Franchising in New England

Elements Therapeutic Massage, one of the fastest-growing franchises in America, will host the “Discover the Elements of Success” franchise event April 7 to introduce prospects to key executives and Boston-area franchise owners. The Colorado-based franchise company has 11 locations open in Massachusetts where revenues increased 37% in 2009 over the previous year.

The company plans to open another 12 studios in the state.

WHO: Small-business owners, multi-unit franchisees, corporate evacuees and entrepreneurs interested in learning about opening and operating Elements Therapeutic Massage franchises in the state of Massachusetts.

WHAT: “Discover the Elements of Success” Franchise Event

WHERE: Marriott Hotel, 2345 Commonwealth Avenue, Newton, MA 02466

WHEN: Wednesday, April 7 Registration: 1:30 – 2 p.m.; Event: 2 – 4 p.m.

REGISTER: Register Here, or call 888-912-2228.

About Elements Therapeutic Massage, Inc.: Elements Therapeutic Massage, http://corp.touchofelements.com, is headquartered in Highlands Ranch, Colo., and owned by Fitness Together Holdings, Inc. The parent company oversees Fitness Together Franchise Corporation, a one-on-one personal training fitness franchise that began franchising in 1996, and Elements Therapeutic Massage, a massage therapy franchise that began franchising in 2006. Today, the combined franchise network has sold hundreds of franchises across the United States, Costa Rica, Israel, Ireland, and Canada.

It’s 11:30 on a Monday morning, and Karim Menebhi is waiting for the first customer at his brand-new Ronzio Pizza & Subs franchise in Smithfield.

Menebhi has been busy — loading boxes of supplies onto shelves, talking on the phone to suppliers. Now he’s getting a little nervous. “I was feeling just normal until about 20 minutes ago,” he said. “Now I’m feeling that I need to see some people walk in and start serving them some food.”

Finally, about 11:40, the elusive first customer arrives. He’s Ryan West, who manages a karate school, Mastery Martial Arts, in the same shopping plaza as the new Ronzio. West orders a chicken sandwich. He also represents a potential source of future business, telling Menebhi that his martial arts school frequently hosts birthday parties for its young clients. Menebhi said he could provide discounts on pizza, and West took some Ronzio menus with him when he left.

Ronzio is a local chain, with 19 locations in Rhode Island and 1 in Massachusetts. Julian Angelone, chief operating officer for the company, said it’s opening a second Massachusetts location, in Worcester.

Read the whole story at Providence Journal

Bruegger’s  the Burlington, VT franchisor announced that it will continue to add bakeries in spite of the weak economy. In 2008, the company is ahead of plan inking development agreements totaling 46 new bakery commitments. Since 2005, when Bruegger’s significantly modified its franchising program, the company has reached development agreements for 153 new bakeries.

This year, Bruegger’s also signed multi-unit deals in two of the largest and most competitive retail markets in the country. In August, the company closed a deal with Hart Street, LLC to open 20 bakeries in New York City over an eight year period. Earlier in the year, franchise rights for 15 bakeries in Chicago were awarded to Windy City Bagels. The company has also reached multi-unit agreements with franchisees in Ohio and Florida this year.

This announcement comes on the heels of a September Wall Street Journal article citing a Franchise Update Media Group survey in which 150 franchise companies, respondents said their franchise sales were about 72% below their 2008 goals, with inquiries from prospective franchisees down about 48 percent1.

“We look for people who love and understand the business and have the resources to build a successful franchise,” said Bruegger’s Vice President of Franchising Chris Cheek. “Our goal is to grow the right way. Choosing the right franchisees and pairing them up with the right locations is key to making that happen.”

Bruegger’s has also seen 18 consecutive quarters of comp sales growth. This month, the company announced third quarter system-wide gross sales of $45.13 million; a 8.7 percent rise over $41.52 million for the same period in 2007. Revenue for comparable sales grew 1.7 percent at company locations and 1.7 percent system-wide for the third quarter ending October 30, 2008.

“Over the last five years we have successfully restructured our business model and we’re seeing the pay off through consistent sales increases and new development deals,” said Bruegger’s CEO Jim Greco. “We’re looking to do even better in 2009.”

Darrell Johnson of FRANdata presented the 2009 Franchise Economic Forecast at the Franchise Updates September Leadership & Development Conference  (download your copy of the FRANdata report here). Darrell reports that the the economic downturn is clearly going to impact many aspects of franchising, none more so than access to capital. The capital markets are effectively shut down right now, forcing banks to put loans on their balance sheets. Even if that changes soon, banks will be slow to open up lending channels in the face of the downturn and after the unprecedented capital losses they have encountered in the mortgage markets.

Planning for next year is becoming more challenging than for any year in this decade, however, there are some trends and patterns to be seen as we head into the 4th quarter of 2008 that give an indication of where things are headed next year for the franchise community.

The exception is SBA lending, which still has a vibrant secondary market and should see a significant increase in activity as banks turn business customers towards their SBA lending units. In general, banks are becoming much more conservative in their lending programs, both with regard to underwriting criteria and with loan terms, assuming they are willing to lend at all.

While capital access is an ongoing issue, franchise development clearly is slowing for other reasons as well. Combined with flat or declining system-wide revenues for many brands, the emphasis in 2009 will naturally turn more to the cost side of the business. We are seeing an increase in interest in bench-marking many areas of franchise activity.

2009 will present some unique challenges to the franchise community. Having reliable information with which to base planning decisions is a primary role of FRANdata. The compensation survey came about as a result of inquires from franchisors. We listen, find ways to fill in the data gaps, convert data to information, and give you a better basis to make critical business decisions. Give me a call with your questions, issues and thoughts.

Download the 2009 Franchise Economic Forecast given at the September 2008 Leadership & Development Conference

Today’s career women are continually challenged by the demands of full-time work and the responsibilities and commitments at home. Fantastic Sams Hair Salons, NEFA Member and the nation’s largest full service hair salon brand, has a unique business model that allows women entrepreneurs to successfully achieve work/life balance.

Ranked as one of Entrepreneur Magazines Top 10% of franchises to buy and featured on Lifetime’s The Balancing Act, over 40% of Fantastic Sams salons/franchisees are women owned, and that number is projected to grow in the future.

“As a mom looking to get back into the workforce, Fantastic Sams was the perfect opportunity. Being a salon owner allows me the flexibility to manage my family life and my career. I’m able to pick up my daughter from school, spend time with my family and run a successful business,” said Marilyn Tokatly, a multi-unit franchisee in Southern California. “The hair salon business also tends to be stable during a slowing economy because people always want to look good. Guests usually visit the salon every 4-6 weeks, which builds a solid customer base. And when they leave feeling fantastic about themselves, it creates a high degree of customer loyalty,” she added.

With nearly 1,400 salons nationwide, Fantastic Sams has a solid, proven system of success, which allows women business owners to go into business for themselves, but not by themselves.
“With our business model and support network, we provide all of our franchisees with valuable information and resources to help them operate a successful business,” states Jeff Sturgis, Vice President of Franchise Sales & Development. “We recognize how important it is that we continue to support the growth of this dynamic sector of women business owners”.

Already a big player in the $59 billion hair salon industry, Fantastic Sams offers a full range of hair salon services catering to men, women and children of all ages. Customers at any Fantastic Sams can expect the full service treatment from a professional team of stylists up-to-date on the latest trends and fashions. Haircuts and styles, straightening, coloring, highlights and texturing are all available, as well as beard and mustache grooming, facial waxing and rejuvenating hair treatments. Fantastic Sams’ menu of services are also complemented by an exclusive line of professional hair care products.

The average initial investment to open a Fantastic Sams salon (ranging from $100,000 to $225,000) and the company’s fixed fee royalties make it one of the most competitive opportunities in the industry.

“We have become the leading full-service hair salon brand by offering the best in salon services and products, and by creating a customer loyalty that sets us apart from our competition - our guests recognize the difference,” states Sturgis.

UFood Grill a franchisor and operator of fast-casual food restaurants, announced that its area developer in Sacramento has signed a lease for a unit in the Westfield Galleria Mall in Roseville, CA. This will be the first UFood Grill location within a shopping mall and the second location in Roseville. The franchisee anticipates construction to begin in September culminating with the opening of the food court in time to accommodate the holiday shopping season.

George Naddaff, Chairman and CEO of UFood Grill comments, “We are very excited that our brand will continue to grow in the Roseville community. The Westfield Mall is a well-known retail development.”

Athletic Nation, NEFA member and a men’s personal-training gym franchisor, has signed National Football League All-Pro Lorenzo Neal to a three-year endorsement deal.

San Jose-based Athletic Nation said Neal’s endorsement of the company includes appearances in television and print advertisements.

A 15-year NFL veteran and four-time Pro Bowl selection, Neal is one of he league’s top all-time blocking backs. He has cleared the paths for 1,000-yard rushers such as LaDainian Tomlinson, Corey Dillon, Eddie George and Curtis Martin. During the offseason, Neal signed with the Baltimore Ravens, his seventh NFL club. He is a native of Hanford and a graduate of Fresno State University.

Athletic Nation describes itself as a no-frills, personal-training gym for men who want to get their bodies back in the game. For many of its members, it is a life-changing experience: A transformation from an overweight, out-of-shape, zero-energy hermit to a slim, ripped, high-energy man who is fully re-engaged in life, the company said.

“I find that most gyms lack the serious attitude and personal attention needed to attain and maintain an optimal level of fitness,” Neal said in a statement. “Athletic Nation’s philosophy of a back-to-basics workout is exactly what the men’s fitness industry needs and is what attracted me to them in the first place.”

Athletic Nation said it has exceeded sales expectations in its first year of operation and has opened 12 locations. The franchisor seeks business-minded professionals to help grow the concept nationwide through regional development and multi-unit agreements.

Athletic Nation founder Dennis Mulgannon said Neal’s endorsement gives the company’s concept a huge boost in the validation department.

Franchisors are becoming increasingly creative in marketing themselves.

Richard Gibson writes in the Wall Street Journal that some franchisors are giving hefty discounts to franchise employees who want to become owners. One is introducing a “lite” version of its concept designed for those seeking a part-time franchise to augment their income. Another is offering a rare money-back guarantee.

As franchises proliferate and competition for new franchisees intensifies, franchisors are using such innovative tactics to ensure their own longevity and success.

Employee Discounts

Dwyer Group encourages workers at its various repair and maintenance franchises to eventually buy their own franchise. For example, employees of a Mr. Appliance franchise can get 10% off the initial cost of a franchise, which averages around $45,000, if they work in the business for two years and perform well. If they remain seven years, they could get 75% off the initial fee.

The intention is to help its franchisees attract industrious employees and keep them longer, says Mike Bidwell, president of Waco, Texas-based Dwyer. “And if a person does move on to buy a franchise,” he adds, “we get a better-quality franchisee, who has a higher probability of success.” Mark Liston, director of sales recruiting for Valpak Direct Marketing Systems Inc., a direct-mail advertising franchisor, says that as competition for a shrinking work force intensified, executives at the Largo, Fla., company asked themselves: “What do we need to do to bring in fresh talent and create franchisees for the future?”

The answer: launch an “earn-and-learn” program that seeks to woo future entrepreneurs graduating from college.

Sales representatives who finish three years in the top performance quartile can qualify to receive the $50,000 initial cost of setting up a Valpak franchise. Alternatively, the company will contribute $10,000 — either to help pay off a college loan, obtain an M.B.A. or make a down payment on another franchise of the recipient’s choosing. Valpak does business with numerous franchisees. So the thinking is that a franchisee that the company has helped out could very well eventually become a client.

Money-Back Guarantee

To accelerate its expansion plans, and reduce the uncertainty of would-be franchisees about buying one of its car-painting shops, Maaco Enterprises Inc. recently introduced an extraordinary proposition: If after the first year a new franchisee hasn’t achieved a certain sales level despite having operated a “first-class” business, the company will buy the franchise back. Certain conditions apply, including using sale proceeds first to pay off loans outstanding and any money due Maaco.

Company president David Lapps expects that in the current credit environment Maaco’s guarantee will make banks weighing loans to prospective franchisees “much more comfortable with the investment, because it’s somewhat underwritten.”

Meantime, one franchisor, Homevestors of America, which buys, repairs and then rents or sells single-family homes, has come up with a version of its franchise aimed at part-timers.

Instead of the usual $50,000 fee for a traditional franchise, so-called associated franchisees will pay $12,000. And unlike full-time franchisees, part-timers won’t have an annual quota of having to buy a certain number of properties per year. Instead, they will have to generate at least $6,000 in annual fees for the franchiser.

“One problem is money, another is time” in deterring many would-be franchisees, says Homevestors Chief Executive John Hayes when explaining why the firm, a unit of Franchise Brands LLC, Milford, Conn., created the mini franchise.

Jim Kinney writes in the Springfield Republican that Herrell’s Ice Cream a NEFA Member is looking to take its 150 flavors of made-where-you-buy-it ice cream including “Chocolate Pudding” and “Malted Vanilla” on the road to franchised locations from Maine to New Jersey.

The most recent franchise opened last month in Huntington, N.Y., on Long Island said Judith U. Herrell, a partner in the business and president of Herrell’s Development Corp., Herrell’s franchising arm. Each location makes its own ice cream.

She and her partner, Stephen R. Herrell, went on a scouting trip this summer looking at other cities where they think a Herrell’s franchise would work including Saratoga Springs, N.Y., Middeltown, Conn., Portland, Maine, and

“We are looking for communities that have the arts, communities where there is a lot of fine dining,” she said.

There already are four independently owned Herrell’s beside the Northampton location: the new store on Long Island, two in Boston and one located at the Massachusetts Museum of Contemporary Art in North Adams.

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After years of being asked by franchisors outside of the United States for assistance in bringing their concept to the United States, Edwards Global Services, TEAM Rennick and PowerHouse Franchising a NEFA Member, today announced the formation of the Global Franchise Team, a one-stop solution for international franchise companies who are considering entering the U.S. – the largest and most diverse market in the world.

Rather than 5-10 franchise suppliers piecing together U.S. expansion services, Global Franchise Team offers in one group all the services needed for a franchisor to expand into the U.S.

Edwards Global Services analyzes the viability of the franchise inbound to the US, compiles the data necessary to examine the return on investment for U.S. expansion, including market demographics, competitive analysis, and pricing; Team Rennick makes the franchisor ready to launch in the U.S. market by modifying a concept for the U.S. marketplace, providing franchise disclosure documents, state registrations and intranets; then PowerHouse Franchising takes over as the sales arm of Global Franchise Team.

“We learned that many of these franchisors are apprehensive about launching their brand in the United States because of many factors including the legal aspects, the size of the market, cost to enter and method of entry,” said William Edwards, chief executive officer of Edwards Global Services. “What Global Franchise Team offers is a single-vendor, process-focused, cost-effective, turnkey solution that cannot be found anywhere else in the United States.”

Global Franchise Team is based in Mesa, Arizona.  For more information visit www.globalfranchiseteam.com.