLSA does allow for differential wages for medical so long as it isn't workers comp medical expense involved), sweeten the pot for the lower wage tier employees that they get first dibs to higher hours and overtime since they are covered and won't affect the 30 hours/week calculation.

Or what about a registry to share employees to keep employees engaged and working but under the hours threshold? I've have an additional whitepaper on this later.

We've mentioned before restaurant utility costs, especially electricity (too few HVAC thermostats and overly cooled dining rooms (since kitchens are hot all day) Could not a second rooftop AC unit and thermostat be added for the front of house that would be amortized quickly? Utility company experts say the payback could be less than two years.

Stop discrimination and avoid legal costs:

It's amazing the number of chain restaurant operators, franchisees and independent restaurants that get caught in EEOC/Title 7 discrimination situations. Two multi-unit franchises (BKW, PNRA) in December 2012 alone. Big settlements, big legal costs, diversion of management time and attention.

The federal anti-discrimination laws have been on the books since 1965, and the Fair Labor Standards Act has been on the books since 1938. Management must enforce fair and equal treatment of all customers and employees.

For every dollar in legal costs, twice as many restaurant sales dollars must be generated just to offset the direct cost.

I frequently get questions related to advertising. So, I began to look more keenly at the advertisements around me. I wanted to find examples of things to do and not to do.

Testimonials and Puffery

I found this advertisement in my local paper. This provides a good specimen for my first two dos and don'ts.

dental.jpg
1. Don't use absolutes. This ad touts that dental implants are: "The BEST Solution for Slipping Uncomfortable Dentures..." I am an attorney not a dentist, but really the BEST (the word 'best' is in all caps in the advertisement).

Aren't there other solutions out there? Is a dental implant really the best solution?

The advertisement goes on to say: "We offer the Best Solution for your Budget (this time the word 'best' is not in all caps; however, you see some random capitalizations that even an attorney would not ascribe). Again is it really the Best for my budget? Doesn't Dr. Jones down the way offer comparable pricing and installment payments?

Don't use absolutes in your advertisements! There is always an expectation. There is always someone else that offers something akin and argumentably equal or better to what you are offering.

2. Do get permission before your print. I don't know about you, but if I were G.L., I would want the good doctor to ask before he printed: "I couldn't wear my lower denture at all. I didn't want to go out in public. Dr..... placed some implants in one operation and gave me immediate temporary teeth. I can eat apples corn on the cob & smile with confidence. It changed my life."

Do get permission before you print testimonials! The speaker would be most thankful and the law requires it.

Print the Facts and Protect Your Rights

I found this advertisement in the August 2012 issue of Popular Science. This provides a good specimen for two more dos and don'ts.

honda1.jpg

3. Don't print unless you can point to it. It you are going to make a claim, make sure that there is evidence that you can point at to backup your claim. And, if it is an advertisement for prospective franchisees, make sure you point to something in the FDD or franchise disclosure document.

American Honda Motor Company in its ad for the Accord says that "J.D. Power and Associates has named the Honda Accord 'Highest Ranked Midsize car in Initial Quality.'" At the bottom of the ad in fine print (fine print-we will get to that) it cites an Initial Quality Study conducted by J.D. Power.

Don't print it unless you can point to the facts! If you are going to make a claim, make sure you can point to the facts to backup your claim.

4. Declare your rights. On the very bottom of the advertisement notice you will find the ©2011 American Honda Motor Co., Inc. This stakes American Honda Motor Company's copyright to this advertisement. It says that the advertisement is American Honda Motor Company's original work of art and no one is allowed to copy it. And, yes that is the proper copyright format. The © symbol, the date, your company name.

In this electronic copy and paste world, it is more important than ever to include a copyright notation at the bottom of your advertisement. Oh and while you are at it, include the other symbols: registered trademark®, service mark℠ and trademark™.

Declare your rights! In this electronic copy and paste world, it is more important than ever to include registered trademark®, service mark℠, copyright© and trademark™ symbols in your advertisement.

Be Transparent

I found this tag on a shirt that I recently purchased for myself. It is a good specimen for my last dos and don'ts.

weaver.jpg

5. Do skip the fine print. It is all about transparency. Transparency is in. Transparency in pricing, transparency in government is all good. If you include a lot of small fine print at the bottom of your advertisements it looks like an advertisement for Viagra or that that your product comes with a lot of hidden terms and conditions.

Instead of in fine print saying that my newly purchased shirt, after one washing would be faded and discolored, the tag nicely explained to me: "We produced this garment with considerable help from the wearers, printers, & embroiderers whose handwork made this style unusual and exclusive . This hand woven and embroidered fabric may result in slight weaving and shade variations, thereby giving it a unique character all its own. Enjoy!

Do skip the fine print! There is a way to say everything. Say it without the traditional fine print legalese. Make everything you say a selling point.

Legal Disclaimer: All advertisements are used under the fair use exception of copyright laws. I have not been a recipient of dental implants, me nor anyone in my household owns a Honda, and no animals, to my knowledge, were harmed in the making of my shirt.

Michigan, last week, became the 24th state to pass right-to-work legislation. A bit of a misnomer, the term “right-to-work” does not guarantee anyone’s right to work per se. What it does guarantee is that when employees choose not to join a union, they cannot be compelled to pay any union dues or fees as a condition of their employment.

In contrast, a “closed shop” would require that all workers join the union, and hence pay dues, as a condition of being hired.

While such completely closed shops were outlawed decades ago, the modified form that exists today permits a mandated fee payment to the union by those who choose not to join.

An argument against right-to-work is that all employees enjoy higher wages and better benefits as a result of the union and thus should contribute. The counter argument, and basis for right-to-work laws, is that choosing to join a union and pay dues to it, or not, is each individual employee’s basic right.

The passage of the right-to-work law in Michigan, and one earlier this year in Indiana, is significant because the mid-West has historically been a stronghold for union activity.

Right-to-work laws tend to have a weakening effect on unions. Many companies have relocated jobs to states that have right-to-work laws; it has been argued that the laws, therefore, have a positive effect on the economies and unemployment rates in those states.

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Are you overpaying on your equipment purchases?

Because you didn't use the right tax planning device?

As we approach the end of 2012, now is a great time to start thinking about not just last minute equipment purchases, but also tax time.

So, if you're in need of any new kitchen equipment or a business vehicle, don't put off that purchase any longer - not only because 2013 is right around the corner, but also because the benefits of the Section 179 tax deduction is expected to reduce significantly at the end of the year.

What is Section 179? Section 179 probably sounds more complicated than it really is. It is a simple tax deduction in the IRS tax code that has been around since 1981 and was developed as an incentive for businesses to invest in their own growth.

While it has been revised numerous times over the years, the most recent changes took effect January 2, 2012 and allow franchisees to immediately deduct up to $139,000 on qualifying equipment and software purchases, with the maximum amount that can be spent being raised to $560,000.

This type of incentive can yield substantial cash savings for a franchise while helping to provide access to equipment that is needed for recommended equipment upgrades, an expansion, or to replace broken equipment. The deduction isn't automatic, however, and franchisees need to do the proper paperwork.

It's easy to take advantage of these savings, provided you know how to go about it. While we aren't tax professionals and you shouldn't consider this tax advice, we have learned quite a bit about Section 179 over the years.

Below are answers to some of the most common questions we hear regarding Section 179.

What Qualifies for Section 179? The best part of the Section 179 deduction is that it can be used for a whole host of qualifying equipment purchases, whether they're required or recommended upgrades, or to replace a broken or worn out essential equipment. From new soft serve ice cream machines, ovens, POS systems, or even computer hardware and software, almost any equipment purchase is included.

The catch is that the equipment must be purchased AND put into operation during the tax year. Some examples of qualifying purchases include:

  • Capital Equipment
  • Business Vehicles (gross weight in excess of 6,000 lbs.)
  • Computers
  • Software
  • Ovens & Other Kitchen Equipment

How to Prevent Overpaying using the Section 179 deduction

You will need to complete Part One of IRS form 4562, a relatively simple form but one you'll need to track down on the IRS website.

Make sure to work with your tax professional to take advantage of this lucrative incentive for your franchise and ensure they have experience with Section 179.

How much is the section 179 deduction worth? For the 2012 tax year, businesses may take a 100% deduction on purchased or leased equipment, as long as the total is below $139,000. This is in contrast to previous years, when the total was as high as $500,000. We'll discuss this in more detail in the next section.

How was Section 179 affected by the various Stimulus Acts? The last six years have seen significant changes in the Section 179 Deduction due to various Stimulus Acts enacted by congress - most specifically related to the dollar limits of the deduction.

The limits by tax year:

2007 Deduction Limit: $125,000

2008 Deduction Limit: $250,000

2009 Deduction Limit: $250,000

2010 Deduction Limit: $500,000

2011 Deduction Limit: $500,000

2012 Deduction Limit: $139,000

Deduction decreases dollar-for-dollar after equipment purchase totals exceed the following:

2007 Total equipment purchases: $500,000

2008/2009 Total equipment purchases: $800,000

2010/2011 Total equipment purchases: $200,000,000

2012 Total equipment purchases: $560,000

How was Section 179 affected by the Tax Relief Act of 2010?

This act impacted the Bonus Depreciation available to businesses under Section 179.

In 2012, there is 50% Bonus Depreciation available for new equipment purchases once the $560,000 limit is reached (or for businesses reporting net losses in 2012).

What will happen to the dollar limits of the deduction 2013? The current law states that the deduction will decrease again to $25,000 in 2013.

This number could be changed by Congress if they tackle it in the next legislative session.

When can I take advantage of Section 179 deductions? The deadline for the purchase and deployment of eligible equipment is December 31, 2012. You will make the deduction as you are filing your tax return for the year. Remember, it's possible that the amount will decrease next year, so you'll want to take advantage of this deduction as soon as possible!

How do I determine my deduction? Let's take a look at some example savings, assuming an equipment purchase totaling $65,000.

Your Equipment Cost: $65,000 Section 179 Deduction (up to $139,000): $65,000 50% Bonus Deduction* (Equipment Cost - Deduction) x 50% *only for new equipment $0 Total First Year Deduction (Section 179 Deduction + Bonus Deduction) $65,000 Total Savings (Total Deduction x 35% Tax Rate) $22,750 Equipment Cost After Savings (Equipment Cost - Total Savings) $42,250  

In this example, you'd save a whopping $22,750. That's the kind of sizable saving that many franchisees miss by failing to file for this deduction.

Is it better to purchase or lease to take advantage of Section 179? Ultimately the buy vs. lease will depend on your businesses situation, but an important fact about leasing is this: with the Section 179 deduction, you can write off 100% (up to $139,000) of the price of your qualifying equipment but you don't have to spend 100%.

This means that with a properly structured lease, your tax deduction can actually be more than your first year of payments. Don't forget, the limits for this deduction have been dramatically decreasing over the years and will decrease again in 2013, likely to as little as $25,000. There is no guarantee that the total will increase above that in the future.

So, if you're thinking you may be in the market for some new equipment, now is the time to jump on it. For more information, be sure to contact your local tax advisor to discuss your specific situation.

Have other projects planned? Direct Capital also offers financing programs for remodels, new stores, relocations, equipment & technology upgrades and more!

With year end almost upon us, human resources and payroll professionals are busier than ever! Reduce your administrative headaches by preventing problems. Check the list below to make sure you’re on top of important requirements and changes in the new year.

1. Report health insurance costs on W-2s. The 2012 W-2s that you issue in January, 2013 must reflect the cost of employer-sponsored health insurance in Box 12 with a code of DD. Note that small employers, i.e. those who issued less than 250 W-2s for 2011, have been given a one-year reprieve but are expected to report the cost in their 2013 W-2s to be distributed in January, 2014.

2. New Health FSA limit. The employee contribution limit for health flexible spending accounts is reduced to $2500 per year for plan years beginning in 2013 and beyond. Be sure to update your plan document and let employees know of the change. (Note that dependent care accounts are not changed.)

3. Social Security Tax Rate. Unless extended by Congress, the 2% temporary reduction in the social security tax rate is about to expire. Most likely, therefore, effective January 1, 2013 the rate will revert to 6.2% of wages up to $112,300 (an increase from $110,000.)

4. Additional Medicare Tax. If you have employees who earn more than $200,000 per year, you are required in 2013 to withhold an additional 0.9 percent Medicare payroll tax (an increase from 1.45 percent to 2.35 percent) to the amount of their pay that exceeds $200,000.

5. Loss of Adoption and Education Assistance Tax-free Status. The income tax exclusion of up to $12,650 in qualified adoption assistance and up to $5,250 in employer-provided tuition assistance are set to expire on December 31, 2012 unless extended by Congress. If applicable to your organization, let employees know about these likely changes. Consider ways to assist employees with educational reimbursements that qualify as a business expense.

6. Minimum Wage Increases. Where the state minimum wage exceeds the federal rate, you must use the higher wage. States with minimum wage hourly rate increases in 2013 are:  Arizona $7.80; Colorado $7.78; Florida $7.79; Missouri $7.35; Montana $7.80; Ohio $7.85; Oregon $8.95; Rhode Island $7.75; Vermont $8.60; and Washington $9.19. The federal rate will remain at $7.25 per hour.

7. IRS standard mileage rate increases are as follows:
56.5 cents per mile for business miles
24 cents per mile for medical or moving purposes
14 cents per mile driven in service of charitable organizations

8. Defined contribution retirement plan limits. Increased amounts for 2013 are:
Maximum elective deferral by employee  $17,000
Catch-up provision limit for ages 50+       $ 5,500
Total maximium (employer + employer)  $51,000

9. Health Savings Account/High Deductible Health Plan increases. Note the following HSA limits and related HDHP dollar amounts for 2013:
HSA contribution limit (employer + employee)  $3,250 individual   $6,450 family
HSA Catch up contribution limit (age 55+)          $1,000
HDHP minimum deductible amounts                   $1,250 individual    $2,500 family
HDHP maximum out-of-pocket amounts             $6,250 individual   $12,500

For a full year-end checklist, HR Made Simple subscribers may view the Year End Payroll & Benefits Checklist (under HR Topic Modules on the Knowledge Menu.)

 

Open enrollment for health and other benefit plans is one of the most hectic periods for HR departments. You can’t completely avoid stress, but you can take actions that will help the process go much more smoothly. For calendar year renewals, if you haven’t already, start now! Here are some important steps to reduce your headaches:

1. Engage brokers and providers. Work with your providers. They should help you evaluate alternatives as well as provide informational materials for your employees. Enlist their expertise to help educate employees and, if need be, upper management.

2. Get approvals. Obtain upper management approvals as soon as possible regarding the plans that will be offered and the amount of employer vs. employee contributions. Until you have those approvals it’s difficult to plan properly so make this happen as soon as possible.  Be prepared to make recommendations and provide alternative scenarios and cost comparisons.

3. Forge a plan. Lay out actions to be taken for each benefit plan. Incorporate deadlines and new requirements into your planning and education efforts. This year there are Affordable Care Act (ACA) requirements to provide a Summary of Benefits and Coverage (SBC) to eligible employees at least 30 days prior to the plan renewal date following September 23, 2012 and to reduce the contribution limit to health flexible spending accounts (FSA) to $2,500 in 2013.

4. Communicate, communicate, communicate. Consider various methods to best reach all eligible employees. Email might be fine for office staff but it doesn’t work for employees who don’t use computers. Use a variety of methods to grab attention: email, intranet, posters, payroll stuffers, newsletters, home mailings. Communications should be clear and concise and highlight key information such as meeting dates, forms to use, and deadlines. Try, too, to drive home the point that this information is important to their well-being.

5. Educate, educate, educate. Benefits plans have become ever more complex in recent years and it’s important that employees truly understand the ins-and-outs of how plans work. If you have a high deductible health plan (HDHP) with commensurate health savings accounts (HSA) or health reimbursement arrangements (HRA,) it’s crucial that employees understand the complexities of how to use them legally and properly. Educational meetings should be held at different times to accommodate varying schedules.

Also, do consider hosting evening meetings for spouses as sometimes they are the ones making the benefits decisions. Make sure employees and their families understand such important facets of their health insurance plans as: deductibles, co-pays, coinsurance, preventative care coverage, required pre-approvals and referrals, cost differentials between in-network and out-of-network providers, and different tiers of prescription drug coverage. Their understanding will save you headaches later on! After all, when the insurance company does not cover a cost in the way the employee expected, to whom does (s)he complain?

6. Coordinate with Payroll. Make sure you know when enrollment and other benefits information needs to be provided to your payroll department and that your deadlines and planning reflect that timing. Ensure that 2013 IRS contribution limits are incorporated into the payroll system so the amounts are not exceeded. (To view these limits, click retirement plan limits and health plan limits.) Employees are disappointed when money they thought was deducted pre-tax needs to be taxed. That’s one headache you can prevent!

All marketing programs have a cycle. Dates and time lines that need to be adhered to in order to make sure that the overall plan is a success. It is all about developing a program that communicates the brand messaging and develops a strong call to action.

For many of my clients, this means developing a custom marketing piece that is unique to them and speaks directly to their brand and messaging. Custom usually equates to overseas and in today's market, that still mostly means Made in China.

As I tell my clients over and over again, if you want quality, but you want it at a lower price point, time lines need to be extended. That means being able to look 90-150 days into the future depending on the project.

Now comes the tricky part. . . Chinese New Year. For those people who live on a Lunar Calendar, it comes at the same time every year. However, to those of us in North America, we need to be cognisant that the date moves and that production SHUTS DOWN for upwards of 3 weeks per year.

This is something that people out West do not seem to grasp. People travel like it's American Thanksgiving, but stay for a longer period of time. It can take them upwards of 5 days to get home and 5-7 days to get back, if they do come back. Projects that arrive at the plant less than a month before Chinese New Year can almost be guaranteed to not ship until after people come back.

This can lead to real panic for those who have not planned accordingly. We tell our clients that we should have orders to China no later than the second week of November. There are moulds to be made, proofs to be sent and signed off upon, raw materials to be ordered and time allocated for production and shipping prior to Chinese New Year.

If you are currently dealing with people who do not regularly procure from Asia, don't. They will not have the expertise to drive the process, assure product quality, make sure that proper testing is done to meet North American safety standards and have no recourse with suppliers if there is a problem.

In today's world, where everyone thinks they can just go online and procure custom projects from overseas and have them arrive on time and right, they will eventually be sadly mistaken.

Let us be your experts to help you drive your marketing process, develop custom marketing pieces that dovetail with your brand and messaging and take care of your offshore procurement and development. We have nearly 20 years experience and we are hear to Get YOU Noticed! in a positive way.

October is National Disability Employment Awareness Month. Consisting of a national campaign to raise awareness about disability employment issues, this year’s theme is “A Strong Workforce is an Inclusive Workforce: What Can YOU Do?”

There’s no better time to remember how vital it is that employers engage in an interactive dialog with employees who have a disability. The interactive process, required by federal law, is basically a dialog between the employer and employee which helps them come up with a reasonable accommodation (that does not create an undue hardship for the employer) to help the employee perform his or her job. Again, the interactive process is required under the Americans with Disabilities Act.

Just last week the EEOC filed suit against Regions Bank in Tennessee for age and disability discrimination. The bank fired a branch manager after she requested accommodation for a disability. The suit alleges that the bank refused her request for reasonable accommodation and failed to engage in the  interactive process to accommodate and, further, that it treated younger managers more favorably.

The Americans with Disabilities Act Amendments Act (ADAAA) of 2009 greatly expanded the definition of who is considered to be disabled. The question, therefore, has shifted from being about whether someone is disabled to how the person can be reasonably accommodated.  Employers should understand that, while they do not necessarily have to agree to a specific accommodation requested by an employee and they do not have to accommodate someone who is not qualified to do the job (with or without accommodation), they absolutely do need to engage in the interactive process.

HRSentry subscribers may find further information about complying with the Americans with Disabilities Act (and the Amendments Act of 2009 which greatly expanded the definition of who is considered to be disabled) by logging in to the HRSentry dashboard. Under the Knowledge Menu, click on HR Topic Modules to find the ADA Kit

Looking into 2013, there is no doubt that rising food commodity costs will have an effect on restaurants. The effect of the US drought, global economic, currency, weather and supply/demand conditions will have negative margin effects. All of the proteins will be difficult, especially beef and chicken. Coffee and vegetable oil are among the few food groups lower.

The cost effect will be felt in 2013, and beyond.  This comes on top of an up/down/up cycle since 2007. Depending on concept, restaurant cost of goods sold is typically 25-35% of revenue, the largest expense. Restaurants might cover moderate levels of food inflation, but if labor or other operating costs rise, and if revenues fall and produces deleverage of fixed costs, a real problem exists.

We think the ‘low hanging fruit’, the easier to implement, plate centered cost savings actions have already been done.  Many restaurants have already reacted, in the recessionary 2008-2009 period by trimming portions and prices and by featuring lower cost per pound items and “small plates” in their menu and promotional mix.

CKE Restaurants, for example, rolled out turkey burgers, and pork, lobster, chicken and other items have been periodically featured elsewhere. PF Chang’s implemented expansive happy hour food and alcohol offerings.

In 2011, we baselined the private equity owned Real Mex Mexican chains (Chevy’s, El Torito) and were embarrassed by how plate portions had eroded smaller over time. No wonder they did Chapter -11 twice and are still closing units.  

Many restaurants have already attacked staffing costs mercilessly, such as Darden, which eliminated bussers nationwide, expanded tip credit and is recertifying servers in massive workforce reorganization (and has the class actions lawsuits now pending). Sonic (SONC) expanded the tip credit, lowered wages for some and rolled out car hops on roller skates to enhance service (and hopefully tips).

What to do? The show must go on of course.  Other than price increases, which always has to be considered in relation to competitors and customers, more work on menu mix and the rest of the P&L has to be considered.

These notes are particularly relevant for franchisees who have their brand composing the marketing.   Hard questions have to be asked.

1. More work towards developing store, zone, and regional pricing tiers needed: most US restaurant chains grew out of a 1960s/1970 culture of mass conformity. It is what the newly traveling public demanded in reaction to inconsistent restaurants in the 1940s-1960s.  The US today is has a far more diverse population, competition, operating cost and real estate characteristics.  Pricing really need not be the same everywhere in every location, either in a DMA or in a region. Ask ABC stores, the famous convenience retailer in Hawaii how they invented store level pricing. Does a Subway customer expect exactly the same price to the penny for a sub everywhere in a DMA?

Restaurant management systems and today’s analytics really are sophisticated enough to handle tiers of pricing. For example, one of Burger King’s (BKW) international high volume markets do not use the same lowball price tactics and is not the worse for wear.

Wendy’s (WEN) is still testing sub-DMA and store pricing tiers and we hope they continue and set the example for more industry innovation in this area.

2. Mass television campaigns can be much more carefully conceptualized. This is where the rub really comes. Conventional marketing theory holds that price specific advertising works better than “culinary” or other message focused advertising. Example; see Darden’s recent Q4 2012 earnings explanations of the Olive Garden sales softness.

 Do restaurants advertise price so much because of the media mix? We bet that the vast body of 15 second TV spots that are aired can only work with price point appeals. And research has shown 15 second spots aren’t half the cost nor have the effect of 30 second spots. Has there been a holistic cost/benefit analysis done between media mix cost and media driven price and mix at the restaurant level? Is some more optimal 15 second or the 30 second spot mix more effective?

And what about using $1/$2/$5/etc. off marketing features? Our experience is that those are highly regarded by the public. That way no specific price baseline must be noted.

3. What is done with mass television campaigns and massive concept repositioning has to be tested. Just must. There is much less time, money and customers for massive redos. Ask Ron Johnson and JC Penny’s (JCP) about the cost of customer confusion in the wake of their massive repositioning (and the negative 20% same store sales resulting), that we understand was not pre-tested.

4. Suggestive selling at the store level always needs a lot of work.  While few of us really likes to sell, renewed emphasis to not downsell once the customer is in the store (“oh…would you like the coupon offer?” or ban the comment “is that all” have to be helpful. There can be at least one universal tradeup question that even a shy person could ask over the drive thru.

This problem is the greatest in the QSR and fast casual subsegments but not zero among casual dining operators.

5. Get the remodel funding in place. Some franchisee centric chains which haven’t remodeled because of sub-par unit economics will be under severe strain. Now is the time now to strengthen system fundamentals and get franchisee financial assistance support processes in place.  Papa John’s (PZZA) gets it, and has done so, but Domino’s (DPZ) hasn’t broken that code yet. 

6. Finally, there are other cost savings possible. My favorite is utility costs, particularly that of electricity (air conditioning) and water. Have you ever been in a restaurant where it was freezing cold after dark, or on a chilly day? There is a reason, and it has to do with a single roof top unit and a single sensory control box that can’t be right for either a hot kitchen or a chilly dining room.

 

This week I turned 60.  And I am concerned and confused about the future of the hospitality industry.  I am concerned about where our future leadership will come from.  For those of us who are also pushing 60 or have already pushed through to the other side, here are some reminders of what we have lived through.  And for those of you who believe that 60 is ancient, here is an interesting history.

We were born before or right at the start of television, before polio shots, frozen foods, xerox, plastic, contact lenses, frisbees and the pill.  We were born before radar, credit cards split atoms, laser beams and ballpoint pens.  Before pantyhose, dishwashers, clothes dryers, electric blankets, air conditioners, drip-dry clothes and before man walked on the moon.

We got married first and then lived together.  How weird is that?  Having a meaningful relationship meant getting along well with our cousins.

We were here before househusbands, gay rights, computer dating, dual careers, and commuter marriages.  We were before day-care centers, group therapy, and nursing homes.

We never heard of FM radio, tape decks, artificial hearts, word processors, yogurt, and guys wearing earrings.

For us, time-sharing meant togetherness, not vacation homes and Facebook, hardware meant hardware, and software wasn’t even a word!

A keyboard came attached to a piano, a virus gave you a fever, to log on was adding wood to the fire.  A program was a TV show and a menu was something you ordered food from.

Made in Japan meant junk and the term “making out” referred to how you did on your exam. McDonald’s and instant coffee were unheard of.

When we hit the scene there were 5 and 10 cent stores where you bought things for 5 and 10 cents.  For one nickel you could ride a streetcar, make a phone call, buy a Pepsi or enough stamps to mail one letter and 2 postcards.

You could buy a new Chevy Coup for $600.00 but who could afford one?  What a pity too, because gas was 11 cents a gallon.

In our day, cigarette smoking was fashionable, grass was mowed, coke was a cold drink and pot was something you cooked in.

Rock music was a lullaby that grandma sang and aids were helpers in the principal’s office.

We made do with what we had.  And we were the last generation that was so dumb as to think you needed a husband to have a baby!

No wonder we are confused.  But we survived and we’re here and that’s reason enough to celebrate and to thank God for our adaptability.

Humor aside, the common theme that runs through all of these comments is change.  Change.  Think about it.  It surrounds us every day.  Change is us.

We don’t notice it every day but boy oh boy is it there - - receding hairline, expanding waistlines, pounding in your chest after you have run one block.

It’s there all right.

Sometimes I think that dealing with change is the fundamental human contradiction.  Rationally we understand that change is the law of life, the inevitability of our universe.  But emotionally, in the heart we really want everything to stay the same.

We really don’t want our babies, those beautiful 3 and 4 year olds to grow up and we don’t really want our teenagers to start to date. And secretly, we don’t really want any more new technology.  Heaven knows, we can’t even absorb or understand what we already have.

But we’re stuck.  Change is the law of life.  And it is here to stay.  Don’t fight change.  Embrace it.

Change in the business environment is rapid.  Something new, something different is coming into the marketplace every day.  Do you see it?  Are you looking for it?  This is serious stuff.  You have worked awfully hard, you have taken risks.  Don’t lose it all by making pretend that things will stay the same or burying yourself so deeply in the day to day details that the horizon is obscured.

There is an insightful story about a friend of mine who buys pampers for his son at Wal-Mart.  The information about his purchase is transmitted electronically from Wal-Mart to the Proctor Gamble warehouse and from there to the Proctor Gamble manufacturing facility so that production, inventory and delivery are totally integrated.

Now 10 -12 years ago there was a distributor who did all this.  And he was good, very good, the best.  He practiced total quality management, was loyal to his supplier, gave great service to his customers and guess what?  He’s out of business.  Finished.  Wiped out.  So you feel sorry for the poor bastard.  He didn’t do anything wrong. It’s just that while he was spending 60-70 hours a week running his business, the world was changing and he didn’t know it.

In reality, there are three types of managers.  One sees changes coming down the track.  Another sees changes just in time to take some adjustments before it’s too late.  The last type gets run over by change with the same result as a Mack truck running over a paper cup.

Look, I travel around the country, talking with owners and general managers, with desk clerks and bellhops, waiters and waitresses and something seems to be missing.  I think it is a sense of pride, a sense that you are proud of yourselves, proud of your employees and proud of your business, no matter what type of business it may be.  Pride is defined in the dictionary as pleasure or satisfaction taken in one’s work, achievement or profession.  Maybe what I sense is a lack of leadership, and without real leadership there is no pride.  We don’t instill it, because we don’t understand and maybe because we don’t care.

Maybe it is because we don’t understand what business we are in.  We are in the people business.  Not the hotel or restaurant business, not the real estate business.  Not the construction business, the people business.  Instead of machinery, we have people.  Instead of automated conveyor belts, we have people.  Instead of computers that hum and print stuff, we have people. 

We have not come to grips with this basic concept.  And without doing so, all the efforts, all the expenditures, all the marketing and sales efforts will not give you full return on your investment. 

It reminds me of an old, old story about Count Basie.  He told an owner he would never play in the guy’s nightclub again because the piano was so badly out of tune.  A month later the owner called Basie and said, “Come back! It’s fixed.”  Basie showed up, sat down, played a few bars and slammed the key cover down in disgust.  He said, “This is worse.  What did you do to this piano?”  “I had it fixed,” said the indignant club owner.  “What do you mean you had it fixed?  What did you do to it,” said the Count.  “I had it painted” was the answer.

There is an old expression freely translated as, no matter which way you turn, your rear end is still behind you.  No matter how much paint you use, it doesn’t help if the piano is out of tune.

You really want to know what I hear, wandering around the countryside.  Serious bitching.  Serious moaning and serious whining.  They say things like, “It’s hard to find good help these days,” and “Nobody wants to work anymore,” and “Why bother talking or teaching anything.  In two, three weeks, they’ll quit!”

Look, I am not going to go down this list of stupidity, item by item.  Wait a second, I have a better idea.  I agree with all of this.  I will stipulate to all 3 points.  The old days were better, nobody wants to work, kids are weirdoes.  I agree, okay?  I’m with you.  So?  What now?  You’ve gotten it off your chest.  What is your action plan?  More bitching?  More moaning? More whining?  Man, if there was ever a better example of that old adage that if you’re not part of the solution, you must be part of the problem...this is it.  The owners and general managers in the tourism business? 

It’s US who are often the problem, not the employees.  It’s us.  Forty to fifty years ago, there used to be a comic strip called “Pogo” drawn by a guy by the name of Walt Kelly.  Some of you graybeards probably remember.  Anyway, in a classic strip one of the characters says, “I have seen the enemy and they is us!”

We are sitting on a real opportunity to increase revenue, cut costs and bump profits.  The hospitality and tourism industry is the last major industry where a formal education is not a requirement for professional advancement or financial success.  Success in our business can be achieved with a simple formula:

1. Hard Work

2. Persistence

3. Desire for self-improvement

4. Willingness to watch, to listen, to learn.

It’s not complicated.  Whether you start out with a graduate degree from Cornell, or as a young person off the street as a night desk clerk or housekeeper.  Hard work and long hours are the pathway to a fulfilling and rewarding career.  Lots of people in this industry including general managers, owners and corporate vice presidents never graduated college.  Don’t bother to think about that statement. We can start right here with me. 

That’s right.  Steve Belmonte, former President & CEO of Ramada Hotels for 10 years and I never graduated college.  I started at 16 as a desk clerk in a Holiday Inn at the O’Hare airport.  My career has worked out pretty well.

So why, for heaven’s sake, why don’t we tell our people about the possibilities?  Why don’t we tell them about the abundance of success stories that are out there?  To these kids, you appear confident, secure, rich and successful.  They probably think you were born with a silver spoon in your mouth.  Why don’t you tell them the truth?  Why don’t you tell them your story?

What’s the point of all this?  I have been talking about change, leadership, pride and people.  It’s about our lives, our business, and our future.  It’s all about relationships.  You want some other interesting words?  How about trust and how about loyalty?  The very foundation of our industry is being able to count on others, dependability, allegiance, reliability, and obligation.  Think of the mix, the interdependence between you as the owner or manager, your employee, your customers and your franchisor.  We are talking about a positive feedback loop here.  People who are all intertwined and interconnected who benefit directly from each other.  And the benefits come directly from those simple words, trust and loyalty.

Okay, so you got the message.  Now let’s get down to specific cases.  Yours.  The owner and the general manager set the culture of the property.  You establish the tone, the environment in which your employees operate.  A friend of mine gave me two perfect examples of company cultures; two opposites.  

The first is about FedEx.  He needed to drop off a package downtown and got to the office 15 minutes before it opened.  While standing on the street corner with his back to the storefront, the young woman inside unlocked the door, came out on the street, tapped him on the shoulder and said, “May I help you, sir?”  She did that for only one reason.  That reason was because of Fred Smith, the Founder of the company.  Smith never met her.  He never talked to her.  But he established the policies and he created the atmosphere where employees want to go the extra mile. 

The other story is bad.  Real bad.  A similar thing probably happens at least once or twice a week to you.  The same guy goes into a well- known premier burger chain.  We’ll call it Ronnie Jockets, located right off Michigan Avenue in Chicago at 10:50 in the morning.  Just 10 minutes before eleven.  He pushes open the door, walks over to the front counter where there are three servers standing there in uniform with a manager-type wearing a tie.  Four people.  My friend says, “I’d like a cup of coffee to take out, please.”  One of the waiters looks at him and says, “I’m sorry, but we don’t open until eleven.”  The coffee is already made in the urn, four feet away and he’s “sorry we don’t open until 11?” 

And the manager stands there like a dummy.  Is that your hotel?  Is that the culture, the kind of employee you want?  Is that the attitude that is going to maximize your revenue and profits?

There’s a simple test I used to use at my hotel, which told me if I was doing my job and whether my properties were alive or dead, kind of like a doctor with a stethoscope.  It’s the pronoun test.  When I check in, I ask one of your people a couple of questions about policy or some aspect of the operations.  You know, something not complicated like, “How come the restaurant closes so early?” or “If you are not busy tonight, can I check-out at 3:30pm?”

If the answer comes back using the words “they” and “them”, I know that this place is dead as a doornail.  There is no heart, no soul and no leadership.  If the answer includes “we” or “us”, then I know something good happens at this property.

The bottom line will be determined by your willingness to help others and by your ability to mentor your employees and prepare them for supervisory and management positions.  Your ability to remain competitive in the most competitive of businesses is determined by your ability to give credit where credit is due and to praise your people for doing a good job.

All of this translates into dollars.  This is not some soft, fuzzy, do-good stuff.  Just maybe, if you assume a leader’s role and instill pride in your people, you will realize your financial and professional goals.  Your business depends on guest services.  Guest service depends on your leadership.  Your leadership instills pride in your people and they perform their tasks better than your competition and this will determine your profits.  It’s not complicated.

John Kotter in his book, “Leading Change” defined leadership as well as anyone ever has:  “Leadership defines what the future should look like.   It aligns people with that vision and inspires them to make it happen despite the obstacles.”

We have financial objectives.  We analyze the past year’s results department by department and create a budget, a forecast which will fulfill the financial requirements.  We understand that.  We do it.  Good.  Check it off.

Align people with that vision.  Do we do that?  Let me tell you something.  If you have not earned the respect of your people, go back to square one.  That’s right.  You have to EARN respect.  Just like you judge others by their actions, your managers, supervisors, and line employees are judging you by your actions.  And nobody is going to go that extra step, exert that degree of energy if you are not respected.  What creates that respect?  Nothing big, more so a lot of little things like: enthusiasm, courtesy, credit, recognition, praise, and affirmation.  It’s easy to criticize.  Any fool can do that.  What is hard is lifting your people up and making them feel good.  Now that takes skill, real skill.  The last part of Kotter’s statement was about leadership.

“Inspire them to make it happen despite the obstacles.”

For the word “inspire”, let’s substitute “incentivevise.”  General Eisenhower said, “There are no victories at bargain prices.”  Again, this is not complicated brainwork.  People respond to incentives.  Everything else is commentary.  All people.  All the time.  It’s human.  It’s natural.  Why would you believe your front line employees are any different from you?  You have incentives, which drive you, which motivate you!  You want my advice?  Provide dollars, lots of dollars, for performance and whatever it costs for bonuses and rewards.  You will get your investment back many fold through increases to your bottom line.  Notice that I refer to this as an investment because this is an ROI situation.

Let’s go back to the definition of pride:  “Pleasure or satisfaction in one’s work, achievements or profession.”  What’s our profession?  We are in the hospitality industry.  We are those people who from the beginning of time have provided a warm, safe haven for the traveler, and in the days gone by, companionship, conversation and food.  Do you feel that?  Do you believe that?  Do you communicate that to your people, that there is satisfaction, a joy that comes from service?  Do you communicate enthusiasm for your profession?

Henry Ford said, “Enthusiasm is at the bottom of all progress.  Enthusiasm is the spark that gives you the energy to execute your ideas.  With it, there is accomplishment.  Without it, there are only alibis.”  You can make a business come alive, creating its personality, but that happens through leadership, through some amalgamation of words and deeds.  Words are so strong.  Words give clear images.  We herd sheep.  We drive cattle.  We lead people.  That is our work as owners, operators and managers.  Leadership.  Leading people and giving our businesses character, personality.   Installing life into our business.

Pride and leadership.  Leadership and pride.  We are talking about revenues.  We are talking about profits.  We are talking about your career, your future. 

I don’t know how else to say it.  My children accuse me of repeating myself so I won’t.  I will let other people speak to you for me.

George Bernard Shaw said that, “The essence of inhumanity is to be indifferent to our fellow creatures.  That is the worst sin.”  Or to quote a famous Indian chief from the 1850’s:  “Humankind has not woven the web of life.  We are but one thread within it.  Whatever we do to the web we do to ourselves.  All things are bound together.  All things connect.”

There you have it.  That’s the message.  All things connect.  You, your customers, your employees, your franchisor, bound together by pride, trust, loyalty and wanting to succeed and complicated by having to adapt to a world which is in constant rapid change where something new, something different seems to come into the marketplace every day.

About Vimana Franchise Systems LLC & Hospitality Solutions LLC

Vimana Franchise Systems LLC is a hotel franchise company owned by CEO Steve Belmonte, President Neal Jackson and Vice President Cory Jackson Jr.  In May 2011, Vimana Franchise Systems launched the Centerstone brand as a three-segment franchise designed to create a fair and cost effective model for the hospitality industry.  In November 2011, Key West Inns was re-launched under the Vimana Franchise ownership umbrella as a fun and uniquely themed leisure brand.  

For more information on Vimana Franchise Systems LLC, contact Steve Belmonte at (407) 654-5540 [email protected].  Visit Vimana Franchise Systems online at www.VimanaFS.com.  Visit Centerstone online at www.centerstonehotels.com, on Twitter at @Centerstonehtls, or on Facebook at www.facebook.com/Centerstonehotels.  Visit Key West Inns online at www.staykeywesthotels.com, on Twitter at @StayKeyWest, or on Facebook at http://www.facebook.com/staykeywest.  

 Belmonte is also Founder & Chairman Emeritus of Hospitality Solutions LLC, which offers experience and expertise in a wide range of areas including negotiation of license agreements, negotiation of termination agreements and furnishing solutions.  For more information please visit www.franchisenegotiation.com.

 

 

 

Last week a man shot a former co-worker in the head five times, killing him, before being killed himself by police. A number of bystanders were wounded during the exchange of gunfire that took place in front of the Empire State Building in New York City during the morning rush hour.

Apparently, the victim had previously filed a complaint against his assailant which had said he believed the man would try to kill him. The shooter, a clothing designer, had been fired from his job about a year ago and is said to have been upset that the man he shot had not sold enough of his designs.

On the heels of a shooting spree during a Batman movie showing in Colorado late last month and in a Sikh temple in Wisconsin earlier this month, we continue to be reminded of the possibility of extreme violence erupting during such every day activities as seeing a movie, attending religious services and going to work.

Not every tragedy can be prevented. However, risks can be reduced and sometimes the extent of a tragedy can be minimized.

Here are some basic steps employers can take to reduce the risk of violence in their workplace:

  • Take proper care when hiring and always check references;
  • Perform background checks of new hires if lawful and appropriate for the position;
  • Create an emergency plan that includes evacuation and communication strategies;
  • Institute a workplace violence policy.

Your workplace violence policy should let employees know of your commitment to providing a safe and intimidation-free workplace and that violent or harassing behaviors will not be tolerated.

It should prohibit weapons in the workplace and give examples of prohibited behaviors (such as shoving, pushing, threats of violence, harassing phone calls or emails, arson, etc.)

The policy should require employees who experience or witness violence or threats of violence to report them immediately. Always provide more than one reporting avenue in case one person is not available or in case the employee is uncomfortable reporting the problem to that individual.

It should be noted that a number of states have recently instituted laws whereby employers may not prohibit firearms and ammunition from being on their property, i.e. if they are locked in an employee’s vehicle in the parking lot, so check your state law. That said, you do have the right to prohibit guns or other weapons from entering the actual work space.

Subscribers to HRSentry may access workplace violence policy samples and many other samples and best practice recommendations among its thousands of helpful HR resources. Although not every tragedy can be averted, employers should do all they can to minimize their risks.

 

 

On July 13, 2012, Visa and MasterCard agreed to a Memorandum of Understanding and a proposed settlement for what may become the largest recovery ever in an antitrust matter (with expected settlement payments valued at approximately $6.6 billion), as well as the second largest class action settlement ever.

In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 05-MD-1720 (JG) (JO) (E.D.N.Y. Aug. 27, 2010) has been a high-profile case, with a plaintiff class of approximately seven million merchants challenging the practices of Visa, MasterCard, and several of the largest financial institutions in the United States.

The class includes large national retailers and small businesses, many of which are franchise systems (such as restaurants, hotels, and convenience stores), as well as trade associations (such as the National Association of Convenience Stores (NACS) and the National Federation of Retailers).

NACS swiftly rejected the proposed settlement and has already issued a lengthy statement on their website, stating that the proposed settlement does not go far enough in encouraging competition or challenging Visa and MasterCard to be more transparent in their implementation of interchange fees.

The matter dates back to 2005, when several retailers filed a class action complaint alleging the named credit card companies and banks had unlawfully conspired to fix interchange fees paid by retailers for consumer purchases (sometimes referred to as "swipe" fees) and committed other statutory violations.

The interchange rates are determined by Visa and MasterCard. The fees are paid by the retailers to the banks who issue the credit cards and are considered a huge expense to the retailers, especially as more and more consumers prefer to use credit cards for purchases. Trial was scheduled for September of 2012, but if certain conditions are met and the settlement is approved by the U.S. District Court for the Eastern District of New York, the effects of the settlement could prove to be far-reaching for both retailers, including franchisees and other small business owners, and consumers alike.

How the New Rules for Visa and MasterCard Affect Franchise Systems

According to the settlement agreement, Visa and MasterCard must modify their "no surcharge" rules to permit retailers to add a surcharge to credit card transactions at either (but not both) the "Brand Level" (the same surcharge to all Visa or MasterCard credit card transactions, regardless of the card's issuer or product type) or the "Product Level" (the same surcharge to all Visa or MasterCard credit card transactions of the same product type, e.g., Visa Classic Card or Visa Signature Card, regardless of the card's issuer).

Retailers have been allowed to offer consumers incentives for paying by debit card or with cash (already a common practice at many gas stations), but to date, retailers have not had the ability to add a surcharge for purchases made with credit cards in order to offset the expense of processing credit card payments.

The settlement agreement sets forth several disclosure requirements retailers must abide by if they wish to surcharge, which may be burdensome for some franchise systems. These disclosure requirements include the following:

(1) Notifying the credit card companies of their intent to surcharge at the brand or product level at least 30 days in advance;
(2) Posting a clear disclosure notice of the surcharge for consumers at the store entry;
(3) Posting a clear disclosure notice at the point of sale (which states specific information in a manner that does not "disparage the brand, network, issuing bank, or the payment card product being used"); and
(4) Clearly disclosing the dollar amount of the surcharge on the transaction receipt provided to the consumer.

For franchise systems that allow franchisees to accept credit cards as a method of payment, each of these requirements to surcharge raises potential issues for franchisors to consider. Based upon the terms of the settlement, the following are issues for the franchisor to consider if the settlement agreement is approved:

Franchisors should determine whether to adopt a system-wide policy on whether to permit or prohibit surcharges by franchisees for credit card transactions.

While some franchisors may want to adopt a systemwide policy requiring franchisees to add a surcharge on credit card transactions, franchisors must keep in mind that some states' laws (California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas) currently prohibit surcharging for credit card transactions. Also, franchisors should review their franchise agreements to confirm that they have the right to impose such a policy.

Franchisors may want to consider providing their franchisees with the required surcharge notices and require franchisees to use that form of notice if they elect to add a surcharge for credit card transactions. The terms of the proposed settlement agreement require franchisees who elect to surcharge to notify the credit card companies as well as to clearly display disclosure notices at the entrance of the franchised outlet and at the point of sale (similar to how franchisees currently must display state-specific alcohol and tobacco notices).

Franchisors should note, however, that the settlement agreement does not provide guidelines on how the notices must look, so there remains a risk of preparing "non-compliant" notices.

Franchisors should consider revising their operating manuals to include any system policies on the franchisees' ability (or prohibition) to surcharge for credit card transactions.

With respect to franchisors that require franchisees to utilize a proprietary or required computer or POS system, it may be necessary for the franchisor to update its software to enable the surcharge amount to be added to the transaction receipt. However, doing so may be difficult, especially if not all franchisees in the network accept credit cards or if some of the franchisees operate in one of the states that currently prohibits surcharging for credit card transaction.

In determining whether or not to implement a system policy regarding the surcharging of credit card transactions, franchisors should take into account both how many customer purchases are made with credit cards, and whether their franchisees would be negatively affected by implementing a surcharge. For some franchise systems, such as hotels, which rely heavily on credit cards, the decision on whether to permit franchisees to implement a surcharge may be different than with other franchise systems, such as quick service restaurants, which rely on credit cards as a payment method merely for customer convenience.

Conclusion

The disputes between the retail industry and Visa and MasterCard will likely continue, especially if more members of the plaintiff class reject the settlement in In re Payment Card Interchange Fee. Meanwhile, franchise systems will continue to cater to the consumers and their preference for convenience. If the settlement agreement is ultimately approved, franchisors should consider providing their franchisees with guidance on surcharging for credit card transactions before franchisees decide to take action on their own. While the proposed settlement agreement must still be approved, these new developments should prompt franchisors to revisit credit card acceptance policies.

This has been a guest post by Alan Greenfield, Victor Vital and Jenine Hinkle of Greenberg Traurig, LLP.

Clearly, franchises (especially nationally recognized ones) can be a huge asset to any development due to their ability to generate traffic, visibility and, hopefully, juicy percentage rents.

However, if you have ever had the opportunity to work on a lease or development agreement with a franchisee or franchisor of a national powerhouse, you quickly realize that there are numerous issues (other than leverage) which are unique to this type of business and, if addressed correctly, will prove to be a benefit to both the landlord and tenant over the long haul. I think the most complex issue I ever addressed was the unfortunate demise of the franchisee.

This gets really ugly especially when the franchise is a good one with a stellar reputation but failed primarily due to the incompetency of the franchisee. The last thing the franchisor wants is a very visible and public closing which could be a publicity nightmare.

I represented the developer in that case and fortunately I was lucky enough to have astute parties involved so, while it took some time to get a new franchisee on board, both the developer and the franchisor absorbed some of the costs to resolve the matter. They both took a long-term approach to the viability of the project and it worked out well.

This is not always the case, so both parties need to address, at the outset, as many contingencies as possible to assure a favorable outcome. Here is my list of important issues in a franchise lease, I am sure that you will find it useful.

The only difference between a franchise and a collection of "mom and pops" is training. Think about it, what is a franchise?

It's a brand, and what makes up a brand? It's the products and services you sell, but mostly it's the way you do business.

When you bring on a new franchisee, you must train them on the way you do business. When that franchisee hires new employees, they too must be trained on that way.

The reason a McDonald's in Paris, Texas is the same as one in Paris, France is because they sell mostly the same products, but also because the experience is the same.

Brand = consistency and consistency comes from effective training.

Training is one of the most significant competitive differentiators you have, if not the most. So why is it an afterthought for most franchisors? Then, why do the majority of franchisors...

  1. Reluctantly allocate money for training.
  2. Half-hardheartedly spend the time developing training.
  3. Grudgingly allow employees time off for training.

One reason is because much of what's considered training out there today is grossly ineffective. But it's also an attitude towards training, a disrespect, if you will.

Here are common mistakes franchisors (big and small) make when it comes to training:

1. Startups - wait and see approach. I've had several new franchisors say to me, "I'll wait until I sell my first few franchises, then I'll worry about training." So for your first few locations, the most important ones in terms of proving the concept, you're going to wing it?!

2. Growing - failing to revise training to fit the new growth model. We've seen brands trying to open 100 locations a year the same way they were opening 10 a year, and they wonder why they're not getting the same results. You can hold the hands of 10, you can't hold the hands of 100.

3. Established - resting on their laurels. As your market becomes saturated, same-store sales are what drives your revenue, and that requires changes, innovations, improvements, efficiencies, reductions, etc. and training is crucial to achieving each.

So how should franchisors "respect" training? Here are a few ways:

  1. Name a training person to your executive team.
  2. Add a discussion about training to every executive team meeting, regional meeting, national meeting, town-hall meeting, etc.
  3. Hire or appoint a training manager, depending upon your size this could be a half-time person or a department of 20.
  4. Allocate annual dollars to a training fund (think co-op for training).
  5. Devise a training "program", not just individual classes. Training is not en event, it's a process.
  6. DEVELOP EFFECTIVE TRAINING. If you don't know how, hire a vendor who does. Hint: if your idea of training is PowerPoint slides, it may be time to bring in an expert.
  7. Base your training on your processes, i.e. your standards or best practices. Hint: if you don't know what are your best practices, it may be time to bring in an expert.
  8. Invest in an LMS. Any franchisor with over 10 locations should have one. Hint: if you're wondering what exactly LMS stands for, it may be time to bring in an expert.

If you're thinking, "woah, this is going to take time and money", you're right. Each of these requires know-how and effort and that's not free. What's more, this is only the tip of the iceberg, but don't get paralyzed by trying to do too much at once. Start off small.

Do something, get yourself a "win" and then move on to the next thing.

One final thought. If you even devote half the time, money and effort to training as you do to franchise sales, you'll soon be operating an efficient and profitable brand. And isn't that easier to sell?

The broker, the landlord and even the franchisor will have an interest in the lease signing that is not always perfectly aligned with the business owner who will be making a long term commitment.

The business owner is most likely personally guaranteeing a large portion of that commitment, for hundreds of thousands of dollars over the course of many years.  He or she is truly committed to the success of the location.

Location, location, location is the mantra of success in retail. It is prudent after you finally select a location, negotiate the rent and are ready to sign a lease that you don't let the fine print kill your location down the road. I have worked with hundreds of franchisees and landlords over the years, and I know what to look for,what is critically important and most importantly what many landlords will give up.

As a retail business, your lease is one of your most important assets.

Every situation and location is unique and every business has a different story to tell. Leases can be complex, long and one sided contracts.

My role as your attorney is to explain every clause in the lease in plain language and to come up with a plan to negotiate the most tenant friendly language in the final version as possible.

Here are 10 important clauses to negotiate, after the rent has been decided.

1. CAM (Common Area Maintenance): How will the landlord calculate their cost to maintain the property?

2. Personal Guarantee: What if things go bad?

3. Term: What if things go great?

4. Build Out Period: Never underestimate the time it takes to build a store.

5. Assignment: If you sell, will you still be liable? Can you sell?

6. Use & Exclusivity: Can you do what you want? Can others compete directly?

7. Signage: You don't get what you don't ask for.

8. Permits: How long will you have?

9. Default: How much time do you get to cure?

10. Remedies: How draconian are the landlords's remedies?

Expect the process of negotiating a lease typically to take between 10 and 12 hours of legal work for review, drafting comments and negotiating the final version. The first step is a thorough review of the landlord's lease marking up our requested changes. This first step is critical; it is very difficult to get any further changes not asked for in the first round. After the attorney and the client agree on that first round it is presented to the landlord.

Usually, a conference call is scheduled to come to terms with what is agreeable and to identify all the remaining outstanding
issues.

Finally, the last steps are to negotiate the remaining issues and to work with the landlord's attorney to prepare a signature ready final version. You can expect the process to take 3 to 5 weeks after receipt of the initial lease from the landlord. But the time and money are well worth securing the advantage and protection of your great new location.

When putting together a marketing plan for a franchise client, the question inevitably comes up: What branding materials should be included in the franchise ad kit?

Well, before you can even begin to determine what the pieces and parts should be, first and foremost a franchisor must provide a strong, consistent brand with documented brand standards.

One of the reasons entrepreneurs buy in to a franchise system is to gain the benefit of a brand and the immediate recognition that name provides on their storefront, building or van. If the brand does not have a well-articulated foundation of how it should look, speak and act, the consistency and value of that brand can be quickly diminished.

Once your standards are established, think about the type of business you have and what materials will help communicate your message to customers. For some it may be yard signs and window decals, for others it may be van wraps and door hangers.

But whatever the magic combination for your business, the materials must be flexible enough to allow appropriate customization for the individual units. This customization may be the format to accommodate different facility restrictions, or the message to respond to competitive issues.

So, when developing your franchise marketing materials, keep these key things in mind:

Have you established and documented how your brand looks, speaks and acts--and does everyone in the organization understand these foundational elements of the brand?

What materials will be most appropriate to communicate to customers in your business format and environment?

Where does your customer get their information from (specific media, online, social, on-premise) and what are the branded marketing materials that your franchisees could use to attract more sales through these channels?

Have you developed materials that are consistent, yet flexible enough to accommodate local marketing needs?

Just as no two franchises are exactly alike in their format, product, and offer, every franchise ad kit will be determined by the special needs of the system. The only thing that will always be constant is the need to start with a well-defined brand.

With the advent of warmer weather, company dress codes often relax. Many employees acknowledge the change of seasons with more comfortable, cooler, and cheerier summer fashions. Ideally, employee morale and the work environment become a bit more upbeat. But some staff members take the flexibility too far and push the envelope. Whether it's too much bare skin or the snapping sound of flip flops, inappropriate dress can quickly produce problems in the workplace. What can you do?

Start with a clear policy. Explain the business reasons for your dress code, e.g.: projecting a professional business image, ensuring employee safety, meeting customer expectations, providing employees with a positive work environment that limits distractions. Give specific examples about what is and what isn't acceptable. If you use the term business casual, define it and give examples of acceptable wear such as collared polo shirts and khakis. If casual dress is acceptable only on certain days of the week, such as "casual Friday," state that clearly. Provide examples of what you don't want employees to wear, e.g. cut off shorts, flip flops or spaghetti strap tops if that's the case.

Be prepared to enforce your policy consistently. Spotty enforcement can hurt morale and lead to an accusation of discrimination. That said, it's legitimate to have different standards for different groups of employees if they are based on sound business reasons. For instance, staff who have contact with customers might be required to dress more professionally than those who do not.

Know your rights and consider the legalities. Dress codes based on sound business reasons and societal norms are usually fine. Where it can get dicey is if your policy infringes upon a protected category such as a religion or when it has a disparate impact on a minority group. For example, a policy forbidding all head coverings could present a problem for a Muslim woman or a Jewish man. A policy that allows men to wear jeans in the workplace but not similarly situated women, is discriminatory. So think through the business purposes of your dress code.

Keep the lines of communication open. Listen to your employees' request. If someone has a problem, meet with that person directly to discuss their needs so the situation gets resolved quickly without escalating. If someone has a true need based on religion or some other personal necessity, be prepared to make a reasonable accommodation as long as it does not create an undue hardship or safety concern for your business.

If franchisee satisfaction is, as we believe, an important indicator of future actions, the next few years could be challenging for the franchise industry. 

Future success for most franchisors is dependent on the renewal of existing franchises and the sale of new franchises. Current franchisees play an important role in this process. In addition to royalties and other payments to the franchisor, franchisees also serve as referral agents that impact on new sales. The thoughts and intentions of current franchisees is crucial intelligence for a franchisor that can aid in building their franchise network.  Franchisors can improve their operations and growth by understanding current levels of franchisee satisfaction and its impact.

Franchisees have had an exceptionally difficult year - possibly the worst of their working lives.  National Franchisee Survey respondents report that few are meeting their financial goals, seeing increased revenues/profits or would consider recommending their current franchise to a prospective franchisee.  The vast majority do not expect to be with their current franchise in five years time.  Yet a majority consider their operation to be superior to that of the competition. 

The following table shows three leading indicators that are incorporated into our National Franchisee Survey,  from 2010:

Franchise Facts.gif

What we see is troubling. By a wide margin, surveyed franchisees report that they would not provide a positive referral to a prospective franchisee. They also report that they would not have invested in their current franchise had they known what they now know. Since overall numbers can hide crucial differences such as those between newer and older franchisees, we also look at these indicators based on years in operation. We find similar results regardless of how long a franchisee has owned the business. This suggests that current concerns have existed for an extended period of time.

When asked about future plans, only 16% of respondents anticipate doing the same thing in five years. While only 14% anticipate retirement, 70% anticipate either owning a different business or being an employee for another business. 

Should these patterns persist, many franchises will encounter significant challenges in the coming years. At the very least, a very large number of new franchisees will be needed to maintain the current infrastructure and revenues of the existing franchise networks. These new franchisees will be harder to find if current franchisees are not prepared to provide positive referrals. Some franchisors may choose to ignore these trends and could very well see a decline in their franchise network.

More enlightened franchisors will look inward to determine if the patterns we have identified are reflected within their network. Should these patterns be confirmed and reversed, short term benefits would likely include a reduction in costly internal litigation. Longer term trends would include a larger and growing franchise network plus a growing dominance within their respective industries.

 

We had the opportunity to travel through the US IN November and December and got into a lot of restaurants. We saw good things, and good people, but also some operational issues that have the result of leaving dollars on the table—revenue enhancement and expense related. We have seen these issues often enough throughout 2010 and 2011 to mention the commonalities.

None of this is brain surgery; we’ve all been talking and working on these issues forever. But execution challenges exist, and easily amounts to that magical point of same store sales gain or multiple pennies/share earnings. Where appropriate, we’ve ascribed this to an operator or restaurant segment sub-set.

Revenue related

Lack of suggestive upselling or actual down selling (QSR):  it is a rare occasion where we are upsold in QSR and fast casual settings. In some situations, the sale is actually downsold, e.g., “will that be the sandwich?” even by store management. My hope in 2012 is that every customer can be upsold once, face to face.   In QSR situations, there must be a comeback situation for hourly staff for where the answer is “no combo”. What’s the next default?

Overkill with POS displays (QSR): via a QSR survey recently, we counted the range of the number of printed in store visual communications pointed at the customer. The high was 87 distinctive signs (Carl’) and the low seven (Pizza Hut, with almost all price merchandizing and only two specific product related displays).  Some drive thru windows and chutes were a veritable forest of signs. Assuming 45 seconds at the drive thru chute and panel, how much can be seen? Two many displays seem to be counterproductive and split the product mix.

Dessert size, portions and price prohibitive (Casual dining): We confess that we have a taste for chocolate, and often have been staggered by the size, calories and price ($6-8) for a post meal dessert item at the casual diners. To our memory, both Chili’s and PF Chang’s (PFCB) are working with smaller bite sized “tastes”, but have not reported on menu mix hit rates for these items. That might be illustrative for the industry. 

Expense related

Staffing standards (casual dining) in general we see way too heavy staffing from 1100a to 1200 noon, and from 500-600P, especially in the Darden concepts (DRI) and at Chili’s (EAT), but understaffed after 900p (DINE-Applebee’s), especially among wait staff. Perfecting matching labor hours, customers and restaurant needs will never be possible, and hourly employees do want hours, of course. Since the average check should go up in later hours, perhaps both labor hour and sales/man-hour standards and calculations are required.

Closely related to this point is new unit opening labor staffing (both QSR and Casual Dining): when a new unit opens, we are justifiably proud of it and want the opening to go flawlessly and get new employees trained. But our observation is that the necessary staffing up period goes on too long after opening, making it then unrealistic for both guests and employees, for when the eventual, sharp ramp back to standard staffing levels occur. We suggest that the ramp up and ramp down be more graduated and less “sharp”. 

Out of whack air conditioning: (electricity/air conditioning: QSR and casual dining) with Starbucks and the coffee houses as a strategic exception (colder=intent to consume hot beverages goes up), we see cooling temperatures way out of whack, particularly after sundown, when it does cool off. This could take CAPEX to fix if not separate units for the FOH/BOH.

Too much product pre-cooking (QSR): The goal is hot food hot and cold food cold. With the growth of big burgers, more complex menus and 24 hour breakfast operations, the back of house is more challenging. Product is warmest when first cooked, and has a finite holding time in bins. Jack in the Box (JACK) does a nice job of delivering hot product, but am noticing more cooler burgers at McDonalds (MCD) the last year.

Earlier this year, we reported that in KFC Corporation vs. Iowa Department of Revenue, the Iowa Supreme Court upheld the state's ability to assess income tax on KFC Corporation and other out-of-state franchisors who, despite not having a physical presence in Iowa, nonetheless derive revenue through its franchisees. The Iowa Supreme Court held that a franchisor's physical presence in Iowa is not a required element in determining whether a sufficient tax nexus exists to justify the imposition and collection of state income tax.

Recently, the United States Supreme Court declined to review the Iowa Supreme Court's ruling with respect to physical presence and substantial tax nexus. The implications of the Supreme Court's declining to review the KFC nexus case are potentially far reaching in that other states, including Iowa, will now begin to aggressively pursue the collection of income tax from out-of-state franchisors who have no physical presence in a state. The tax nexus ruling could also affect other areas of interstate commerce where there is no physical presence.

We expect that states will begin adopting their own tax nexus analysis based loosely on the Iowa Supreme Court's analysis and will soon require out-of-state franchisors to begin filing income tax returns if they are not already doing so.

Franchisors with significant presence in multiple states should begin preparing for what seems to be an inevitable outcome with respect to reporting and paying state income tax in each state they will be deemed to have a sufficient tax nexus.

Franchisors may consider spreading the cost of additional tax among their franchisees through higher fees or higher cost of goods. This could result in the consumer's paying a higher price for the franchisor's good or service.

If required to file and pay state income taxes, franchisors who previously were not subject to state income tax need to begin analyzing their taxable income with respect to those states in which they derive franchise income not only to determine their potential state income tax liability, but also to begin planning with respect to reporting and accounting procedures.

Franchisors should conduct tax planning and analysis at the state level where they will now be required to report and pay income tax, but the analysis should start at the federal level with respect to income, expense, deduction and planning opportunities to minimize tax exposure at the state level. As part of the analysis, franchisors may want to examine their current franchise structures to determine whether income and deduction items are properly characterized.

This has been a guest post by Tae Shin, Associate with Roetzel & Andress. For help in tax planning for out-of-state franchisors, please contact attorney Tae Shin in Roetzel’s Franchise Law group.

Social media and brand awareness creates unique problems for a franchisee system, the well understood division of national and local advertising has to be revisited.  

One important question is: should every franchisee own a website for local marketing purposes?

Michael Seid, a well known franchisor consultant and Board member for of the International Association of Franchisors, speaking for his franchisor clients, argues on Linkedin, that franchisees should not have the right to develop their own local content marketing program using a franchisee owned website.

Before a franchisee develops an independent website, they should review their franchise agreement to determine if they are allowed to.

Most well developed franchise systems would likely have some prohibition regarding a franchisee developing their own independent site.

However, many franchisors do provide the franchisee with a customizable site linked through the franchisor's website.

Even if the agreement does not discuss an independent web presence for its franchisees, a franchisee should discuss this with their franchisor to determine if the franchisor has any policy regarding this.

(Most of MSA's clients have such a policy and I do not believe any allow the franchisee to set up an independent site, for a host of reasons, although some do provide the franchisee with a customizable web presence.)

 

I disagree with Michael Seid's suggestion that it is in the franchisor's economic interest to contractually ban its franchisees from exercising their first amendment rights to free speech.  
 
First, many franchisees are active participants in local charities and events and correctly wish to publicize via social media their roles and achievements, which indirectly adds to brand value.
 
Second, a contractual ban on franchisee "ownership" of a  website is not likely to be effective given the tremendous opportunities in social media which do not require the ownership of a website to be effective.
 
This is an area in which organic practices have to drive policy to be effective.  What those best practices are is unknown at this moment.  Franchisors simply don't have the advertising or support dollars to set up the necessary social media tools by themselves, and  some form of user generated content is going to be needed to make them effective.
 
Third, the franchisor owns the trademark, the brand is what people are saying about you - which you don't own and need many listening posts to find out what the trends are.  That cannnot be done with a single command listening post.
 
Finally,  Franchisors risk missing the value of either content or inbound marketing, the online replacement for yellow pages, if they attempt to ban franchisee's first amendment rights.

Some History

For better or worse, tipping has become an accepted part of American commerce. It is a practice that first emerged in the late 1800s. In 1917, the California legislature passed a law for the first time prohibiting employers from taking any portion of employees’ tips. However, the courts struck down the law as a violation of constitutional due process. The legislature tried again in 1929 and this time succeeded. However, now the law permitted employers to credit tips against employees’ wages, i.e., use tips in place of wages. It wasn’t until 1975, after repeated failed attempts, that the legislature was finally able to pass a law that prohibited the practice of “tip credits”.

 

Labor Code § 351

California Labor Code § 351 now reads:

No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer.

Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.

An employer that permits patrons to pay gratuities by credit card shall pay the employees the full amount of the gratuity that the patron indicated on the credit card slip, without any deductions for any credit card payment processing fees or costs that may be charged to the employer by the credit card company. Payment of gratuities made by patrons using credit cards shall be made to the employees not later than the next regular payday following the date the patron authorized the credit card payment.

Interestingly, the federal law – the Fair Labor Standards Act – continues to permit “tip credits”, though with restrictions. As usual, California laws continue to offer greater employee protections than their federal counterparts. While federal laws usually trump or “preempt” state laws, courts have ruled that this is not the case with the FLSA and the California Labor Code. Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 567; Skyline Homes, Inc. v. Department of Industrial Relations (1985) 165 Cal.App.3d 239, 250-251.

Section 351 seems pretty simple and straightforward. However, it also left open some important unanswered questions that the courts took it upon themselves to answer.

 

Can My Employer Take My Tips?

Yes. . .

Many industries, particularly the restaurant industry, have a “house” practice of mandatory tip-pooling, in which the employer takes employees’ tips, pools them, then allocates the money to its employees as it sees fit. Tip pooling is nowhere mentioned in section 351 and that would therefore seem to make it an illegal “taking” of the employee’s “sole property”. However, the courts engaged in some fancy analysis to conclude it is permissible, so long as the distribution is “fair and reasonable”. Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062. So to that extent, yes, your employer can take your tips away from you.

. . . and no

But the employer can’t take any part of your tips for itself either. Even if your employer sets up a mandatory tip pool, it and its “agents” (meaning any employee with managerial/supervisory functions) are prohibited from getting any of the money from that pool. That is clearly stated at the very beginning of section 351: “No employer or agent shall collect, take or receive any gratuity or part thereof . . .”.

So Who Can Participate in the Tip Pool?

Here is where things get tricky because the courts seems to be all over the place. Section 351 makes it clear that employers and their supervisory/managerial agents cannot get any of the money from a tip pool. But it is unclear what other employees can. Can the tip pool monies be allocated to dishwashers? Busboys? Sushi chefs? Janitors? Accountants? Security guards? Etc. Where do you draw the line?

Since 1990, the bright-line rule was that only those employees who are involved in “direct table service” are entitled to participate in the tip pool. Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062. However, that all changed recently.

In March 2009, a court held that employees who did not engage in direct table service could still participate in the tip pool, so long as they were in the broader “chain of service”. Etheridge (Brad) v. Reins International California, Inc. (2009) 172 Cal. App. 4th 908. So, for instance, bussers who clear away plates after a customer has already left might not qualify as having engaged in “direct table service” but would qualify as having been involved in the “chain of service”, and so could participate in the tip pool. Another court held that bartenders could participate in tip pools, even if they never directly brought drinks to the customer’s table (although there the court stuck with the old model and ruled that this was “direct table service”). Budrow (Aaron) v. Dave & Buster’s of California, Inc. (2009) 171 Cal. App. 4th 875.

In June 2009, a court reversed an $86 mil. judgment when it held that supervisory/managerial agents could share in “collective tip boxes” because they were not “tip pools” but “tip allocations”. Chau v. Starbucks Corp., 174 Cal. App. 4th 688 (Cal. App. 4th Dist. 2009). I call this one the “Starbucks exception” because it only seems to apply if you work at Starbucks.

So the question of which specific employees can participate in a tip pool remains up in the air, to be answered on a case-by-case basis. The key for the courts is the intent of the tipping customer. If the tipper (arguably) intended that a type of employee share in the tip, then they are participants in the “chain of service” and/or “direct table service”. An accountant or security guard probably would not qualify under this standard, but a bartender and busser probably do.

 

My Employer Has Violated the Tip Laws, Can I Sue?

Yes you can. At the moment, it is unclear whether you have a private right of action under section 351. The California Supreme Court is considering that question at the moment.Lu (Louie Hung Kwei) v. Hawaiian Gardens Casino, Inc., 2009 Cal. LEXIS 5505 (Cal. May 26, 2009).

However, as your lawyer can explain to you, you can still probably bring a claim for violation of the California Unfair Competition Law (California Business & Professions Code 17200 et al.) and/or for penalties under the California Private Attorney General Act (California Labor Code § 2698 et al.). But I recommend you leave that to your lawyer.

 

This was a guest post by Eugene Lee, a lawyer in the Los Angeles, California area. All  he does is labor and employment law – it’s his passion and calling.  He is also proud  husband, married to the love of his life, and a father of two kids who give him a dose of sunshine every single day.

If you’ve got a problem in the workplace, call him anytime at (310) 906-0039 or go to my law firm website.

How are We Short?

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“What?  What do you mean we are out of product?  Did you check the cooler and stockroom?  How could we be out?  I know I ordered plenty and checked it all in.  What happened to it?”  

So goes a mysterious disappearance of a food item.  A negative hit on food cost and of course – profitability.  

In effort to track and prevent this type of loss, we start with answering this question:

The main food item that has the most mysterious disappearances or is most often stolen in my restaurant is:

1.  Desert items

2.  Chicken strips/wings

3.  Bacon

4.  Hamburger patties

5.  Cheese

6.  Other


Establishing Norms    

If you answered the question, how do you know?  Are the losses identified by inventory control records, audit processes, anecdotal information, or calculated guesses?  Once you have identified what item or items are most stolen or have very high associated negative food cost, the process to mitigate or prevent the losses can begin.  Establishing the norms of food cost for each item in your restaurant and routinely tracking them will assist in identifying issues when unacceptable variances and shortages occur.  After you know which items are most stolen, you can then do something about it.

Inventory Counts

Effective inventory control involves a systematic approach to counting inventory and ordering properly.  If you know the quantities on hand for each product with routine audit counts, it will greatly assist in ordering effectively and readily identify short or missing items.  Assign a responsible and accountable person to conduct inventory counts and food orders.  Periodically audit the inventory counts and food orders by the assigned person.

 

Security

Inventory control will be enhanced by limiting access to the refrigerated, freezer, and dry goods stock areas.  Secure access to the back door.  The door should be kept locked and openings limited to authorized personnel only.  If the back door is alarmed, it should be turned off before opening by a manager only.  The most effective back door control is the opening of the back door and monitored by a manager.

 

No Answer

If you didn’t know the answer to the above question, initiate establishing normal guidelines for acceptable negative food cost, start an audit process of food items, limit access to food storage areas, and secure the back door.  It will be a start to a more comprehensive loss control program in your restaurant and eliminate the frustrations of mysteriously running out of product.  The profitability of your business depends on it.

 

Do you want further information about Effective Cash Management Programs.

This was a guest post of Libby Libhart.  D.B. “Libby” Libhart has over 30 years of experience in the Loss Prevention industry.  Libby has provided security and safety leadership in a variety of retail settings including Department Stores, Drug Stores, and Quick Serve Restaurants.  Before launching his own company, LL Training and Consultant Group, LLC Libby served as the Senior Director of U.S. Security and Safety for McDonald’s Corporation.  Libby entered the Quick Serve restaurant industry with Taco Bell and subsequently YUM Brands. 

During his career in Loss Prevention, Libby was recognized for moving Loss Prevention programs from reactive responders to pro-active business partners.  He has led teams that were highly recognized for the development and implementation of successful programs in cash and food cost controls, risk management and life safety.

Independent Purchasing Cooperative, Inc. (“IPC”), the franchisee purchasing cooperative for SUBWAY® Restaurants, has integrated Chequed.com’s ChequedFit5™ assessment to deliver greater hiring success in its 24,000+ locations throughout North America. 

The program, delivered through the MySubwayCareer.com hiring portal, allowing SUBWAY® franchisees to maximize the quality of new hires through upfront assessment of all store level candidates.

It uses Web-based technology to determine which candidates can and will excel as Sandwich Artists and Store Managers. 

“Our franchisees realize that hiring a great staff is the first step in delivering a great customer experience. By integratingChequed.com’s pre-employment selection tools into the new MySubwayCareer.com portal, our restaurants can make faster and more accurate hiring decisions,” said Brian Wheeler, Director of Services for IPC. (Subway® IPC is the Independent Purchasing Cooperative for Subway® franchisees.) 

“Chequed.com’s tools are designed to help companies link hiring initiatives to business results,” said Greg Moran, CEO and Founder of Chequed.com. “We customized these tools to specifically serve SUBWAY® in selecting hires who could make the most impact on the company’s goal to offer the ultimate QSR customer experience.” 

 13 Costly Mistakes Franchise Tenants Make Negotiating Their Commercial 
    Lease or Renewal 
How To Negotiate a Mid-Term Rent Reduction Right Now
   
 
Following the 40-minute Leasing Webinar there will be a 10-minute Q & A session.
 
Email your most important question about leasing to and then listen for  your answer during the webinar.
 
Visit  this website to register for this webinar event.   

 

For more details on the Lease Coach webinar, click here.

 

Receive your complementary access by entering Access Code: IAFD when joining the webinar, otherwise the cost is $79.00.
 
When:  Thursday, Mar. 10, 2011 – 11:00 AM PST, 12:00 PM MST, 1:00 PM CST, 2:00 PM EST.  
 
Can't wait for the Webinar? 
Leasing issue or renewal coming up?  
Contact us today!
 
 
1 800 738-9202
Many business people and trainers will tell you that "belief systems" and how they can translate best to create profitability in your business are "soft skills." As contrasted with so-called "hard skills" such as strategic planning, financial analysis, or product development, soft skills are considered by many to be the quality of one's interpersonal abilities and leadership talent. Yet soft skills, or lack thereof, directly impact the bottom line, in some cases even more so that hard skills, because often you're not even aware how they are impacting your behavior and, therefore, the profitability of your business.
 
In the context of belief systems, we all carry around beliefs about customer service, money, sales, team building and similar issues that translate measurably to our profit. Does your belief that sales people are untrustworthy keep you from being the best sales person possible for your product or service? Does a scarcity belief system about money keep you from creating a big enough vision for your enterprise? Going deep to figure out what your beliefs are is the first step toward changing them. If you want to know what your belief system is in any particular area of business such as customer service, business planning, or team relationships, look at your behavior, your actions, and the reasons for them. Once you understand your beliefs, changing them is possible. What beliefs do you have that you manifest in ways you'd like to change?

Marcy Cowan
TriOdyssey GPS
www.triodysseygps.com
770-912-0250
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It's hard to find good help these days. Or is it? 

The quality of your corporate culture matters regardless of your organization's size. Having the right culture maximizes employee retention and profits. In our recent webinar on this topic, attendees learned the power of moving their culture from one of hostility (dysfunctional), to one of cooperation (functional) to one of mutuality (high performance). 

Among the franchisees who participated, a QSR franchisee asked "how I do decide what the right values are for my company [culture]?" The TriOdyssey presenter responded that a practical way to identify the proper values for your company is to link them to the behaviors you want demonstrated. For example, you might want your team to demonstrate behaviors towards customers that are associated with timeliness and good service. 

The values you might establish to foster those behaviors are commitment and accuracy. If you want the members of your team to work closely together, you might select collaboration as a value. 

Your goal as an owner or general manager is to make that linkage between desired behaviors and values for each of your company's key stakeholders. Once you've identified the values that are relevant for your organization, select the top five to seven that will serve you best. 

 Odds are that most of the values you select will serve multiple stakeholder groups well. How would you respond to that question?

 

Marcy Cowan

678-444-4161

[email protected] 

 

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More than 550 association and nonprofit professionals from across the country have added their names to ASAE's sign-on letter calling for repeal of new Form 1099 reporting requirements that would prove burdensome for associations and other small businesses. ASAE will deliver the letter to Capitol Hill offices today.

Not a single franchise trade association signed this letter.  Why is this?

How can the franchise trade associations state to their members that the association is concerned with the regulatory burden of having to file a ton more of form 1099's, but not be able to recognize, join with, and help their allies in other non profit associations?




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Several years ago, the Federal Government had a good and thorough review of payroll cards.

And since now the Bank of America is getting rid of its free checking accounts because they cannot automatically debit the overdraft charges, it is worth looking at payroll cards again.

Payroll cards, a less costly alternative to paper payroll checks, allow employees to access their pay through various means, depending on the particular product. 

Wages are deposited to the payroll card account via direct deposit, and the employee uses the card to withdraw cash at an ATM or purchase goods and services. 

One of the distinguishing characteristics about bank-issued payroll cards is that they generally are not marketed directly to consumers. 

Instead, banks market the cards to employers, who, in turn, encourage their employees who do not use direct deposit to use a payroll card to receive their wages.

The payroll card is a particular type of stored value (or prepaid) card, a product that streamlines the payment process for purchases or cash withdrawals. A variety of stored value cards exist, including prepaid phone cards, mass transit cards, and prepaid debit cards.

Stored value cards operate in either "closed loop" or "open loop" systems. In the closed loop system, an issuer provides a card that can be used only for its products or at a finite number of merchant locations. 

Mass transit fare cards and college-issued cards that can be used at cafeterias, bookstores, and other campus venues typically have closed-loop systems. In an "open loop" system, cards are accepted beyond the issuer's locations through a more universal network for PIN-based (e.g., STAR) or signature-based (e.g., Visa, MasterCard) transactions. 

Payroll cards use an open loop system, and should probably find there way into most franchisee operator's payroll tools.

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The Coverall decision caused a furor in the franchising world, when a Court decided that Coverall's  franchisees were independent contractors.

But there is much more at stake for franchisees than this one case.

Using contractors offers a lot of benefits, but you have to make sure you're doing it right," says 352 Media's Wilson. 

"You don't want the government to come calling and decide you owe a lot of back taxes for classifying contractors incorrectly. 

Be vigilant about reading the government's contractor classification guidelines and make sure your contractors actually fall within them."

The trade-offs and problems of contingent workers are nicely summarized by Steve King, at Small Business Labs.

"Federal and state governments claim they lose billions of dollars in payroll taxes due to under-reporting by contractors. 

They also claim they collect less in unemployment insurance and worker compensation taxes. Because of this, they are aggressively going after companies they feel mis-classify full time employees as contingent workers.

This issue has huge implications because: (1) companies of all sizes are increasing their use of contract workers; and (2) a growing number of people are choosing to work as independent contractors.

This used to be much simpler issue from the standpoint of the contingent worker - they almost always wanted to become full-time employees. 

But that has changed. 

A growing number of people are seeking the flexibility and work/life balance advantages contract work brings."

The Employee Misclassification Protection Act of 2010 (EMPA), amends the federal Fair Labor Standards Act (FLSA) to Increase government enforcement against employee misclassification practices by employers of all sizes, to curtail and penalize worker misclassification.

EMPA sets strict notice and record-keeping requirements on all employers, with costly penalties for non-compliance (up to $5000 per worker). 

It requires all states to develop and enforce their own employee misclassification enforcement programs through audits and other methods.

King again states that the problem on contingent workers is going to get bigger

"The most important trends of the last few decades is the growing use of contingent workers. This is a structural shift towards employer use of contractors, freelancers, part-timers, etc. instead of hiring full-time, permanent employees."

For more information, King says that "Staffing Industry Analysts are the leading, and maybe the only dedicated) analysts in this space. Their site, blogs and magazine also has lists, ads and references to firms that do contingent workforce compliance. 

In addition to Industry Staffing Associates, Workforce Week is another good source on services related to the contingent workforce. It has broader HR related coverage, but it seems like they usually have an article or two on contingent workers each week."

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"Location, Location, Location" is the oft-repeated mantra meant to emphasize the importance of the right site to the success of any retail business.

But what are the key factors for you to understand with regards to your location choice?

The three most important real estate-related drivers for any type of retail business are:

(1) the size and quality of the trade area served;

(2) number and quality of your competition and;

(3) the type of shopping center and other site-related qualities.

A common mistake is to ignore the distinction between a trade area and a site within that trade area. A trade area is the market area that will be served by your business. The trade area has geographic boundaries and consists of a mix of uses (home, work, shopping, entertainment and public facilities).

Tip: a good mix of uses tends to provide higher sales potential mainly because there's activity in the trade area for most of the day and 7 days a week. The demographic profile of the residents of the trade area is critical, too.

The demographic profile should match your customer profile (if you're a franchisee, your franchisor should tell you the target customer profile in detail). A large population base is good only if there are a lot of your customers.

The precise size of a trade area is determined by community affiliation, travel and shopping patterns, and natural and man-made barriers.

Think of the difference between the trade area and your site in this way: the trade area is the market area you hope to tap, and your site is the location in that trade area that will determine how much of that trade area you'll reasonably be able to serve.

Your type of business and the location of competitors are key elements that determine your reach into the trade area.

For example, a dry cleaner is largely a convenience business, and there tends to be a lot of competitors. Unless you offer particularly unique services or your competitors are poor operators, you'll be cut off by other similar businesses that are more convenient to customers in the trade area. You should seek to "out-position" your competition, so pick a site that's defensible, both now and in the future.

Your trade area reach is also determined by the type and location of the shopping center your chose (neighborhood, community, power center) as well as the center's site characteristics (such as sufficient parking, ease of access and signage).

A traditional grocery store in a suburban area tends to pull 2-3 miles, and the other tenants in those centers tend to be convenience tenants that also have limited reach.

If there are tenants that have a larger draw, such as specialty grocers or other "big box" tenants, you'll have the opportunity to draw from 5 miles or more into the trade area. That's why it's important to locate with co-tenants that will serve as generators for your business.

All things equal, you'll want to be in a strong shopping center with co-tenants that provide generators for your business. But remember that no matter how strong the shopping center and your space within that center may be, you will always have an uphill battle if you're "fighting the market".

I've seen stores with even poor site characteristics do strong sales, and this was largely attributable to the strength of the trade area for that tenant.

Make sure you'll be serving the right trade area before focusing on any specific site. A strong location in the right trade area makes a winning combination. 

 

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A study entitled "2009 Forbes/CIT Survey" completed last fall included the following retail statistics:

- 40% of tenants had renegotiated their rent
- 38% negotiated other types of concessions
- 28% received Landlord allowances on new leases
- 22% had reduced their overall occupancy expenses.

It's no secret that rents are down (anywhere from 20-40% depending on your location) and that corporate, multi-unit tenants have real clout and are using the condition of the great recession to ratchet down their rents. 

But how does the small business operator take advantage, even in the short term? (The current consensus is that retail rents will remain depressed in most areas through 2011, due to an overabundance of vacant, retail space and the forecasted modest demand in the short term.)

Here are (4) actionable tips for good operator to reduce their retail occupancy cost.

Franchisees who have a good track record with their Landlord have an opportunity to reduce their overall occupancy costs and this can be accomplished in a number of ways. If your operations and sales performance are historically strong, a Landlord will have every motivation to work with you because right now he is limited in his ability to replace you.

First, read your existing lease for any conditions that the Landlord may be violating, such as co-tenancy provisions or vacancy levels. For example, the Landlord might have agreed to have a certain anchor tenant and that tenant is no longer operating. Or he might be in violation of a maintenance standard provision. If you find anything in your lease that is a violation or a potential default by the Landlord, this gives you additional leverage in your negotiations.

Second, annual base rent is an obvious target for modification. You need to do your research by finding out the asking rents in competing centers. Also learn what the Landlord is currently asking for vacant space in your center. If your lease commenced after 2004, chances are your rent is significantly above-market. The Landlord could agree to temporary "rent relief", which is generally a short-term reduction (a year or two) but might expect to recoup that reduction later on. If you agree to a payback, tie it to a sales threshold. This is a win-win for both you and the Landlord.

Third, occupancy cost isn't just rent. In some centers, Common Area Maintenance (CAM) charges are high. Part of your negotiations, if you don't have this already, is to "cap" the CAM charges, which is standard practice for corporate-owned businesses. Also, make sure your lease reads that your pro-rata share of the CAM (as well real estate taxes and insurance on the center that are passed through to tenants in most retail situations) is based on your total square footage divided by the total square footage of leasable space in the center (not "leased" space). The Landlord should be paying CAM on vacant spaces. If your lease doesn't read that way, change it as part of your rent renegotiations. This is a quick way to reduce your occupancy cost.

Fourth, another part of your occupancy cost is a marketing association charge for the shopping center (for example, $1 a square foot). Ask the Landlord to show you how those marketing dollars are being spent and if it's not helping you, try to get this charge omitted from your lease, or at least reduced. Another expense is the administrative fee percentage that's usually noted in the CAM section of your lease. Anything over 5% is too much.

If you hope to stay in your existing location for the foreseeable future, or there's a better space in the same shopping center that's opened up, consider negotiating an extended term or a new lease. This is valuable to you if you get what you need in that lease, and the Landlord benefits in that he'll have a more bankable lease on your space.

It's worth the time and effort to reduce your occupancy costs. Most of these costs are fixed. If you lower them now you'll be better positioned to survive the current market and you'll be more profitable as your sales increase in the future. 

Written for the IAFD.

By Elizabeth Angyal
Angyal Realty Advisors.

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This page is an archive of recent entries in the Operations category.

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