World Franchising
March 2007 Newsletter
 
2006 Earnings Claims Packages
 
   
   
 
Pre-selected industry packages containing Item 19s (Earnings Claims Statements) for the year 2006 are now available on UFOCs.com! Read on for detailed price and product information.
 
Earnings Claim Hall of Fame: Great Clips
 

Source Book Publications has long argued (with very modest success) that all franchisors should be required to submit an earnings claim statement (Item 19) in their UFOC. Given that submission of an Item 19 is entirely voluntary, only 20% of franchisors choose to do so. The reasons for non-submission range from the ludicrous to vaguely plausible.

To us, it seems entirely one-sided to ask a prospective franchisee to invest in excess of $200,000 (on average) to “buy” a franchise without providing him or her with a clear understanding what he or she might earn from the investment. Although there are numerous variables that preclude franchisors from coming up with an exact projection of future Net Operating Income, the franchisors clearly have the ability to determine the historical sales and related expenses for operating units currently within their system. At a minimum, they can work backwards from royalty payments to come up with a gross sales figure. To the extent that they closely monitor and support their franchisees, they should have a good sense of average operating costs as well. Given this information and the latitude they have to provide as much detail as they see fit, they can break out summary operating data for those franchisees or company-owned units that have been around for say 5 years, 10 years, etc.

Our sense is that the FTC will ultimately acknowledge the need for a mandatory Item 19. Given the difficulty from industry to industry to provide a workable template for the submission of information, the FTC will continue to allow franchisors to provide as much or as little information as they deem necessary. Those franchisors that do in fact provide real, in-depth information will clearly enjoy a competitive advantage over those that do not. At any rate, those franchisors that go to the trouble of including an Item 19, even if only cursory, should be acknowledged and applauded.

As an on-going feature of future newsletters, World Franchising will publish an exemplary Item 19 each month. This month, we honor Great Clips for the exceptional detail that they provide in their Item 19. My guess is that the rapid growth and success of their system has a great deal to do with the forthrightness with which they celebrate the success of their existing franchisees. To view their Item 19, please click here.

Those companies who feel they provide exceptional disclosure in their Item 19s are free to submit their Item 19 electronically for consideration in subsequent newsletters.

 
 
Industry Focus: Senior-Care Services
 
With each passing year, the elderly become a larger percentage of the total population. Consequently, the need for senior-care -- ranging from simple companionship to shopping for food and other supplies -- is constantly growing. Such steady growth provides numerous openings for potential franchisors looking to get involved in this personally and professionally rewarding industry.
 
 
Source Book Publications Video Feature

Prompted by the increasing importance of Web 2.0 media and the desire to keep all of us from becoming too serious, we thought we would add a monthly feature that highlights an incredible new on-line video each month.

If this month's video doesn't cheer you up, very little will! To view, click here.

 
2007 Franchise Guides Coming Out Soon!

Keep your eyes peeled for the 2007 editions of the following annual publications:

To pre-order, call 510-839-5471 or email [email protected]
 
Source Book Publications
1814 Franklin St., Suite 815, Oakland, CA 94612

(510) 839-5471; Fax (510) 839-2104; www.worldfranchising.com

In This Issue
Earnings Claims Packages
Earnings Claim Hall of Fame
Industry Focus
 
Franchise Spotlight

Gymboree Play and Music has been providing childhood development programs for young children and their parents for 30 years. Gymboree's core belief is that children should develop at their own pavce via physical, mental and creative activities in a fun environment -- with parents by their side. There are more than 500 Gymboree locations in 24 countries. Franchisees have access to a wide selection of branded consumer products for resale, and gain a competitive advantage with children's clothing stores.


The HoneyBaked Ham Co. & Cafe is a truly exciting franchise opportunity with 50 years of experience building a strong brand. We are the original (and the world's largest) specialty retailer of high quality spiral-sliced glazed hams, turkeys and other special occasion center-of-the-table products complemented by a full service cafe.



Papa John's International, headquartered in Louisville, KY., is the world's third-largest pizza company, owning and franchising approximately 3,000 restaurants in 49 states and 22 countries. For six years running, consumers have rated Papa John's #1 in customer satisfaction among all national Quick Service Restaurant (QSR) chains in the highly regarded American Customer Satisfaction Index (ACSAI).


Quick-service restaurant- Fried chicken

Captain D's restaurants offer fresh, high-quality seafood in a fast casual service environment. The menu features our signature fried fish, which is hand-cut, hand-battered and made-to-order to ensure freshness. We also offer premium-quality baked and broiled fish, as well as shrimp, chicken and home-style side dishes with selected desserts.