International Freight Is Russia The Next Hotspot

The world is changing at an unprecedented pace and that means freight transport companies need to constantly update their knowledge and networks.
At present, Russia is undergoing significant change, which will impact on freight services in the future.

Of course, Russia is not immune to the global financial crisis. Since peaking in May 2008, Russia’s stocks have lost 60 to road freight over the last ten years. However, Poland, Latvia and Bulgaria have seen an increase in rail freight volumes over the same period and it is expected that rail freight will continue to grow in importance in Russia.

In Russia, the private rail freight company Globaltrans raised $449million of investment when it offered shares earlier this year. The success of the IPO showed that investors recognise the potential of the Russian rail freight industry.

There have been calls for the privatisation of the Russian railways, as a way of bringing about urgently needed rail reform and making the most of this important means of freight forwarding.

Meanwhile, there needs to be significant infrastructure investment in port terminals and interior transport networks, if it is to going to fully exploit the potential of the container shipping sector.

At present, only 1% of freight in Russia is containerised. Shipping companies say the industry could double in the next five years, if the transport infrastructure expands to cope with increasing volumes.
Currently, two companies control the two container terminals that deal with the majority of Russian sea freight transport. These are the First Container Terminal at St Petersburg and the Vostochny International Container Terminal in the East. The lack of competition may partly account for the high costs and poor service which are current features of internal freight in Russia. Storage costs in St Petersburg can be a staggering twelve times higher than in Western Europe. What’s more, containers can sit in port for 10 days, whereas in Rotterdam, it would be less than an hour.

Another problem is the congestion of the logistics networks and warehousing around the major trading centres of Prague, Warsaw, Budapest, Bucharest, Sofia, Poznan, Kiev, Moscow and St Petersburg.

Other cities in Russia and Eastern Europe need to develop as distribution and freight forwarding hubs in the next five years. This will create new transport networks for international freight, for which there is particular demand from the automotive, electronics and machinery sectors.
The Russian Government has now implemented a programme of modernizing the transport infrastructure, as well as simplifying customs controls. This will have a big impact on freight services and allow the export markets to continue to grow.

The freight forwarding industry in Russia is still very fragmented and undeveloped. However, with the rapidly growing economy, an ever expanding manufacturing industry, increased international trade and foreign investment in infrastructure, the freight forwarding sector will see transformation in the coming years.

Already, the small number of large shipping companies is steadily increasing, especially in Russia, Poland, Hungary and the Czech Republic.
The EU accession of the region is a further boost to the growth of export and freight forwarding in the region. Until recently, the region has been hampered by lack of economic stability and the poor transport infrastructure.
However, with many Eastern European countries now members of the EU and others in the pipeline, improved fiscal management and increased investment is now going some way to tackle these challenges.

Russia and Eastern Europe are poised to become one of the next hotspots in international freight.

By: Stephen Willis

Article Directory: http://www.articledashboard.com

R W Freight Services Ltd is a UK based family owned and run freight forwarder established in 1971 operating worldwide forwarding services. ISO accredited Quality Management system. BIFA Reg no 1. www.rwfreight.co.uk

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Automakers Get Down To Business In Russia

At the AutoRussia 2007 conference that opened Tuesday at the Grand Hotel Europe, foreign-based automakers unveiled their investment plans for St. Petersburg. Detroit’s automakers also announced their plans to recuperate and be back to profitability in the near future. And Russia will form a significant part in the foreseen recuperation.

Russia has started to appear on automakers’ radar screens as a market with an enormous growth potential that can no longer be ignored, according to the latest Global Auto Report. The General Motors Corp., the largest American automaker, said that it will open its plant by November 2008. The new facility from GM is built in the Shushary district on the outskirts of St. Petersburg. The $300 million-worth invested is projected to handle production capacity of 70,000 cars annually.

Richard Swando, the managing director of GM in the CIS, said that the Chevrolet Captive will be the main model produced at the plant, Interfax reported Tuesday. ‘Chevrolet Captive will be launched in November 2008, while the C-class sedan could be launched in April 2010,’ Interfax cited Swando as saying. GM owns two production sites in Russia. With powerful product lines and trusted auto parts like the Chevrolet pickup motor mount, analysts say Russians will be undeniably captivated.

Speaking at the conference, Henrik Nenzen, the president of Ford Russia, promised to increase the automaker’s turnover in the territory by 50 percent this year up to $3 billion. In 2006, Ford Russia reported turnover of $2 billion. Increased transport costs are pushing foreign automakers to set up local production sites for the manufacture of components. ‘We are interested in localizing the production of all components,’ Nenzen said. However he did not announce any related plans.

Conversely, the ‘Russian Detroit’ is attracting component producers. The Canadian company Magna already owns a number of assembly plants in Russia. In January next year, the company will start the construction of a plant in Shushary.

According to Interfax, Maxim Sokolov, the Chairman of the Committee for Investment and Strategic Projects, said that the plant could be completed in a one and a half to two year period. At the moment Magna is undertaking exploration works on a land plot. The decree on projection and construction will be issued by the St. Petersburg government before the end of 2007, Sokolov said.

Fujio Hosaka, the managing director of the Nissan Manufacturing Rus, announced that their new plant in Kamenkais which is expected to start operation in January 2009 will initially produce one model and later could expand its assortment to three or four models. The initial production capacity will be 50,000 units annually. Hosaka added that it could be expanded to 500,000 units. Although at this stage all components will be imported, Nissan will consider localizing their production in the future, Hosaka said. According to Maxim Sokolov, investment into the plant will total about 5.5 billion rubles.

Russia is already one of the top ten global auto markets. In the previous year, Russia car sales accounts for 1.5 million units, surpassing Spain to become Europe’s fifth largest market. However, with only 31 million vehicles in operation in Russia, a country with 142 million inhabitants, the vehicle penetration rate only stands at 0.2 per capita, in line with Mexico. But the figure is still notably lower than other Eastern European markets like Hungary and Poland. Russia’s vehicle penetration is roughly one-third of the G7 average of 0.6 vehicles per capita.

Other foreign automakers, such as Volkswagen, Toyota, Renault and Suzuki, also are rushing to set up new assembly facilities in Russia. Additionally, the Russian Industry Minister indicated late last year that foreign automakers plan to invest US$1.8 billion in new assembly facilities.

By: Anthony Fontanelle

Article Directory: http://www.articledashboard.com

Anthony Fontanelle is a 35-year-old automotive.buff who grew up in the Windy City. He does freelance work for an automotive magazine when he is not busy customizing cars in his shop.You can also visit

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Last week’s question from Anthony R. on how to choose the franchise that would best fulfill his life-long dream of owning his own business sparked a number of emails from other readers wanting to offer their two cents on the subject.

Some folks offered helpful insights and suggestions on how to pick a franchise and a few things to watch out for, while other emails came from current franchise owners asking me to help them sell their operations to Anthony R.

Hmm, sounds like it’s time to update the old business card once again. Tim Knox: Franchise Broker At Large… Who knows, maybe I can franchise the concept.

Last week I promised we’d take a closer look at a few of the things you should look for when considering a franchise opportunity. Keep in mind that there are thousands of franchise opportunities that range from the low end opportunities available for a few thousand dollars to the high end franchises that cost hundreds of thousands of dollars.

The difference in price is reflected in many ways: the viability of the opportunity, the level of training and support offered to the franchisee, the track record and financial stability of the franchisor, the success rate of the franchisees, and a dozen other factors.

All a lower end franchisor might offer is a training manual and the right to use their company name. Many also have very little interest in weeding out potential franchisees. The truth is many are in business just to collect franchise fees. They have little interest in whether or not a franchisee actually succeeds. If you have a pulse and a checkbook, you can become their franchisee. And your pulse does not have to be that strong.

The higher end franchisors have very strict franchisee requirements and will not allow just anyone to become a part of their franchise system. They also go to much greater lengths to ensure the success of their franchisees. They offer complete hand holding from start to finish and remain heavily involved in the business even after the doors open. Yes, you do pay dearly for their assistance, but as the old saying goes, you get what you pay for.

Here are a few things to look for in a franchise opportunity:

Turnkey operation This is the most appealing feature of many franchise systems. Many of the top franchisors will scout the best location for the business, build and equip the facility, hire and train employees, put you through an extensive management training system, then toss you the keys. Furthermore, they will work closely with you for the first few months to help make certain that you know what to do with the keys once they’ve been tossed to you.

The majority of franchises don’t offer such complete turnkey packages, so be prepared to do much of the upfront work yourself. Often it is up to you to find a location, negotiate the lease, build out the space or erect a building, install the equipment, hire and train a staff etc.

Proven track record and management system As mentioned earlier, many of the lesser-known franchise systems offer you a training manual, maybe a training video, and a few hours of telephone support. Not the best way to learn how to run a business. A good franchisor will provide you with thorough management training, either at their facility or onsite at yours. Since one of the reasons for buying into a franchise system is to tap into their expertise and know-how, thorough training should be a foremost consideration.

Customers waiting for the door to open I don’t have the statistics in my pocket to back this up, of course, but I’d bet the farm that every time a new McDonald’s opens its door, it’s a mere matter of minutes before the first Happy Meal is sold. Many franchisors spend hundreds of millions of dollars on national ad campaigns to promote brand awareness. This works great for the franchisee who can literally have customers waiting for the doors to open on the first day of business.

Always consider the downsides There are downsides to franchising. Foremost is the high cost of entry. The top franchise opportunities require considerable investment on the front end, usually more of an investment than if the entrepreneur started a similar venture on his own. You could open an independent hamburger fast food restaurant for a fraction of the McDonald’s franchise fee, but you probably won’t sell as many hamburgers. What you’re buying from McDonald’s is not just a fast food restaurant that sells hamburgers. What you’re buying is a brand, a reputation, and a proven business system with ready to eat customers. Be prepared to pay a premium for it.

Another downside is that when you buy into a franchise system you often have to pay a percentage of your revenues back to the franchisor. You might also be required to buy supplies from the franchisor, including inventory, paperwork, software, computer systems, and anything else the franchisor decides that they should supply to you.

And there in lies the biggest downside of all. When you buy into a franchise system you don’t control your business, the franchisor does. You have very little say-so in running the business. You must follow their processes and procedures without variation. And should you decide to get out of the business you may not even be allowed to sell the franchise to just anyone. The new owner would have to be approved by the franchisor before a deal could be made final.

The bottomline, Anthony, is to do your homework and make sure the franchise you choose fits your personality, your lifestyle, and your pocket book.

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How to Use a Little-Known Business System as Your Best Vehicle for Business Success… The Best Kept Secret in Business Today… For the Right Person!

Eight years ago we stumbled over a unique business system that has brought unbelievable success to it’s owners. Although very rare, those that were using it were not only experiencing a high success rate but also a very high level of earnings.

We found that there is very little detailed information about this type of business. Out of tens of thousands of business books there has only been one book written about this type of business, to our knowledge, and it is very hard to lay your hands on. No accurate database exists, that we have been able to find, which list these opportunities. This system is one of the best-kept secrets in business ownership today. It allows the business owner to develop a large business within a relatively short period time, yet has an extremely high success rate. Recent surveys show that these owners experience yearly incomes of $150,000 to $1,000,000 or more a year. They build an increased net worth or equity in these businesses of $500,000 to $10,000,000 or more, much quicker in comparison to other businesses.

What is this Concept?

Imagine coming up with the idea of a new franchise concept that explodes in your area with dozens of new units opening up. Imagine having control of this concept and receiving royalties and franchisee fees on a consistent basis. Imagine having an idea like McDonald’s and having people line up at your door to buy your opportunity. Imagine having access to the best business experts to help guide you in your new venture to build your organization to last. This opportunity is extremely rare, yet there are such businesses available if you know where to look. This unusual, highly successful opportunity is called MASTER FRANCHISING. With master franchising you get all of the benefits mentioned above but without the expense of having to develop the concept from scratch. You get control of the successful franchise system in a specific geographic area, a proven track record that works, the brand name and even a partner in the form of a corporate office and other master franchisees to give you valuable support, latest innovations and business expertise when you need it.

As a master or regional franchisee your ways of generating income are expanded over that of a normal franchise. With a normal franchise you are generally offering the product of service directly to the end use customer such as in a retail store. With a master franchise, you can generate income through your own stores, if you wish, with a significantly reduced royalty and franchise fee. In addition you can generate sales through:

Franchise Fees- When you sell a franchise, you receive a franchise fee. Most franchise fees are between $20,000 to $30,000 and in a typical master franchise program, you keep most of the fee!

Ongoing Royalties- This is the ultimate income source. Once you help set up the franchises, you receive royalty income or annuity type income for the rest of the life of those franchises. Imagine receiving 2% to 5% of your franchisee’s volume every month.

Products or additional services- Often products or additional services needed by the franchisee’s outlet can bring excellent additional income.

Real Estate- If real estate is involved with the franchisee’s location, often the master franchisee can become involved in the development of sites and receive other types of real estate related income.

A Very Prestigious Business

The prestige of owning a master franchise and controlling an entire area can give you great satisfaction. Your main job will be to act as a business consultant to your franchisees and help them succeed in their own business. You will be associated with the elite brand name of the franchise as the main developer of an area even though it will be your franchisees investing their money.

Improved Quality of Life

Master franchisees own and enjoy a quality of life business. Here are some key characteristics about the typical master franchise:

Very few customers. Your customers are your franchisees. You help support a small number of franchisees who typically own several franchise units each.

Very few employees. Typically you will operate a master franchise by yourself and then expand to have an administrative assistant, a trainer or other support person and a franchise sales person. As your master franchise grows larger you may need to add more staff, perhaps a general manager to run the operation so you may back away almost completely, if desired. We have found that many master franchisees, after having worked for three to seven years, can semi-retire and live off of an extremely good income and spend one or two days a month in the office.

Very little office space. Many master franchises can be started out of a home office. Once you have enough franchises in place then you can expand to an outside office.

You build equity in the business at a much faster rate than a normal business. Once you sell a few franchises or open your own stores, you increase the value of your business significantly. Not only do you have an existing business with cash flow, you have additional franchise opportunities to sell which gives the master franchise a higher value. Typically a master franchise will make four to nine times the earnings rather than the typical 1.8 to 2.8 times the earnings of a normal business.

Low overhead. You don’t have to jump into the business with a large office, staff and other overhead expenses. You can expand as you go.

You have the option of setting up your own franchises at reduced rates. As you open your own outlets you create another asset of value. You now have your master franchise with a specific value and also your own franchise with its value. As the value of your franchise increases, it increases the value of your master franchise. They are separate assets that you may sell when you would like.

You own an exclusive territory. Only you and your designated franchisees will be allowed to develop franchises in your area.

More freedoms exist in a master franchise than a normal franchise. You help set the standards of the franchise in your area.

You stay up to date on the latest technology. Being part of a larger franchise system allows the best ideas to flow into the corporate office and then into the field. You’ll have your own research and development department built right in.

You don’t need experience in the specific industry. You will receive industry specific training and support from the corporate office in the beginning and ongoing.

It can be started part-time and then you may move to full-time as required by the business you bring on.

Best of all- it is a franchise! Franchises as a whole enjoy a 92% success rate. Master franchises typically have an even better success rate than the normal franchise. All you need to do is find the right master franchise for you. Mater Franchising or regional development franchises, as they are sometimes called, are the best-kept secret in business today… for the right person.

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WHAT IS FRANCHISING?

The simplest definition for franchising is: ‘A method of doing business whereby a franchisor licenses trademarks, systems and methods of doing business to a franchisee in exchange for a recurring ongoing consideration i.e. a royalty fee or a franchise management fee’.

Franchising is a form of a business by which the owner (franchisor) of a product, service, or method obtains distribution through affiliated dealers (franchisees). A franchisor is expected to offer assistance in organising, training, merchandising, marketing, and giving direction in return for a consideration.

Franchising usually involves a contractual arrangement between a franchisor (a manufacturer, a wholesaler, or a service sponsor) and a retail franchisee, which allows the franchisee to conduct a given form of business under an established name and according to a given pattern of business.

DOES FRANCHISING IMPLY THAT YOU ARE SELF-EMPLOYED?

In some respects, NO. You still have to answer to someone else and follow his or her direction. You don’t really own the business; you own the assets you’ve purchased in order to establish the business. If you consider that you are in business for yourself, but not by yourself, then YES…you are self employed.

FRANCHISING IS THE FASTEST GROWING BUSINESS ECONOMIC MODEL

Globally, franchising is the most popular and the fastest growing business economic model. It assembles business relationships that allow people to share brand identification, a proven method of doing business and a successful marketing and distribution system. When most people think of a franchise, they think fast food. Franchising, however, long ago grew beyond the burger and fried-chicken shops. Today franchise concepts span over 70 different product and service sectors, including such businesses as auto-repair shops, children’s art centers, fitness clubs, law & consulting practices, and many home based businesses. The franchising business model has turned into a major economic engine globally and it is one that’s providing increasing opportunities for companies and individual entrepreneurs alike.

For South Africa, and for Africa as whole, franchising is a perfect vehicle for the economic empowerment of the historically disadvantaged sectors of the population. This brings with it the need for the establishment of more franchises. That is, franchising businesses that are established, that has a unique offering and where the method of doing business has been tried, tested and perfected. Apart from empowering companies and individuals, there should be a particular focus on identifying labour intensive businesses that have the potential to make a significant and positive impact on employment creation as well as those businesses that have a product or service offering for export markets with the ultimate objective of booming local economies.

THE ADVANTAGES OF FRANCHISING

1. An investment is usually made into a proven business.

2. A faster start up, developing a customer base quicker, and experiencing profitability quicker are key attractions.

3. There is a known quantifiable proven formula.

4. Owner transition and training is available, and there is full control of strategic direction and ability to thoroughly review past records and company history.

5. The biggest advantage of franchising appears to be the reduction of risk you will be taking for your investment.

6. You also usually get better deals on supplies because the franchise company can purchase goods and supplies in bulk for the entire chain, and then pass that savings on to you and the other franchise units.

7. Customers are dealing with a "known" rather than an "unknown."

THE DISADVANTAGES OF FRANCHISING

1. Some franchises can be very expensive. Franchisors expect you to follow their operations manuals to the letter. No flexibility on your part.

2. Buying a franchise is like marrying someone you haven’t known for long.

3. The relative security offered by franchisors may be exaggerated. Some franchisors are in for a quick buck.

4. Franchising as a pyramid scheme. Some companies try to make money by just collecting franchise fees, and won’t spend the time or money necessary to help their existing franchisees succeed.

5. Overcharging for supplies. Some franchisers may require you to buy supplies exclusively from them at inflated prices.

6. Fees for unnecessary training.

7. Misleading sales presentations. Some franchisors over-promise the moon in their pitches to prospective franchisees

BUSINESS OWNERS: IS YOUR BUSINESS FRANCHISE READY?

An appropriate first step in the decision to franchise is an examination of the question of whether or not a business concept is actually "franchisable." Any organization seriously considering franchising should undertake this analysis before implementing a franchise strategy. While it is impossible to determine the franchisability of a business concept without a significant amount of analysis, most franchise experts are guided by the following criteria to assess the readiness of a company for franchising and the likelihood that it will achieve success as a franchisor.

1. Credibility: To sell franchises, a company must first be credible in the eyes of its prospective franchisees. Large organisation size, number of outlets, years in operation, strength of management are key credibility factors.

2. Differentiation: In addition to credibility, a franchise organisation must be adequately differentiated from its franchised competitors. This can come in the form of a differentiated product or service, a reduced investment cost, a unique marketing strategy, or different target markets.

3. Transferability of knowledge: The next criterion is the ability to teach a system to others. To franchise, a business must generally be able to thoroughly educate a prospective franchisee in a relatively short period of time.

4. Adaptability: Next, measure how well a concept can be adapted from one market to the next. Some concepts do not adapt well over large geographic areas because of regional variations in consumer tastes or preferences.

5. Refined and successful prototype operations: A refined prototype is necessary to demonstrate that the system is proven, and is generally instrumental in the training of franchisees. The prototype also acts as a testing ground for new products, new services, marketing techniques, merchandising, and operational efficiencies.

6. Documented systems: All successful businesses have systems. But in order to be franchisable, these systems must be documented in a manner that communicates them effectively to franchisees.

7. Affordability: Affordability merely reflects a prospective franchisee’s ability to pay for the franchise in question. This criterion is as much a reflection of the prospective franchisee as it is of the actual cost of opening a franchise.

8. Return on Investment: This is the real acid test. A franchised business must, of course, be profitable. But more than that, a franchised business must allow enough profit after a royalty for the franchisees to earn an adequate return on their investment of time and money.

9. Market trends and conditions: While not an indicator of franchisability as much as general indicators of the success of any business; these trends are key to long-term planning. Is the market growing or consolidating? How will that affect your business in the future? What impact will the Internet have? Will the franchisee’s products and services remain relevant in the years ahead? What are other franchised and non-franchised competitors doing? And how will the competitive environment affect your franchisee’s likelihood of long-term success.

10. Capital: While franchising is a low-cost means of expanding a business, it is not a "no cost" means of expansion. A franchisor needs the capital and resources to implement a franchise program. The resources required to initially implement a franchise program will vary depending on the scope of the expansion plan. If a company is looking to sell one or two franchised units, the necessary legal documentation may be completed at low costs. For franchisors targeting aggressive expansion, however, start-up costs can run into Hundreds of Thousands and more.

11. Commitment to relationships: Successful franchisors focus on building long-term relationships with their franchisees that are mutually rewarding. Unfortunately, not all franchise organizations understand the link that exists between relationships and profits. Strong franchisee relationships enable the franchisor to sell franchises more effectively, introduce needed changes into the system more easily, and motivate franchisees and their managers to provide a consistent level of products and services to their customers.

12. Strength of management: Finally, the single most important aspect contributing to the success of any franchise program is the strength of its management. More often than not, new franchisors will try to take everything on themselves. In addition to absorbing several new jobs for which the franchisor has little to no time, the franchisor needs to exhibit expertise in fields in which he or she may have little or no experience: franchise marketing, lead handling, franchise sales, ad fund management, training, and multi-unit operations management.

ENTREPRENEURS: HOW TO SELECT THE RIGHT FRANCHISE

Buying a franchise can be a daunting task. With thousands of franchises in over 70 different industries available worldwide, finding the best franchise can be like finding a needle in a haystack. Moreover, the best franchise for your neighbour might be a disaster in the waiting for you. How do you invest in the right franchise?

1. Why?: First, you must ask yourself certain questions and be very objective. Why do you want to own a franchise? If it’s to get rich or to get on easy street and not have to work, then franchising will probably not meet your expectations. If you are like many people who have the dream of owning your own business (but not being on your own), being your own boss and having control of your life, then franchising may be for you.

2. Strengths: Be realistic and fully understand your strengths and weaknesses. Invest your strengths into the right type of franchise. Don’t explore every franchise opportunity. Select only those you believe co-incides with your strengths

3. Research: Compile a list of the franchises that interest you. Go through their websites and set up meetings with the franchise manager/director.

4. Disclosure Document: Study the franchise disclosure document or prospectus. Here you want to see strong financial history, experienced people in key positions, and a company that has been in business for 3 years or more, the longer the better, has a large number of outlets and has few closed or bought back.

5. Franchise Agreement: Closely examine the franchise agreement. This is the contract between you and the company. Franchise agreements are always biased in favor of the franchisor, that’s just the way it is. This can be good and bad. The company can be unfair in it’s dealings with you and the franchise agreement may allow this, on the other hand you should want a strong franchisor.

6. References: Call as many franchisees as possible. Call at least 10. Find out how they are doing. The key question is "Would you buy this franchise again?"

7. Visits: Visit personally as many operating units as possible. At least three. Often the owner or manager will be more forthcoming in person than over the phone.

8. Verify Financial Information: If everything still looks good, then contact the sales rep and get as much definitive sales information as possible. Most franchisors will not make earnings claims but they will provide information with which you may extrapolate gross sales.

9. Advisors: If everything still looks good then go for it. If you are unsure, speak to qualified advisors.

THE FIVE REASONS FRANCHISES FAIL

Generally, on a global level, 30% of small independent businesses fail within the first year, with less than 20% going beyond year 5. Franchises, on the other hand, are significantly more successful. Less than 5% of franchises fail. The reason(s) for failure could be a number of factors, most of which could have been prevented by due diligence during the early phase. The following are the main reasons franchises fail:

1. The Idea. Whether you are franchising your own company or buying into a franchise system, how the concept is received by the community is critical. While burgers seem to have universal appeal, not all food chains meet with majority approval. Also, if your business model is complicated you are in for a struggle. You want to create an operational standard that can be taught to and replicated by any businessperson. A company may be successful when run by the entrepreneur who dreamed up the concept, however, if the business model or prototype is not easily duplicated the chances for success are not so optimistic.

2. Bad Location. Ask seasoned franchisees to name one of the most important keys to a successful franchise and undoubtedly they will say, "Location, location, location." Even with a well-branded name, if you are off the beaten path, inconveniently located or in an isolated area the opportunity to be as lucrative as possible diminishes.

3. Poor Marketing/Advertising. Many well-established and reputable franchisors have marketing and advertising funds into which franchisees contribute monetarily. Chains like McDonald’s and Subway have national campaigns, while other types of franchises may advertise on a local level. Some franchise concepts require a lot of legwork on behalf of the franchisee. Depending on the business you chose, you may have to solicit your own clients, as in technical and computer support franchises. If you are considering a concept that requires outside sales skills and you lack them, you may want to rethink your choice.

4. Competition. There are approximately 160,000 franchises in operation in the US. That means a lot of competition. If your market already is saturated with a concept you may want to consider something that still is popular but not yet tapped out. Medical spas and restaurants offering healthy choices are gaining ground among the public but there is abundant room on the business owner side.

5. Unrealistic Expectations. New franchisees are notorious for having very high expectations for their businesses. It may take 2-3 years before you see a profit and if you don’t plan for that you may sink before you have a chance to swim.

A word to the wise: If you don’t like people you should not buy a franchise. If you want to make it you have to put in long hours and work with all kinds of personalities. It’s an undeniable fact that some people are more difficult to interact with than others. As a business owner you need to be able to interact well with people from all walks of life. The ability to manage employees also is essential to the success of your business.

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Business franchising has a long history of successful business companies expanding their businesses through franchises. The earliest of franchising ventures take us as long ago as the 1850s when Isaac Singer expanded his line of sewing machines. Some of the veterans of business franchises that need mention include Coca Cola which started franchising at a time when no one else was doing it. The modern day franchising of food chains started in the USA with a company called A&W Root Beer, which started the trend of quick serving food stores, in the 1930s. Franchising includes business systems that involve a "franchisor" who sells a certain business rights to the "franchisee" who purchases these rights in order to conduct the business that may include original terms of the franchisor.

Franchising helps a business to achieve lateral growth, which means the increased sales of its products through these various franchise outlets. The advantages of business franchising are many, including a quick launch pad to aspiring entrepreneurs, and growth of the parent company. Relatively less training and skill levels are required for the franchisee in order to operate the business franchise, therefore, the parent company ends up spending less time and money behind a single franchise outlet. Franchising leads to the expansion of the mother company, and this is probably the biggest payoff to the same.

On the downside of franchising, there are concerns for the parent company regarding the control and profit making of a single franchise unit. Epistemological origin of the word "franchise" includes the French root words of "honesty", but it is difficult for the franchisor to take this for granted. Individual franchising units may lead to problems of pricing and profitability concerns, as the rights allotted to the franchisee cannot always be regulated by the franchisor. Adding to the equation of the franchisor and the franchisee are other issues of control, use of raw materials, shipping of materials and other regional problems that crop up with the individual franchise unit. Legal terms are binding to the franchisee, and the violation of this result in the poor working of the franchise system, which leads to the loss in money.

The legal aspects of business franchising are significant to the proper functioning of the franchise. The legalities of franchising include involving the franchisee and the franchisor in trust based cooperation, and if this is tampered with, there is a risk of hampering the business franchise. Several countries have individual franchise regulations and rules which should be followed by all the legal business franchising units in the country. Recognized franchising units can only allowed to function if they practice the norms that are laid out by the country. This is applicable to countries like India, and China, where the governmental regulations are vital for the franchising company. There are some countries which do not have any such specific franchising laws, which include countries like the United Kingdom.

The world of business franchising has a lot to do with mutual cooperation between the franchisor and the franchisee, and this ensures profit for both.

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Have a better mousetrap and scared to death that the world actually is beating a path to your door? People walking through your operation with notepads and cameras? Trouble sleeping at night wondering who will knock off your operation first? Certain that yours is the next Ray Kroc story, if only you could get the capital? Tired of reading this magazine and thinking, "I have a better franchise concept than that company"?

Maybe you, too, should consider franchising.

Why Franchise?

In general, companies franchise for one of three reasons: time, people, or money.

The primary barrier to expansion faced by today’s businessman is capital. And franchising allows companies to expand without the risk of debt or the cost of equity. Since the franchisee provides the initial investment at the unit level, franchising allows for expansion with minimal capital. Moreover, since it is the franchisee, and not the franchisor, who signs leases and commits to various service contracts, franchising also allows for expansion with virtually no contingent liability, thus greatly reducing the risk to the franchisor.

Another barrier to expansion facing many of today’s businessmen is finding and retaining good unit managers. All too often, a business owner spends months looking for and training a new manager only to see that manager leave - or worse yet, hired away by a competitor.

Franchising allows the business owner to overcome many of these problems by substituting a motivated franchisee for the unit manager. Interestingly enough, since the franchisee has both an investment in the unit and a stake in the profits, unit performance will often improve. And since a franchisor’s income is based on the franchisee’s gross sales, and not profitability, monitoring unit level expenses becomes significantly less cumbersome.

Finally, opening a unit takes time. Hunt for sites. Negotiate leases. Arrange for design and build-out. Secure financing. Hire and train staff. Purchase equipment and inventory. The end result is that the number of units you can open in any given period of time is limited.

For companies with too little time (or too little staff), franchising is often the fastest way to grow. That’s because it is the franchisee that performs most of these tasks. The franchisor provides the guidance, of course, and the franchisee does the legwork. Thus, franchising not only allows the franchisor financial leverage, but it allows him to leverage his resources as well.

But is my Business "Franchisable?"

Franchising is a relatively flexible format, and just about any type of business can be franchised, provided it meets some basic characteristics:

It needs to be credible. Does it have experienced management? A track-record over time? Is the concept proven? Has it achieved good local press or public acclaim?

It needs to be unique. Is it adequately differentiated from competitors? Is it marketable as a business opportunity? Does it have a sustainable competitive advantage?

It needs to be teachable. Are the systems in place? Are operating procedures documented? Could someone learn to operate the business in three months or less?

And it needs to provide an adequate return. Not just profitability. In today’s high-octane marketplace, if a business cannot generate a 20% return on investment after deducting a royalty (typically between 4% and 8%), it is going to have difficulty keeping franchisees happy.

If your business meets these criteria, then it may be a good candidate for franchising.

The Process of Franchising

When a company makes a decision to franchise, it must first develop a sound plan for expansion. The plan must take into consideration the numerous issues confronting a new franchisor: speed of growth, territorial development, support services, staffing, and fee structure, to name several of the most important. Larger companies need to address more complex issues such as channel conflict, anti-trust, and resource allocation issues. And obviously, this entire plan needs to be subjected to rigorous financial analysis and scrutiny to fine-tune the strategy for growth.

Once this plan is in place, the franchisor needs the proper legal documentation. At a minimum, the franchisor will need a franchise contract, an offering circular (as required under FTC Rule 436), and, depending on where franchises are being sold, state registrations. There are literally hundreds of different business issues that must be addressed in a good franchise agreement, and the decisions made regarding these issues will ultimately dictate the franchisor’s success.

Quality control for a new franchisor involves the development of highly developed systems. Generally, this translates into the development of an operations manual. This manual must contain not only the systems used by the business, but also the checklists, policies, procedures, and tactics that will allow these systems to be uniformly enforced. Moreover, these manuals must be careful to avoid the creation of an agency and must also address issues that could create claims of negligence if the franchisor is to maintain an effective shield from consumer liability.

Finally, the new franchisor must develop the ability to market and sell franchises. That requires knowledge of how to attract the prospective buyer and the necessary materials (brochures, mini-brochures, videotapes, etc.) that will help make the sale. Moreover, since the franchise sales process is highly regulated, the franchisor needs to be educated in proper sales, disclosure, and compliance techniques.

Every new franchisor quickly learns that when they turned to franchising they entered a completely different business. Regardless of how the franchisee makes money, the franchisor has two roles in life: selling franchises and servicing franchisees. And of the two, ensuring the success of the franchisee is the most important.

Properly structured, franchising can allow small companies to more effectively compete with much larger competitors. It can also allow large companies to gain the advantages of highly motivated unit management while reducing overhead. As such, franchising is an option that more and more companies should explore.

The key to success in franchising is successful franchisees. Without successful franchisees, no franchise system will last. But if you can put the interests of your franchisee first, those same franchisees might help you become the next McDonald’s.

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The golf franchise industry has seen an explosion in new and exciting concepts over the past 5 years. With an aging population and many people wanting to get out of corporate America, take control of their schedule, take control of their earning potential and start a new career, golf franchising is answering the call. Many of these new golf franchise systems are following the roots of franchising and offering food related systems. For those who do not want to be stuck in a kitchen or restaurant during their golden years, there are many franchise systems that outdoors and based on activities that have a broad appeal. The game of golf is no exception to this growth.

Traditionally golf franchise systems have been concerned with the sale of equipment through retail stores. Long hours, high investment and over head were just some of the reasons people did not want to get involved in a golf business. Most golf business occurs on the weekends and during holidays. Spending your golden years working 12 hour days behind a counter over the weekend does not sound very golden, does it?

What if there was another opportunity that would get you outside, still be involved in golf, give you control over your schedule and not leave you income up to the latest big bertha club that was created? Synthetic turf products have come a long way over the years and one company IntelliTurf, Inc. actually installs golf greens that hold shots from 180 yards away and play just like natural grass.

IntelliTurf’s franchisees are sales and marketing professionals that love golf. They are people who are looking to build a business with a golf career, not buy a job. Golfers who would like to build equity in a business related to their passion. After training they become golf designers of backyard putting greens and consultants for all types of properties from multi-housing developments to some of the nicest residences in their protected territories.

This golf business franchise opportunity calls for the marketing, sales, design and installation of putting greens, short game practice areas, and actual golf courses. IntelliTurf’s artificial greens are actually golf greens, not just for putting. They hold shots from 180 yards away and the pace of the greens can be altered to match the greens in the area.

As the owner of this golf business the franchisee can set their own hours, price jobs as they see fit which gives them control of their profit margin and design beautiful amenities that add value to their client’s property. This is a good opportunity for an entrepreneur.

While IntelliTurf is primarily focused on golf surfaces, other products are offer for many applications and properties. Artificial turf is installed as lawns for private residences and on public and commercial land. Play areas provide up to 4 inches of cushion for playgrounds at schools, churches, parks and neighborhood amenity areas.

IntelliTurf offers a golf franchise business opportunity but also includes many other applications that golfers and business professionals will enjoy representing.

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If you find a beautiful Russian woman, who is thirty years younger than you, who tells you that she is desperately in love with you after you just met her for the first time last night, you should be a little suspicious.

The overwhelming majority of Russian women seeking husbands abroad are honest in their intentions. They want to have a reliable partner, happy family life, and a stable future. They are not going to marry a man just to divorce him in a couple of years after they get to where they want to go.

However, you must be aware that there are a few barracudas out there who are willing to take advantage of your sincerity. To avoid an unhappy experience, use your common sense.

For some reason, some men who are shrewd in business, enough to amass a small fortune, seem to check their brain at the hatcheck counter when they come to Russia.

Men are always shocked when a gold-digger takes advantage of them. A close examination of their behavior frequently yields the following observations:

They often act like big shots, throwing money around, dating women thirty years younger, bragging about their accomplishments to impress the women they meet.

They are like peacocks that try to display their plumage in order to attract a mate. When they meet a gold-digger, they are surprised, even though money is exactly what they were advertising. Then they act victimized by the innocent looking girl who took advantage of their offer.

All men are guilty of this at times. Let me make some recommendations: Don’t brag or exaggerate about your personal circumstances. She will find out the truth as soon as she gets to your home.

If You Lead With Your Chin, It Makes It Easy For Someone To Take A Punch At You.

I sometimes think that when a man says that he has been taken advantage of by a gold-digger, that this kind of circumstance did not happen by mistake. As the old saying goes, hockey players and chess players don’t hang out together.

There are all kinds of people that are out there in the dating world. There are women that are jerks and there are men that are jerks.

I have heard stories of men who are addicted to the tours because of the gigantic ego stroke it gives them. They take advantage of the ten to one ratio of single women to single men at the social to bolster their self-image.

They like to feel superior to the local population of Russians because of their relative economic superiority. They brag about themselves and throw money around to impress others because of their low self-esteem.

They toy with women’s hopes and aspirations to get married without being really serious about commitment. They pick the most gorgeous runway model they can find to parade as a trophy wife, or arm candy, in front of their friends.

A guy like that probably deserves a gold digger - a woman who is his moral or spiritual counterpart.

Elena Petrova tell this story:

‘A professor from an American university told me that he met a couple of men on board a plane to Russia who flew there for a "marriage tour". He characterized them as "bad". He said they were arrogant, obviously had problems with health, and were drinking too much.’

‘One of them complained that he was previously married to a Russian woman but she left him a year after the marriage. The professor said he felt sorry - for the woman — because she had stayed with this man for the whole year.’

‘He said that he would have run away from him in a couple of days if he was her. And this guy was intending to find another lady for marriage in Russia - again, twenty to thirty years younger.’

The other male specimen who gets taken advantage of by gold-diggers is the ones that literally are mentally or socially challenged. They either don’t have a brain, or don’t use it, or they are three nuts short of a candy bar.

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