August 2013 Archives

The Week in Review - August 30th- Top Influencers & Best Articles

By Michael Webster on August 29, 2013 10:29 PM | 1 Comment

Here are the Top Influencers, as determined by LinkedIn, in the Linkedin Groups that Franchise Info manages.

Each week individuals contribute their comments and ideas to our LinkedIn Groups.

LinkedIn claims to use a neat & secret algorithm to select whose comments & ideas have the most influence.

Google also claims to have a neat influncer alogrithim.

But, what do you think?  Because your opinion also counts.

 

1. Franchise Owners (969 members) 

Congratulations to: John Gordon. 

Ok, Franchise Owners -this is bit crazy.  Why is John always the Top Infuencer?

Look, I love the guy - but doesn't someone else have something to say?

      John A. Gordon

John A. Gordon
Chain Restaurant Earnings and Economics Expert

2. Franchisors ( 2364 Members)

Congratulations to Pete Crouse and Rhonda Sanderson.

Hey, does Rhonda always get to be an Influencer because of her PR backgroumd?

3. Franchise Suppliers/Services (1333 members)

Congratulations to David Stein and Don Sniegowski.

4. Franchise Attorneys (1163 members)

Congratulations to:  John Gordon  & Matthew Kreutzer 

So Matthew gets top billing for commenting on the Legal Zoom story?

5. Metro Franchise Association (983 Members)

Congratulations to: Christopher Frits Blomkwist & Naomi Meghory

6. Finally, here are the Top 10 Stories - determined by Google Analytics- by popularity and time spent.

Congratulations to Richard Solomon for the most Popular Article & Warren Lewis for the Most Engaging Article.

So only attorneys can write popular or engaging artices?

Most Popular 

Popular.png

Most Engaging

read.png

If you believe that you are deserving of being an Influencer & want to Get Your Name Out There, take a Look into the Franchise Info Marketing Program .

The Week in Review - August 23rd- Top Influencers & Best Articles

By Michael Webster on August 22, 2013 10:52 PM | 0 Comments

Here are the Top Influencers, as determined by LinkedIn, in the Linkedin Groups that Franchise Info manages.

Each week individuals contribute their comments and ideas to our LinkedIn Groups.

LinkedIn uses an algorithm to select whose comments & ideas have the most influence.  

We don't report the group owner's influence ranking.

1. Franchise Owners (944 members) 

Congratulations to: John Gordon.

      John A. Gordon

John A. Gordon
Chain Restaurant Earnings and Economics Expert

See all members

2. Franchisors ( 2352 Members)

Congratulations to Dale Waite & June M. Toth.

See all members

3. Franchise Suppliers/Services (1329 members)

Congratulations to Marc Gordon.

See all members

4. Franchise Attorneys (1155 members)

Congratulations to:  Matthew Kreutzer & Mary Clapp.

See all members

5. Metro Franchise Association (916 Members)

Congratulations to: Eric Gustafsson, Sandra K. Jimmerskog, Howard Kline, Esq.

See all members

6. Finally, here are the Top 10 Stories - determined by Google Analytics- by popularity and time spent.

Congratulations to Richard Solomon for the most Popular Article & Bob Canter for the Most Engaging Article.

Most Popular 

Popular.png

Most Engaging

read.png

If you believe that you are deserving of being an Influencer & want to Get Your Name Out There, take a Look into the Franchise Info Marketing Program .

How Much Does It Cost to Buy a Solar Universe Franchise?

By Michael Webster on August 22, 2013 9:31 AM | 1 Comment

There are basic three questions any prospective franchise owner wants to know: 

1.  How much does it cost?

2.  How much can I make?

3.  Is my area still available?

Some of the answers to these questions are found in the FDD.  

To answer "How Much Does It Cost", you need to look at Items 5 - 8. This is the standard format in all FDDs.

5-8.png

What makes answering the question, How Much Does It Cost?, hard is the quality of disclosure in Item 8- the item that deals with restrictions on your purchases and rebates.  Excessive restrictions on your source of supply can lead you to overpaying for your purchases.

Many propsective franchisees assume, without verifying, that the franchisor:

a) makes bulks purchases and receives better pricing, and;

b) passes on those rebates to the franchisees.  

After all, isn't that the point of being in a franchise system - to get better pricing through group purchasing?

Well, no.

You must actually read the Item 8.

Here is Solar Universe's Item 8.  It is remarkably clear.

How Much Does It Cost.png

(Here is the entire Item 8 Disclosure, How Much Does It Cost)

Solar Universe is very clear.

1. You will buy all your solar products from them, and nobody else - even if the prices or quality is better from an alternative supplier.

2. Solar Universe makes the bulk of its money, almost 75%, by selling franchisees solar products - whether or not the franchisee sells those products.

3. The definition of "solar products" is wide.

4. The is no group buying power, and rebates are likely not available to the franchisees, given this boilerplate lanugage:

"Additionally, we may negotiate pricing arrangements, including volume discounts on behalf of our franchisees with our suppliers.

Volume discounts may not be available to franchisees located in outlying markets that a particular supplier does not serve in significant volume."

In this business, you are essentially distributing and selling the products Solar Universe has bought -without regard to competive price and quality.

So, you need to be very clear on just how good Solar Universe is with their buying and prices to franchisees. Not something you can tell without more homework.  This is the major input to how much does it & you must be clear on it.

For more helpful tips from expert on purchasing a franchise, please click here.

The Week in Review - August 16th- Top Influencers & Stories

By Michael Webster on August 15, 2013 10:00 PM | 0 Comments

Here are the Top Influencers, as determined by LinkedIn, in  Linkedin Groups that Franchise Info manages.

1. Franchise Owners (931 members) 

Congratulations to John Gordon.

EE.png

2. Franchisors ( 2341 Members)

Congratulations to Doreen Morgan, Marc Gordon & Stephan Donati.

or.png

3. Franchise Suppliers/Services (1326 members)

Congratulations to Marc Gordon

supply.png

4. Franchise Attorneys (1148 members)

Congratulations to: Ben Hanuka, Richard Wilbourn & Matthew Kreutzer

law.png

5. Metro Franchise Association (832 Members)

Congratulations to: Robert Bilotti, Marc Gordon, Aaron Weiner, CCIM, CPM, LEED AP & Sandra K. Jimmerskog

Metro.png

Finally, here are the Top 10 Stories - determined by Google Analytics- by popularity and time spent.

Congratulations to all the authors.

Most Popular 

Popular.png

Most Read

read.png

If you believe that you are deserving of being an Influencer, take a look  and see if it works for you.

The Week in Review - August 8th- Top Influencers & Stories

By Michael Webster on August 9, 2013 9:01 AM | 0 Comments

Here are the Top Influencers, as determined by LinkedIn, in the 5 main Linkedin Groups that Franchise Info manages.

1. Franchise Owners (918 members) 

Congratulations to John Gordon!

EE.png

 

2. Franchisors ( 2321 Members)

Congratulations to Richard Vogel, Rhonda Sanderson & Glen Walford

or.png

 

3. Franchise Suppliers/Services (1316 members)

Hmm, LinkedIn didn't pick any influencers this week, other than the usual suspects.

supply.png

 

4. Franchise Attorneys (1136 members)

Congratulations to Matthew Kreutzer, Mary Clapp, and David Steinberg

law.png

Finally, here are the Top 10 Stories - determined by Google Analytics- by popularity and time spent.

Congratulations to all the authors.

Most Popular 

Popular.png

Most Read

read.png

McDonald's Real Estate Business Model - The Franchisor Insider's Story

By John Gordon on August 8, 2013 2:00 PM | 13 Comments

McDonald's (MCD) has been in the national press of late with notes of franchisee problems. Many understand that McDonald's is partially a real estate story, and is one of the three primary MCD revenue streams. Being in real estate in the early years presented an understandable story to the lending community, that didn't understand $.15 hamburgers. It also was a way to control the franchise structure via a lease, and to take an ownership interest to smooth out early startup losses.

Over time, MCD corporate earnings have been partially reliant on the real estate margin. Early histories on MCD noted an 8.5% total restaurant rent goal and a MCD corporate real estate margin of 25-30%.

It's risen a lot since those days. Rent expense has generally increased worldwide, but McDonald's rent margin-its markup--has also. See the following extracts taken from the MCD last 10K filings.

MCD 10k.png

The McDonald's rent margin is now almost 84%. This is the function of several factors, including higher store revenues over time, hitting a rent overage threshold that goes as high as 18% of revenue, as well as rent concessions that the landlord McDonald's realized that it did not pass on to the franchisees.

McDonald's rent per franchise lessor site is calculated as above, at over $292,000 per unit, up 26% from 2007. We don't have the exact breakout of McDonald's franchisee revenue for the lessor stores to run a rent percentage, but it rent has to be up. Rent revenue is up more than the number of franchisees, illustrating the issue.

McDonald's is 81% franchised. The franchise economic model has to work for MCD to expand. Restaurant economics were built on 6-8% rent. But the data above suggests actuals are higher.

The missed opportunity of the McDonald's model is that corporate could lower franchisees rents to offset the price discounting it does to hit the Street's same store sales goals-but to do so, it would have to find corporate G&A savings elsewhere to offset the rent decline. That is not on the corporate menu at this point.

How Much Can I Make with a Popeyes Louisiana Kitchen franchise?

By Michael Webster on August 6, 2013 12:17 PM | 4 Comments

Ok, you are interested in how much you can make with this franchise, right?

So, I want you to a take a serious look at this Item 19, Financial Performance Representation, found in the 2013 Popeyes Louisiana Kitchen FDD.

First, the Item 19 is 14 pages long, with useful data collected from the franchise owner's profit and loss statements.

Here is one of the seven sales charts, detailing gross sales.

(Click on the image to see a full scale view.)

Sales Ranges.png

This is a good presentation. We don't have to guess about how many locations did how much volume.

We can read it off from the chart.

For example, we know that 24 stores had gross sales less than $600,000 and exactly 126 stores had gross sales between $900,000 and $1,000,000.

We aren't presented with meaningless AUV numbers, instead we are given data from which we can draw our own conclusions.

(There is a table at the bottom showing the high, middle, and low AUVs, but it is presented in the context of useful data. I am not against AUV, but there is no reason to present an AUV only without showing the data the average was calculated from.)

Second, there are seven charts - each an attempt to compare apples with apples.

The seven charts are for: all free standing restaurants, freestanding built in 2010, freestanding built in 2011, inline restaurants, convenience store restaurants, and other.

Again, this is very useful. It is especially helpful for Popeyes to have broken out the gross sales figures for stores built in 2010, and 2011. This will give you a better idea of what the first few years may hold in store for you.

Third, and this is most remarkable, Popeyes has constructed a composite P&L, profit and loss statement.

Click on the image to see the large image.

P&L.png

Notes to P&L.png

All in all, this is a useful Item 19 and will help the probable purchaser of a Popeyes Louisiana Kitchen franchise.

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