A lot of research goes into selecting just the right franchise to invest in.  The more time that you spend looking into prospective franchisors, the better your chances of making a smart decision that you will be satisfied with 10-15 years down the line.  There are a lot of important questions to ask and a lot of people to approach with those questions.
If you take the information of your prospective franchisors at face value, then you are setting yourself up for disaster.  Franchisors have one main goal – selling their brand.  Franchisors need investors buying franchises if they want to profit.  As such, they are most often inclined to focus on the benefits of signing up with them and gloss over the negative.
Of course, if there is negative to be seen, then much of it will be there in plain sight for those discerning enough to look for it.  No matter how much a franchisor might wish to gloss over negatives, if the company’s franchise owners have had problems with them, then there are probably some telling clues in the Franchise Disclosure Document.
Any franchisor is legally obligated to disclose through their FDD any litigation against the company brought by franchisees.  This is true regardless of whether the case went in favor of the franchisor or the franchisee.  Even in those instances where lawsuits went in favor of the franchisor, those cases can shed light into issues that may arise with that franchisor should you choose to pursue franchise ownership.
On the other hand, if there are no lawsuits listed and a franchisor has been in franchising for some period of time, then there is another important question you should ask.  No matter how great a franchisor might be, there isn’t much chance that no franchisee has had a serious grievance even once over the life of the franchising company.
A lack of litigation should be a red flag that the franchisor may have a mediation and arbitration clause in the franchising agreement.  If you suspect that this might be the case, then it is something you should definitely investigate.  Mediation and arbitration clauses, though rare, can have a major impact on franchisees.
Arbitration is, essentially, a truncated lawsuit.  Rather than taking a complaint into court, both sides agree before hand to be bound by the decision of an arbitrator or arbitrators.  Arbitration happens more or less in the same way as a court case, with both sides presenting their cases.  An arbitrator then decides how the two parties should proceed.  Mediation is much the same, but is less formal and less binding.
Mediation and arbitration are not bad, in and of themselves, but such clauses can severely limit the recourses available to a franchisee should trouble with the franchisor arise.  Such clauses prohibit pursuit of litigation (other than by violation of contract).  As such, if you feel that you have been wronged by your franchisor, you may find yourself obligated to adhere to an arbitrated ruling that quite likely would not be in your favor.

Ideally, franchising is a mutually beneficial arrangement.  On one side, the franchising organization grows and prospers by offering investors the chance to use its successful name and business model in return for royalties and franchising fees.  On the other side, franchise owners get the opportunity to start a business that has a greater chance of success than an independent business would and comes with a pre-existing customer base.
It seems that with so much to gain on both sides that there could be little cause for complaint from either party.  Of course, that isn’t at all realistic.  The truth is that franchisors and their franchisees bump heads regularly.  Any franchising company whose Franchise Disclosure Document doesn’t list at least a few lawsuits hasn’t been franchising very long.  Franchisor/franchisee disputes are so common, in fact, that a whole subset of legal council has arisen to cater to parties on both sides.
However, in most instances it does not serve a franchisor well to allow things to progress to the point of litigation.  As mentioned, those suits all have to go into the franchisor’s FDD.  Even if the case goes in favor of the franchisor, having those complaints levied by franchisees does not look good for potential investors.
In order to prevent litigation, franchisors may attempt to resolve conflicts through other channels first.  In fact, many franchising agreements may even include mediation and arbitration clauses which obligate franchisees to pursue resolution through this channels before, or in lieu of, pursuing legal recourse.  However, such clauses are not the norm.
Mediation and arbitration clauses are not common because of one simple fact.  When push comes to shove, the franchisor can almost always out-gun the franchisee in court.  So, while the franchisor may prefer to avoid litigation, if it feels that its chances of coming out ahead through mediation or arbitration are week, then it may prefer to take the hit of the FDD suit disclosure and go for the win in court.
Those franchisors who do not contractually obligate their franchisees to pursue mediation and arbitration are often still inclined to push those means of resolution.  Again, avoiding litigation is best for the franchisor in almost all instances (except those wherein the franchisor probably really is in the wrong).  This does not mean that mediation and arbitration cannot work in favor of the franchisee, though.
In fact, mediation or arbitration, either one, is often mutually beneficial to both parties.  It, of course, allows the franchisor to avoid potentially embarrassing litigation.  For the franchisee, it provides a means of having his or her complaint heard and addressed without the expense of going to court.  Since arbitration is generally binding, as per agreement before arbitration, it can be just as effective as litigation.
Though mediation is generally not binding (unless both parties agree to abide by it after the fact), it can still provide a channel to allow franchisor and franchisee to reach a mutual understanding and agreement without escalating the conflict beyond the point of repair.  Generally, by the time a dispute reaches court there is no longer any chance of maintaining a working relationship.  Mediation and arbitration both allow conflicts to be addressed while preserving the franchisor/franchisee relationship.

Going into business is always a major financial risk.  More than half of new businesses won’t survive the first five years of operation, even under the best of economic backgrounds.  When the economy hits a slump, the risk of opening a new business is even greater.

Does this mean that going into business during an economic down period is necessarily going to be a disaster?  Not at all.  Going into business can be a sound financial move even when others around you are handing in the towel.  Some investments are simply stronger than others.

As a general rule of thumb, though often more costly to get into, franchises tend to have a higher success rate than independent businesses.  Restaurants also tend to weather economic hard times better than many other industries.  After all, people still need to eat and those who can’t or won’t cook for themselves aren’t inclined to learn just because times are lean.

That being said, it is important to understand that not all types of food-service establishment do well.  It isn’t so much a matter of food style (though if you are going after something that appeals to a small niche market, you may not do so well).  What matters most is the type of establishment you get into, itself.

There are four distinct classifications of restaurant, each with its own genres, subsets, etc.  The four basic types of restaurant are fast-food, fast-casual, casual and fine dining establishments.  Each has its own merits and weaknesses, especially in time of economic hardship.

Fine dining establishment tend to weather most economies fairly well, by virtue of catering to those who are well off enough to not have to make major sacrifices to their dining habits.  If you are a frequenter of fine dining establishments, you may have noticed the distinct lack of fine dining franchises, though.

The lack of fine dining franchise options means that if you want to get into fine dining, you’ll have to go it alone.  Independent ownership is a significant risk, even in good times.  Trying to build the reputation of a new restaurant during a time of hardship could well put you in that 50% of disastrous failures rather quickly.

So what is the safer bet for franchising in a down economy?  You might suspect that the wise choice is in fast-food.  After all, the well known fast-food franchises all do fairly well across the board.  However, the demographic groups targeted by fast-food franchisors are also the groups most inclined to drop dining out from their budgets and start cooking at home more often when the economy tightens up.

Casual dining establishments also take a hit.  People stop being willing to pay extra for table service when they can get comparable food elsewhere for less.  Where can they get comparable food?  At fast-casual establishments.

Fast-casual establishments provide all of the quality of casual dining at prices closer to fast-food.  This appeals to those who are less inclined to drop dining out from their budgets, but are more than willing to forgo table service (and tipping) to save money.  This makes fast-causal establishments the safest restaurant franchising option during a slow economy.

Did you know that many food service establishments can actually save you money? This may sound contradictory, after all, isn’t eating out expensive and don’t most budgeting gurus say that it’s something to be limited? Well, this is why this is not about eating out, this is about waste vegetable oil. That’s right, the very thing that they use to fry your chicken tenders and fries in can save you money, a great deal of money, in some cases. Whether you’re using it with heaters or in your car, there are a number of ways that waste vegetable oil, coupled with conversion kits and generators can bring some much needed financial breaks into your life. More than that, though, it gives the environment a break.

Think about the green house emissions that are expelled into the air each and every time you start up your car. Carbon dioxide, sulfur, and other particulates create that lovely smell that comes from your vehicle’s exhaust. But what if your muffler reeked of french fries? Would that be a better option?
Here, we’ll explore some of the ways that Bio Diesel, or even straight vegetable oil is a much better alternative than you may have previously considered. The environmental impact is most obvious in the fact that waste vegetable oil comes from completely renewable resources. The same cannot be said for conventional, petroleum based fuel systems. Also, because waste oil is found almost anywhere, wherever there is a food service establishment that fries their food- there is definitely not a lack of being able to get the oil you need to fuel your heaters or vehicles.

The main things that you need in order to run a waste vegetable oil system are secondary fuel tanks, though some have come up with ways to use single tank systems, a heat source, a filtering system, and a fuel selector solenoid. There’s a bit of a retrofit system also involved and this helps produce much less emission than a standard petro based system. However, if all of this seems a bit complex, there are many outfitters that now sell not only conversion kits for your diesel vehicles, but also, conversion kits for the fuel itself. A quick look around online will reveal that this trend is growing and so too are the innovations and improvements to existing systems as more and more people catch on to this convenient fuel source. There are a few concerns with the system, for instance, cold weather congealing the grease- however, if you do have an adequate heat source, a quick warm up of your vehicle may be all that’s needed. There are even options for special additives now that help to prevent the solidifying of oil into greasy goo.

Consider, though also that the benefits of waste oil fuel are many- from being able to fuel up pretty much anywhere so long as you can filter your oil before hand, to being able to have a much, much less expensive option- think about possibly making the switch. Who knew fast food could actually save you money?

The best restaurants out there offer not only a consistently good food at a reasonable price, but also, great service. With most businesses, you find that there is a similar line of thought- the greatest asset the business has is actually it’s workforce, and for a restaurant, this is everyone from the wait staff to the dishwasher. Improving your staff’s productivity is important and a key element in making sure that you have the best possible experience for your customers. The key to increasing profits happens before the customer steps in the door and begins with your staff. If all staff are not working together in tandem to create a better dining experience, you may find that your patrons go elsewhere.

The best thing that you can do to promote productivity happens well before the staff is actually out on the floor full time. Make sure that your staff is adequately trained. This means being able to have a clear sense of exactly what is expected of them, and encouraging them to follow procedure as they are instructed from the start. Mentoring is a good thing, yes, but more often than not without a good, reliable training up front- having a newer staff member follow or shadow a senior staff member may cause problems as the older staff member has ways of doing things that the new one may not be ready to pick up.

Making sure that your staff is prioritizing customer service is key. If you notice that you have some servers that do not pay attention to their customers while still giving them some space- it may be time for a training refresher course. For newer servers, the key is in not allowing them to get to that level of comfort in service- from the start, make sure that they are well trained, and doing the best that they can.
Insofar as your kitchen staff goes, there needs to be a level of team work and camaraderie between kitchen and wait staff. This needs to be so that the kitchen staff makes sure that orders are correct, but also quick and efficient, and so that the wait staff is doing all they can to be sure that orders are actually brought to the back of the house the proper way. This is another area where a great training program can help, because a uniform way of ordering may enable better communication. In cases where a point of sale terminal is used, this is generally circumvented, but even then, problems can arise.

The key to better customer service may well lie in having a very solid, very uniform means of training. Better service not only makes sure that customers are coming back, but that they are also recommending your restaurant and that word of mouth is very important, especially in food service. This may take time to get all staff on board, but when the economy is uncertain and every little bit of loss is noticed- it may mean all the difference in the world for your restaurant.

It is not as easy to find franchising now as it was a few years ago, and with the current economic state, it may not be for some time. There are still options available to those who seek out funding to purchase their franchises, however, before doing so, it is absolutely vital to have your finances in order. Once you have taken a long hard look at both your assets and your liabilities, then it is time to seek out that funding. Here, we’ll go into a few examples of how to finance your franchise.

Usually, if you do have decent credit and a bit of collateral to put towards the loan, a conventional loan may still yet be an option for some. In order to obtain a commercial loan, however, you will definitely need to have your finances in order as well as being able to make the lender realize what a great opportunity the franchise, and your ability to manage your own branch of it are.

Some franchise companies finance from within, but it does not happen often. Finding out if your franchise company will offer this sort of loan is fairly easy, as it is usually contained in the Franchise Disclosure Document. Usually, there has to be a solid reason that the franchisor would lend you the capital- perhaps potential gains in a new market or if you are very experienced. In order to raise your chances of being able to use this option, make sure that you are strongly qualified and can outline that to the franchisor. If this isn’t an option, sometimes they are able to refer potential franchisees to lenders who may be able to help.

There are usually options in grants or through the various small business programs. If you are ready to do paperwork, you will find that the time and effort just may work out for you. The state government often also offers help for small businesses or franchises, as well as the small business organizations in various areas. The actual Small Business Association does not lend to borrowers, however, they do guarantee parts of loans made by those lenders who they approve and you may find that there is a loan program that works for you. If you find a franchise that is approved by the SBA, you have a much better chance at this option and usually this option is much more timely and simple.

Another option is using a home equity loan, or borrowing against your house. If you have enough equity in your home, this can be a good source of funding for your franchise. However, the risk here is that you are essentially risking your home. If you make sure that you are able to get with a franchise that shows potential, this can lessen the risk but it is always there, so you have to be very careful. These are a few different ways that you can obtain funding for your franchise, there are others out there available if you do your homework, but these are the ones that most people find the greatest amount of success in.

There are many great benefits to franchising, and that’s something that most people would agree on. However, many people, while doing great research and seriously looking into the franchises that interest them, never sit down to ask themselves about their own goals. There are a number of things that come in to play in order to make for a successful franchisee, and quite a few traits that make a world of difference. Apart from being ready and having the capital, there are some other, deeper questions that you may want to ask yourself before you decide that franchising is right for you.

One of the biggest problems that people come up against in franchising is they do not really realize that with the benefits of being able to use the brand name, and the proven business system- there’s the rub. Using a proven system of business, you have to adhere to someone else’s rules. While this is actually a huge part of what makes franchising such a great option, it’s not for everyone. If you find that you have difficulty sticking to a routine system of doing things, it may be that franchising is not for you.

Do you have issues with sales? If you feel like being your own boss will mean that you don’t have to work with sales, you may not realize how vital being an adequate salesperson is to any business. Being able to knock on some doors and get things started is a very important part of being a business owner, especially in the early days. Depending on the franchise that you go into, sales may be a much bigger aspect of the overall business than you think and it is a good thing to bear in mind.

Another issue is not so much one of personality, but one of finance. Many find that they did not plan ahead and end up in a world of trouble on this one. You may have enough to invest, but do you have enough to support yourself during the start up period? No matter how profitable a franchise may be, or how profitable it may claim to be, having a cushion set aside is an intelligent thing to do. Being absolutely sure that you have this in order makes sure that everything goes smoothly and you are not struggling.

Lastly, if you have not talked to people who are involved in franchises in general, give it a shot. More often than not they are happy to relay their experiences and this may make you feel a bit better about your choice- but it may also change your mind. Being able to decide before you do a great deal of research on franchises if you really feel that is the option that would best suit both you and your lifestyle is an important step that some miss. All too often, the rush of being able to have their own business comes into play and first making an assessment of yourself, your family, your lifestyle and your overall goals and dreams may make a big difference in where you take it.

Never underestimate the value of a great leader, when it comes to restaurant management. This is actually a critical element to any sort of management position, and there are a few traits of truly effective managers that make for a better overall quality workplace. Being able to exhibit these traits to your employees makes for a greater confidence in your abilities, but also, this helps the customer to feel that the management is on their side, and cares about their experience. Being a great manager is more than just being able to make a schedule or take care of a dissatisfied customer. There is much more to it than that, and these traits are important.

First and foremost, management has to be openly communicable with those in their employ. Unclear instruction or inadequate communication can lead to many problems, and most of which a loss in productivity. Changes in the system, changes in the way that things are done need to be communicated immediately, and conveyed in an understandable way. Vagueness or rushing to express a given demand usually will result in either a job not done correctly, or a complete do over- this is to be avoided. When it comes to training, being open and receptive is also good, and a back and forth with regard to communication can enable a much smoother workplace environment. Not only is communicating change important, but acknowledging the hard work and effort of the employees, as well. Food service of any kind can be a rather high stress work environment, and being able to encourage the staff helps a great deal more than many people realize.

Secondly, when it comes to organization, an effective restaurant manager knows what’s going on in his or her location at all times. There is not anything that the management should be unclear on, and this sort of ties into the first area- because communication being open enables a greater understanding of issues sometimes even before they arise. If the management team is not in synch, it makes for an uncertainty in the workplace, or opens the door to manipulations. Being careful to ensure that everyone is on the same page and communicating that well is vital to the success of a restaurant management team. This also has bearing on numbers, as it is really important that any member of a management team be able to keep not only accurate records, but organize all of this in a way that makes sense to others.

Lastly, making sure that everything is balanced is important. What discipline was handed out to one employee for an infraction, has to be to the next who causes the same issue. When looking at situations and analyzing problems, it is a must to be able to see all sides of any given problem and come to an intelligent resolution that does not breed any sort of animosity. Fairness in all things is important and being able to balance these things will make for a much more efficient and effective management team.

When economic times are good the food-service industry can be pretty brutal in its competitive nature.  When the economy hits a slump, that competition can become downright bloody.  Never before has this been more apparent than in recent times.

As consumers cut back their spending, restaurant owners become increasingly frustrated in trying to bolster flagging profits.  Many continue to look for better ways to do business, while others collapse and shut their doors.  Others, in their frustration, may even resort to less than scrupulous marketing tactics.

I drive past a prime example of this latter case on a regular bases.  In area in which I reside there are two well known fast-food hamburger chains on either side of the street, directly across from one another.  One of the franchises is from a slightly more successful brand and has weathered the economic decline fairly well.  The other seems to be declining rather rapidly.

As the frustration and panic of the owner of the less popular franchise escalates, there has been a degenerative quality to the blurbs on the franchise’s marquee.  The statements began as vague innuendo about “the other guy across the street”.  Over time, as the less popular franchise’s parking lot become increasingly less crowded and the “other guy’s” parking lot remained fairly consistently packed, the adds got worse.  Before all was said and done, the owner of the less popular franchise had accused the “other guy” of almost every conceivable crime against food, taste and humanity in the book (and a few I’d never considered before).

Obviously, this rather aggressive and distasteful tactic was ineffective.  The “other guy” continued to prosper while the less popular franchise was forced to eventually shut its doors to the public.  What made the difference and why does mud-slinging fail?

The difference, quite simply, is value.  The “other guy” is well known for providing a substantial value of food per dollar.  In fact, they have an entire section of their menu dedicated to just such value.

While the less popular franchise across the street was engaging in low blows, was the more popular franchise reciprocating?  Not at all.  The owner of the more successful franchise was using his marquee to consistently promote the franchise’s value items and special promotions.

The community honestly didn’t care what was said about the franchise on the competitor’s sign.  What the community did care about was getting the best value for their already stretched tight dollar.  This is exemplary of where a successful restaurateur needs to turn his or her focus when the economy begins to slip.

When people are scaling back their budgets and cutting back on how much they dine out, it is no time to go on a campaign against what the other guy does or does not do.  Rather it is time to look internally and start focusing on giving the public what they want most:  more bang for the buck.  Perhaps if the failed businessman had realized that the “other guy’s” customers were there for the prices rather than how much better the food was, he or she would have altered their tactic and promoted their own value items.  If so, then that franchise might still be open today.

For a franchise to succeed, the franchise owner cannot simply rely on the widespread marketing campaigns carried out by the franchisor.  Certainly those advertising campaigns do help the individual franchisee in most instances, but there are other factors that must be overcome within any given community.  The franchise owner may start his or her business with a certain degree of brand recognition and acceptance, but he or she still faces the task of raising community support for the new business.

Local Merchant Antagonism

The need for the franchise to thoroughly establish itself and gain community acceptance is especially relevant in smaller, rural areas.  In these locations there is a greater trend toward viewing franchises as “outsider” business that has come in to take business from local merchants and to hurt the community.  For the most part, those who espouse such views fail to consider whether or not the franchise owner is actually someone local, or even to view what the franchise may be bringing into the community – such as commerce and jobs.

It falls to the franchisee to remind the community that just because his or her business carries a brand name does not mean that it is not a valuable part of the local business community.  Establishing a positive image means more than weathering the storm of local resentment and hoping that, in time, the business will be accepted.  Rather, it requires a proactive stance on the part of the franchise owner; a commitment to becoming involved in the community in a positive and beneficial way.

Offsetting Negative Marketing

Sometimes a franchise owner may find that the marketing strategies of his or her franchisor have actually worked against his or her franchise.  This is a rarity, but it does happen.  Franchisors, seeking to benefit the majority of franchises, may advertise in manners that do not appeal in all localities and may even create a negative image of the franchise on a local level.

In these instances, the franchise owner may find, even if a good rapport with the community has already been established, that he or she must redouble the efforts of the franchise to stay connected with the community.  The franchise owner should distance his or her franchise from the national marketing campaign as much as possible.  If they are required to display ads that might be perceived as distasteful within their communities, franchise owners would do well to consult with the franchising organization and see if alternative marketing might be acceptable.  The individual franchise owner must find ways to very publicly embrace local values, even if the franchising organization does not.

Becoming Visible

As with most things, the public is inclined to believe what they hear until given reason to think otherwise.  Therefore, in areas where franchises are seen as antagonistic to the business community, or where marketing campaigns have presented the franchise as antagonistic to the values of the community, the franchisee must find ways to change his or her franchise’s individual presentation.

This can only be accomplished through community action.  By becoming an active and contributing part of the community and by supporting community action, a franchise owner can overcome preconceived notions or misperceptions about the franchise and become a thriving part of the community.