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Welcome to the Newsletter for October 21, 2004
Take the Quiz!
Craving Closure
It's sad when relationships end, but it's not all bad: it also opens the door for new opportunities and new growth.
Franchise relationships end too, for reasons that are more or less understood: franchisees can either sell their franchise, cancel their contract, or not renew another term; the franchisor can reacquire the store and operate it themselves, terminate the franchisee's contract, or chose not to approve the franchisee for renewal.
Turnover statistics are important to pay attention to since some lenders are hesistant to lend to franchise systems with system turnover above 10%.
On average, 1 in 10 stores will turn over in a year or about 40 units per company. Some have more: there were 3 systems that cancelled all of their franchisees according to their 2003 UFOCs; many have less: 18% of companies reported 0 units turned over. The industry segments that have the most turnover are:
As a broker, lawyer, financing institution or anyone else involved in helping franchisees sell their business, you should see the opportunities that exist for you in those systems with high turnover. FRANdata's targeted marketing services can help you find just those companies who are your hot prospects.
If you are a franchisor, you might want to compare your turnover against others in your industry or who are similar to you in size or have been doing business as long as you have or maybe have a similar fee structure. We can work with you to find your peers and benchmark your system against theirs.
Relationships are all about communication. Call me.
Quiz Question
According to the New Concept Report, Cendant - the largest franchisor in the world - is franchising yet another brand. In what industry will this brand be?
ANSWER QUICKLY! If you answer the quiz question, we will put your name in a drawing to win a Custom Turnover Report. Email me your answer.
Congratulations Jonathan Waite, CFA, CPA! Jonathan is an equity analyst covering the restaurant industry for KeyBanc Capital Markets, A Division of McDonald Investments Inc. and the investment banking arm of Key Bank. Cleveland-based KeyCorp is one of the nation's largest bank-based financial services companies, with assets of approximately $86 billion.
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