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Positive linking

How about some good news and good ideas?


Once in a while, someone will talk about opportunities. But very seldom will anyone focus on making lemonade out of lemons and actually thriving in tough times.

I am tired of listening to speeches, reading articles, hearing about conferences and webinars, and having every conceivable means of communication all tout the latest and greatest on how to manage in tough times. I am sure you are tired of these things as well. Many of these communications have the same ideas and thought processes. Once in a while, someone will talk about opportunities. But very seldom will anyone focus on not only managing in tough times, but thriving.

Let's look at some of the specific valuable attributes of the franchise community. What do we have that the rest of the business world does not?

Cash businesses

A franchise business' sales are normally converted to immediate cash; therefore, in most cases, there are no receivables and no significant amounts of inventory.

Entrepreneurial approach

Franchise businesses usually are based on an owner/operator model; thus, entrepreneurialism is a strength for the franchise world.


Most franchise businesses have multiple franchisees, which results in diversification of the franchise system. Some franchisees may be doing poorly while others are doing well, but there is strength in numbers.


Most businesses that have decided to franchise have a tried and true concept. While these franchises may suffer from recessionary issues, many are lasting concepts that have been proven over time.

Strength in marketing

Marketing is becoming cheaper than ever. Franchise systems, by definition, have strength in size, and with the pooling of dollars, they can more effectively market. The message may have to be retooled in light of the economic issues, but their marketing power remains strong. Advertising and marketing dollars go a lot further today than they did six months ago.

Given the tremendous attributes of our industry, let's look at opportunities:

Dominate market share. Market share is a product of how you cultivate and nurture your customers. Think of ways you can be the best friend to your customers, regardless of their economic situation. Make them feel they should, and need to be, involved with your concept.

- Combine franchise concepts. Look at ways concepts can be combined. Sometimes the whole is greater than the parts. For instance, you could combine a franchise concept that deals with car repair with a car transportation concept, thus creating a unique approach.

- Financial alliances. Continue to focus on your financial relationships and move these relationships to a very sound level, even though there may not be any present need for funding. Call on your financial contacts regularly. Let them know what you are doing; keep them current on your growth plans and update them on your financial needs. If you are a franchisor, hold seminars and get-togethers so that the lending community (even if they are not active) still understands your concept. You can also use the services of FranData to provide the lenders with an analytical tool to help them understand your system.

- Plan your balance sheet for the future. The most important thing to look at right now is your balance sheet. Your P&L may be suffering, but keep in mind that the balance sheet of the future is one that has reduced leverage and good liquidity, thus creating a number of financial options. The liquidity in your balance sheet constitutes dry powder, so that when good deals come along, you can take advantage of them quickly. You may be in a difficult situation, but accumulate whatever cash you can.

- Inventory talent. There is a great deal of talent on the street right now. I spend a lot of time talking to this talent. If you can somehow keep this talent in your system or hire new talent for the future (even if it requires a reasonable amount of retainer), this may be one of your greatest assets when the economy turns around.


Dennis L. Monroe is a partner and the chairman of Krass Monroe, P.A., a law firm specializing in multi-unit franchise finance, mergers and acquisitions, and taxation.

Dennis can be reached at (952) 885-5999

- Pulling together strong concepts. There are many good concepts out there that have not had the capital and talent. There are also tired concepts that need to be retooled, but still have a significant value. If you can inventory these concepts (acquire them for a small price) and keep them within your system, these concepts will be great to grow in the future.

- Good Service. Service is the number one issue in today's economy. If you can provide effective service, it will go a long way towards sustaining your concept in tough times. When I say, "good service," I mean "great service." Get to know every customer who walks through the door.

- Positioning. Your concept needs to be positioned for something that will appeal to customers. If people are going to eat out, they should choose to eat at your restaurant because you are providing a reasonable and affordable luxury. You can also position your concept by providing your customers with a "nesting" environment. People are staying home, so consider how your concept can work towards meeting your customer needs.

- Population trends. Think about the next powerful population segment. Probable examples are "Millennials" or "Net Genners." How can your concept best serve these various population segments?

- Social networking. Social networking is one of the key elements that all franchise systems need to think about. Facebook (with 150 million users), MySpace, Twitter and other online groups can help your system.

- Intellectual property. Look at acquiring intellectual property. This property, like talent, can be used in the future for creating new and wonderful concepts and opportunities.

- Read. You can never read too much about what is happening in today's world and our industry. Read Thomas Friedman's book, "The World Is Flat." Look at globalization and what is involved.

- The Great Depression. Remember what was effective during The Great Depression - movies and things that provided an escape for people, such as chocolate, pastries, doughnuts and big steaks.

- Wording. Use words like "approachable" and "opportunity" in your concept versus "cost effective" and other words that do not have the same type of euphemistic value.

- Look toward the future. People will begin doing more "do it yourself projects," such as gardening. Think of this as a paradigm for your franchise concept. What businesses will be needed to provide services to these new endeavors?

Consider how you can acquire and inventory talent, concepts and intellectual property; look at effectively stealing market share; be aware of changing consumer needs; and approach each day as an opportunity, not a struggle.

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