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The U.S. franchising industry is poised for modest growth in 2011, according to two new studies to be released this week.

Franchise businesses in most sectors are expected to add more store units and employees this year, concludes an analysis produced by consulting firm PricewaterhouseCoopers on behalf of the International Franchise Association, a trade group in Washington. PWC attributes the positive outlook in large part to the recently enacted tax and unemployment benefits package, which includes payroll and income tax cuts.

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The study projects that the number of franchise units will grow 2.5% in 2011 to 784,802. Last year, franchise units increased just 0.3%, and their ranks declined 3.6% in 2009.

Franchises are also expected to create 194,000 new jobs in 2011, a 2.5% increase that will bring total employment to an estimated 7.8 million. Franchises expanded their payrolls 0.6% in 2010 after shedding 2.8% of their employees in 2009.

Economic output—the gross value of the goods and services a business produces—is projected to grow 4.7%, or $33.3 billion, for franchise businesses, reaching an estimated $739.9 billion in 2011, PWC said. Last year, economic output rose 3.4%, following a 0.3% increase in 2009.

By sector, all business lines except business services are projected to increase in store volume and employment this year. The largest gains in these areas are expected in lodging, automotive and retail products/services. In terms of economic output, industries expected to see the greatest increases are automotive, commercial and residential services, personal services and retail food.

Business is starting to improve for Driven Brands Inc. and its six franchise brands, which include Maaco and Meineke, said Ken Walker, chairman and chief executive of the Charlotte, N.C., auto-repair company. Following a relatively flat 2009, Driven Brands’s revenue increased 3.1% last year, and Mr. Walker anticipates a 5% increase in 2011 sales. “We’re going to see a good period,” he said. “I am very confident.”

Meanwhile, a recent survey of 142 franchisees by the franchise association also suggests that 2011 will be a better year for their businesses. Nearly three-quarters of respondents said they expect “moderate to significant” increases in same-store sales over the next 12 months, while 40% said they expect to see an improvement in business conditions. Forty-five percent said they expect to increase employment “moderately to significantly.”

To be sure, survey respondents also noted that obtaining sufficient funding remains a major hurdle to success. Thirty percent said lack of credit has had a “significant impact on ability to expand business,” and 25% reported it has had a “moderate impact.” In addition, 42% of franchisees said they’ve seen “no improvement” in access to credit in recent months, while 28% reported a “moderate improvement.” Just 18% said that a lack of credit had “no impact” on their business and that they were able to obtain financing, while 27% said their business did not require any financing.

“Without more consistent access to credit, franchisees can’t grow,” said Steve Caldeira, president and CEO of the association. “We’re beginning to see some light at the end of the tunnel, but clearly again we have a long way to go.”

These days, only about 40% of BrightStar Care franchisees rely on bank loans to get started, add more units or make renovations, whereas three years ago just about all of them tapped home-equity loans for such purposes, said Shelly Sun, chief executive officer. Today, 40% of the home health-care company’s 195 franchisees nationwide are also funded by owners’ retirement savings, and 20% operate with cash investments, she said.

BrightStar Care earned $100 million in system-wide sales last year, up from $52 million in 2009. The company projects sales of $175 million in 2011, plus the opening of 86 more locations. Its corporate staff increased to 53 people last year and “because of the [extension of] the Bush tax cuts, we plan to add 15 additional personnel in 2011,” Ms. Sun said. She further attributes the company’s expansion to a growing preference among seniors for home-based health care rather than relocation to a nursing home or assisted-living facility.

To help prospective franchisees get started, some franchisors have begun offering in-house financing options in recent years. Nadiene Raia said she launched a Money Mailer franchise last September by borrowing roughly $30,000 of the $40,000 total cost from the direct-mail advertiser. The loan includes the option to defer interest-free payments for the first two years.

Ms. Raia had previously been laid off from a publisher position at an alternative weekly newspaper in Sarasota, Fla., and she said she didn’t bother to seek out a bank loan because she lacked a track record of owning a business. “For somebody that’s looking to get involved in franchising and doesn’t have the capital, this is the way to go,” she said of the option she chose.

Article by Sarah E Needleman at the Wall Street Journal.  01/12/11

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If you have any questions about data reporting and mapping please let me know.
Rich Mithoff
888.848.4436 x4

1.   Define your Territories Before they are Sold.

This may seem easier said than done but there is nothing worse that knowing you could have squeezed more franchise territories into a market than you did.  A market that can handle 3 territories but only contains 2 is a major revenue loss.  By proactively creating accurately defined territories, i.e.: 50,000 Owner Occupied Housing Units, you not only portray confidence in a territory’s success based on a standard benchmark, but you also create a demand.  If you can create just 1 additional territory to maximize revenue, you win.

2.   Utilize the Most Current Internal and External Data.

In today’s economy, many major markets are in constant flux so make sure you have access to reliable, up-to-date data.  There are multiple sources for updated Census Demographics and Business Data that can prove invaluable to making sure your sites or territories are located effectively to generate expected profits.  You likely have internal company data, such as revenue by zip or customer sales data that can help predict future results. Make sure you use it.

3.   Do Your Own Site Research.

Many Franchise owners count on their brokers to provide site reports around locations they are proposing to you.  Brokers often have access to demographic data and mapping services but do you know how up-to-date it is?  Isn’t your broker trying to sell or lease a property and make a commission?  The cost for choosing the wrong location can cost more than lost sales from that location, and it is a strike against you when other franchise prospects inquire about the success of your concept.

4.   Create Territories by Utilizing Specific Geographies.

Territories that are defined by specific geographies, such as ZIP codes, counties, or standard Census boundaries are much easier to control and gauge.  Data is almost always tied to specific geographic areas and it is much easier to manage expectations with the demographic make-up of those territories.  Territories defined by a set of landmarks, like highways and rivers are much more difficult to measure and therefore very challenging to predict success.

5.   Maintain Easy Access to Data.

With so many tools and resources available to us keeping things organized is extremely important.  When it comes to territory data and demographic data it is critical to have easy access to it.  If a potential franchise prospect wants to see a breakdown of the territory under consideration you should be in a position to provide it within minutes.  This not only saves you valuable time putting it all together but it decreases the possibility for the prospect to continue shopping elsewhere.  Data should be easily accessible and transferable which makes it much easier for the client to access it on the other end.

GeoMetrx.com is a powerful web-application that will allow you to apply the 5 strategies above.  For more information please contact Rich @ 888.848.4436 x4, go to www.geometrx.com or request a demonstration/free trial — Click Here

Stay Grounded,

Rich Mithoff

With different countries comes different geographies and different data.  Take for example the widely known United States five digit ZIP code.  Everybody can identify with their home ZIP.  On a side note, the ZIP code was introduced in 1963 and ZIP stands for Zone Improvement Plan.  The ZIP code is a common geography for Franchisors to define their territories in the States.  They are easy to use with demographic data or with your own company data.  But when crossing the border north into Canada you will need to find another option.    A similar geography in Canada is the Postal Code, a 6-digit code made up of letters and numbers, but they are MUCH smaller.  Boundaries for the first three characters of the Canadian Postal Code (known as the FSA or Forward Sortation Area) are most similar in size to US 5-digit ZIP codes.  Every country has their own unique geographies…what also compounds the challenge of marketing, site selection and territory mapping is the data.

Data is a key component to any marketing and mapping efforts.  What are your data sources? Are they reputable? How often are they updated? What is the source?  In the US, the dicennial Census takes place every ten years.  Currently in process the 2010 Census Data will not be widely available until early 2012 at best.  Data providers are still using the 2000 Census and its updates to create current and more “marketing friendly” estimates and projections.  Most companies release annual updates and one, our partner PopStats, releases quarterly updates.  The Canadian Census is performed every 5 years, with the most recent being 2006.

Now, throw in Europe, Asia, Latin America and other regions around the world in and it can get pretty confusing.  GeoMetrx has access to most of the more industrialized countries and datasets and they are all capable of accurate site analysis, territory mapping and alignment and other marketing capabilities for the internationally expanding franchise.

Stay Grounded,

Rich

If you are interested in our service, or just want to ask me a few questions regarding international data sources please feel free to call or email.  My contact info is below.

Rich Mithoff  |  Geographic Enterprises  |  888.848.4436 x4  |  rich@geo-e.com

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You can clear the lines and find your county for more relevant data.

How can Franchise Developer use GeoMetrx for Territory Management?

• Import and Export territory structures including geography based (postal-code) or point based (retail stores, home based businesses, hospitals)
• Build new Territories accurately and equitably in just minutes
• Balance Territories based on hundreds of demographic variables (Households, Income, Owner Occupied Housing Units, etc.)
• Create customized territory maps within GeoMetrx or utilize our Google Earth/Maps export
• Minimize travel-times
• Run real time scenarios for potential clients and distribute territory reports to their owners instantly via the web

Want to see GeoMetrx in action?  Please click here to request a personalized demonstration.

Some images below will give you a sneak peek into the GeoMetrx Territory Manager (click to enlarge)

Territory Manager Interface

Google Earth Export

Balancing Chart

Effective territory management is critical to maximize revenue, why limit an are to 3 territories when it can support 4?  The cost of leaving a territory on the table is a loss of thousands of dollars.   GeoMetrx is the application that can ensure maximum profitability.

Don’t hesitate to contact me directly with any questions.  To schedule a web-demonstration,  click here.

Stay grounded,

Rich Mithoff    |    888.848.4436 x4

Click the link below for a larger, interactive version.

http://www.cnn.com/SPECIALS/war.casualties/index.html