Tag Archives: Franchise

‘WOW’ IDEA DOESN’T MAKE THE CUT

 

Gordon-Logan-Photo_3

How many times have you been to a bakery or coffee shop and immediately been swept off your feet by the ambiance, the food, and the service? How many times have you thought, ‘WOW’, this business would go great near my house? Often, that is all it takes for someone to start a franchise.

However, in today’s economy and cutthroat business world, it takes more than just a great idea to make a franchise work.

Earlier this month, Sport Clips Haircuts, one of the fastest growing and most successful haircutting franchises in the U.S., held its annual franchisee and managers conference at Caesars Palace. More than 2,400 were in attendance, including representatives of the 11 Sports Clips locations in the Las Vegas Valley.

The Las Vegas Business Press sat down with Gordon Logan, founder and CEO of Sports Clips, and asked him what he believes are the qualities of a successful franchise.

The heart of his philosophy includes a unique business concept, selecting the right franchisees, creating a cohesive corporate culture, and providing the proper support and training.

Logan’s second career after leaving the military was as a consultant with Price Waterhouse. After a few years, he took his business knowledge and sought out franchising opportunities for his own personal investment, eventually purchasing a haircutting franchise. After his franchisor had gone bankrupt, Logan decided that he could develop a better, more targeted product and opened his first Sport Clips store in Austin, Texas, in 1993. After honing the concept and developing the support systems in the prototype store, Logan used that store as the working model for the launch of the Sports Clips franchising initiative in 1995.

The initial corporate concept was to develop a unique service that filled an unmet demand, created by the slow demise of the traditional barber shop. Sport Clips specifically targets the male haircutting market with a sports-themed interior that includes basketball court-style flooring and large screen TVs projecting the popular games of the season. They also offer the “MVP Experience,” Sport Clips’ signature service that includes a haircut, shampoo, hot steamed towel treatment, and neck and shoulder massage.

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But it is not enough to have an updated barber shop with lots of zings. To be a success, you also have to have the right location and franchise ownership, Logan said. That is where due diligence enters the picture.

Sport Clips has a staff of close to 200, known internally as the “Support Team.” Members of this team work together to review franchisee applications.

“We are not looking for someone who is buying a 40-hour a week job for himself,” said Logan. “We want someone who is a leader, knows how to inspire employees, can set goals, develop action plans to achieve those goals, train, and grow their business beyond just a single store. The person who we accept as a franchisee is very important to the integrity of our brand.”

In addition to the franchisee screening process, members of Sport Clips’ Support Team also review new store location applications. Using a sophisticated software program and psychographic data developed by Nielson, a ratings and survey company, Sport Clips identifies target customer bases for its locations. In addition, the company chooses its shopping center locations based on this analysis and the retail synergy of the area.

“Competition for lease space is stiff,” Logan expalined. “We are competing against Subway, and other food and service franchise business on a daily basis. However, landlords love us because we have only closed four stores since 2010; once we move in, we are there to stay.”

The final and perhaps most important step in establishing a successful franchise is continued corporate support and training, he said. Sport Clips has established specific guidelines that are designed to ensure the success of its franchisees. But these guidelines are not set in stone.

All of the stores in the Austin and Las Vegas markets are company-owned, and these two distinctly different markets serve as testing grounds for any new product and business ideas. Once these ideas are perfected, they are sent out to the franchisees to help them improve their market share.

The company also provides extensive training to new and existing franchisees at their corporate headquarters in Georgetown, Texas, and in the local areas.

Logan serves on the board of directors of the International Franchise Association and strongly believes in the opportunities that franchising offers to entrepreneurs of all ages, cultures, and backgrounds.

Some of the most successful franchisee candidates have been military veterans, and Logan has made it his personal goal to support those members of the armed forces. As chairman of the association’s VetFran Committee, he is proud of the fact that the IFA exceeded its goal of employing 80,000 veterans. Thee franchise industry is employing more than 200,000 veterans and assisting 5,000 more become franchise owners.

Logan believes that a company’s culture is also a key to success. Working with the VFW, Sport Clips franchisees and employees have raised over $3 million to provide free phone calls home for troops overseas and in hospitals, and is now shifting those funds to provide scholarships for veterans making the transition from military to civilian careers.

Sport Clips also “takes care of its own.” After losing several employees and franchisees to unexpected tragedies, the Wayne McGlone Memorial Relief Fund was established in 2012 to provide assistance to employees in need (McGlone was an area developer in Maryland). This fund is an on-going effort, with almost all franchisees contributing. Over a quarter of a million dollars has been awarded to those affected.

To future entrepreneurs or investors, Logan offers this advice, “Whether you are interested in a Sport Clips franchise or one of the other thousands of franchise investments available, complete your own due diligence to make sure the product is right for you and your market. Investigate the support and training program and corporate’s commitment to making you and your franchise business a success.”

– See more at: http://businesspress.vegas/small-business/wow-idea-doesn-t-make-cut#sthash.joBIurFm.dpuf


Heller challenges NLRB ruling on who is employer

U.S. Sen. Dean Heller used a small business round table at the recent International Franchising Association’s convention as an opportunity to do some big game hunting. His quarry was the elephant in the room — a recent finding by the National Labor Relations Board that employees of individual franchises were employees of the parent company.

The Nevada Republican didn’t miss, much to the delight of the round-table participants, most of whom have a stake in the issue.

Heller requested the participants to speak from their heart. And they did, although it took a while to focus on the NLRB ruling.

As a general consensus, each of the participants expressed concern about the increasing amount of government regulations they face. Heller agreed, stating that “It has been very difficult to run a business in the U.S. for the past four to five years because the government has not been predictable. One thing that we will have this year that we have not had in five years is a budget. Budgets set priorities and that is key to you knowing how to plan your business.”

Then the discussion moved to NLRB ruling that McDonalds, the world’s largest hamburger chain, could be named as a joint employer in several complaints regarding worker rights at franchise-owned restaurants. The decision is pivotal because it could expose McDonald’s Corp. to liability for management practices in those locations. This decision also comes at a time when fast food employees in the U.S. have been protesting for higher pay, and labor groups calling for pay of $15 an hour and the right to unionize.

Catherine Monson, CEO of Fast Signs, attacked the issue head-on: “I don’t know the names of my franchisees employees, I don’t control their hiring practices or tell them how to run their business. This ruling can be devastating to our corporation and our franchisees.”

John Noellert, a Fast Signs franchise owner with two locations in Reno and Carson City, confirmed Monson’s comments stating that “The most you have ever said about my employees was just a moment ago.”

The issue is crucial for Noellert. “My business is excellent; I have doubled over the past four years despite the recession. I have a P &L and a budget but my biggest problem is trying to figure out my HR cost due to changing regulations. My lowest paid employee is making $4 above minimum wage. I believe that franchising is successful because you are an independent businessman but have the support from corporate.”

That position was echoed by Debbie Shwetz, co-founder of Nothing Bundt Cakes Enterprises, who said: “Corporate is there to support and give advice but not control the franchisees business.”

Mara Fortin was the first Nothing Bundt Cakes franchises owner and operates six bakery locations in the San Diego area. Fortin stated: “I have a business degree and a law degree but what I need is a crystal ball degree. I thought that I would be using my business degree to run my business but I spend more time using my law degree trying to figure out all of the government regulations. I would like to expand my business more but there are too many question marks for growth.”

Heller quoted a portion of a letter that he and other senators have signed, and sent to the National Labor Relations Board:

“In particular, we are concerned about the lack of public reasoning supporting your conclusion. Small businesses like franchises are the foundation upon which the American economy is built. In fact, there are more than 700,000 franchises in America. While they may be associated with a national brand, in reality they are small, independently operated entities that contribute to economic growth in countless towns and communities across America — and have for decades. Treating franchisors as joint employers with their franchisees will likely disrupt this well-functioning, established business model.

“As you know, franchisees generally control hiring practices, working conditions, wages, and hours of operations. They also file their own taxes. Franchisors do not control any of these activities. A franchisee’s employees do not work for the franchisor. Federal labor law has long recognized the importance of these distinctions.

“In light of the serious consequences that could follow from your decision, we respectfully request that you make public your supporting reasoning and relevant data. This information will allow Congress and the public to evaluate the merits of your decision and enable franchisees and franchisors to better understand the possible legal implications of their relationships.”

Jeffrey Tews, owner of multiple locations of BrightStar Healthcare of Madison, Wis., was encouraged by Heller’s endorsement of the letter. “We (the IFA) have 150,000 franchisees in 800,000 locations in the U.S. and we are the small businesses that drive the economy. What can we do to become more involved?”

Heller urged all concerned about the issue to make their feelings known to their elected representatives. “Change is coming in D.C.,” Heller said. “What makes the biggest difference is the telephone calls, emails and letters. I receive 2,000 correspondences each day and from them I get a feel for the current topic of concern and the way the general population is leaning.”

Heller’s round-table meeting was a small part of the annual three-day International Franchise Association Convention and trade show that included 3,800 attendees from around the world. Both franchisors and franchisees had the opportunity to network and attend educational sessions that dealt with a full spectrum of business management, operations, human resources, and marketing topics.

– See more at: http://businesspress.vegas/small-business/heller-challenges-nlrb-ruling-who-employer#sthash.RGGMpwTj.dpuf


Sears spinoff to franchise its Nevada outlet stores

By Craig A. Ruark
Special to the Las Vegas Business Press

A spinoff of retailing giant Sears is looking for a Nevada entrepreneur to run its three Silver State outlets stores under a franchise arrangement. The cost: $1.8 million.

Sears is a prominent name in the retail industry with brands such as Kenmore, Craftsman, and DieHard. But its Kmart and Sears stores have been struggling.

Its outlet stores in Las Vegas, Henderson and Sparks are part of a young spinoff venture that’s been a profitable game changer as it converts shops that had been company-owned to a franchise model.

In October of 2012, Sears Holdings Co., which owned all of the Sears and Kmart branded stores, spun off a small group of stores that included Sears Hometown &Outlet Stores. And while Sears Chairman Edward Lampert owns a majority stake in the business through his ESL Investments Inc., the Hometown &Outlet Stores are operated as a totally separate company. This spin-off has successfully increased the stock value and profits of both Sears Holding Company and Sears Hometown and Outlet Stores, Inc.

Part of what has made the Sears Outlet Stores more profitable is a franchise model that they adopted shortly after the spin-off. In this model, a franchisee invests from $400,000 up to $3.5 million per store, depending on the location and size of the market. With that investment, the franchisee assumes the store property lease and all the products in the store are placed on consignment, supplied by Sears Holdings Co., for which Sears is paid a commission on each sale.

According to Scott Nichols, director of franchise development, “We have found that we sell more products by working with franchise owners who know the local market and are involved in their own business, than we do by operating the stores through the company and hiring a store manager.”

There are 150 Sears Outlet Stores across the country and 65 of those stores are operated by franchisees. Three of the Outlet Stores are operating in Las Vegas, Henderson and Sparks, and according to Nichols. Sears Outlet Stores wants a single franchise owner to take over all three Nevada locations for a total cost of $1.8 million.

The Sears Outlet Stores only sell appliances, apparel, mattresses, sporting goods, tools, and lawn and garden equipment. Some of the products may be new items that have been discontinued or overstocked; many items may be one-of-a-kind, out-of-carton, used, reconditioned, and scratch-and-dented merchandise. The condition and availability of items may vary from store to store, as may the price, but everything is sold at a discount of between 20 and 60 percent off regular retail price. Most products still carry the full manufacturer’s warranty.

In addition to the physical location, Sears Outlet Stores are also supported with a website presence www.SearsOutlet.com where customers can locate a store near them and browse the inventory, order online if they wish, and arrange for delivery.

Securities regulations prevented Nichols from disclosing operating performance and profit expectations, but that information is available to perspective franchisees once they have signed the required confidentiality agreements and appropriate Securities and Exchange documents. Franchise inquiries can be made at www.OwnaSearsStore.com.

– See more at: http://businesspress.vegas/small-business/sears-spinoff-franchise-its-nevada-outlet-stores#sthash.mi9Ifpcc.dpuf