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Operations Forum

A forum for those who operate franchises - single-unit, multi-unit, and area developers.

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What is EBITDA and how to calculate it!

Just saw this article at Fit Small Business on What is EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)? - https://fitsmallbusiness.com/what-is-ebitda/. They discuss what EBITDA is, how to calculate and improve it, and what its advantages and disadvantages are. Easy to read and helpful so I thought it might be useful to post here!

Good article on EBITDA, cash flow and profits

There was a good BMM article written by a financial analyst on store EBITDA and what other metrics are needed. The short of it, EBITDA is a valuable metric but it is not the end all of financial metrics.

Here - http://goo.gl/WZOLB

How to calculate EBITDA

Here is a six step process on how to calculate EBITDA, care of wikiHOW.

It essentially is taking out a company's expenses from the revenue line in the Profit & Loss Statement and then add the line item for depreciation and amortization back. (It's basic but the fundamentals need to be said.)

I thing so

I thing so

Drive-thru Windows

I just thought I would share that we are a national supplier to McDonalds and if you own a drive-thru and need either a replacement window or a new window feel free to contact me to answer any questions you might have in this area.  We build custom, reliable and cost effective windows.  Take advantage of the dollar as well.  We are from Vancouver, BC Canada.

Have a look at our website.

www.easi-serv.com

Don Sniegowski's picture

Who Are the 10 Biggest Franchisees in America?

I know I'm supposed to be the answerman but I have a question for our expert members for a few news stories I am looking into.

Who are the top 10 franchise owners in America? (List your source, please.)

Re: 10 Biggest Franchisees

Don,

Are you going for units or revenue (if known)?

Either way, I'm going to assume that NPC International (Pizza Hut) is among them. 

888 stores and $792mil in revenue based on their 2007 10-K.

Don Sniegowski's picture

Biggest Franchisees

Going by revenue. I have a list now and NPC is among the top 10. Harman's Consulting (KFC) too.

I'll do a series shortly on this. I also want to follow-up with the largest hotel franchisees by revenue. An insider has told me that these 5 are probably the largest franchise owners.

  1. Tarsadia Hotel, CA
  2. Nobel Investments, Atlanta
  3. JHM Hotels
  4. Northstar Hotel Management
  5. Imperial Hotels, Atlanta

Anyone have any insights into whether this list sounds right or where to get hold of a list of the largest hotel franchisees?

Area Development

What is Area Development and how is that different than a franchise or master franchise?

Mr. Blue MauMau's picture

Will Close New Remarks Soon In Succession Planning Article

The remarks under succession planning have filled up quickly to a point that before the postings hit 35, we need to move the discussion to the forums. We try to limit remarks of a blog to 20 but the remarks to this article have filled up very quickly.

It is strongly suggested that you focus remarks from an article to the author. Discussions with other members of the community are best done through the forums. That's why forums are set up by our members.

For those who may still have questions of the author about succession planning, I'll try to allow those postings. Our long-time members know that when the remarks to a blog become too numerous, the links to the second and third page will not work. So, we have to limit the remarks area. (We are working on this glitch.)

Please take the discussions to the political activism forum or if it is peripherally related to comments on succession planning, please come here to the Operations Forum.

Regards,
Mr. Blue MauMau
Community Umpire

Darnelle White's picture

Good Intent, Baffling Service

Sometimes service efforts are built around the wrong activities because of faulty customer perceptions.

The Startup Journal had an interesting introduction on this, Avoiding Practices that Baffle Customers.

Cosmetic counters and retailers are an example of this. The salesperson hovers around me every few seconds to get what I want. I can hardly browse in peace.

Another pet peeve of service in the wrong place is at restaurants. In order to impress me that they deserve a great tip, the waiter/waitress comes up to me just as I'm stuffing something in my mouth or deep in a great conversation and asks, "How Is Everything? Can I get you something?" Frankly, when I want them, I would prefer raising my hand and they come immediately. How about a restaurant that has the waiter come when I want them to come? Now that's worth tipping for.

I'm working on a service consulting project for retailing. Can anyone think of examples of where in operating the front-end (retail-end) of a franchise we have wrong perceptions of where the service should go? 

--

dw 

Encrocement - Need Feedback !

Need feedback on how to handle an encrocement issue!

I own a multi-store franchise deal with three locations in which to place stores. We are faced with another franchisee that has placed a store 1.5m (via street access) from a researched location in which we planned on placing a store which is a potential new development.

a. The contract does not provide a buffer zone that addresses protection from other stores not sitting on territory lines; there is a 2.5m distance between stores addressed in the contract, which is essentially stating that we are now pushed at a 2.5 miles radius from their store which is located almost on the line or border of our territory.

b. The territory that we purchased is extremely desirable as far as demographics, however is one quarter the size of the franchisee's territory which is sitting on our line; our entire territory is approximately 3.0 miles, which now leaves us with no area in which to put a store.

c. The other franchisee is now pulling from our customer base as well as their customer base because they are so close!

d. Corporate was made aware of this issue prior to the signing of the other franchisees lease; multiple corporate managers have quietly stated that it was an oversite that needs to be corrected and after many letters and calls...they have reluctantly asked what can they do that is amicable to fix this issue... we need to be compensated...SUGGESTIONS OR CASE STUDIES PLEASE!!!!!

Don Sniegowski's picture

The Franchipedia Will Tell You

Speaking of our franchipedia telling you these terms, I hope our members will link to specific terms and concepts when they contribute their franchise news reports, blogs and comments.

It makes it much easier for readers.

I would invite our members to contribute franchise encyclopedia entries on business concepts, significant law cases, and brand histories -- anywhere they can -- to build on our knowledge of franchising.

michael webster's picture

Wiki

Don, doesn't running a wiki automatically select terms that it knows about, and highlights them?

Michael Webster PhD LLB
Franchise News

Mr. Blue MauMau's picture

All Kinds of Wikis

It depends. Our original, full-fledged Wiki has been stripped down to something very simple for business people to use. Right now readers contribute to our Wikipedia entry pretty much like writing a blog. The downside of this version is that it does not automatically underline words input into the Franchipedia.

So this is what I struggle with - if readers would feel comfortable writing Wiki script, then I could immediately upgrade to have that feature and all other features of a full wikipedia. A full wiki can automatically hyperlink terms that are part of the wiki (not outside of the platform, even though the term may still be used inside the same domain).

Being the techie I am, I would love to have such a function. But in my experience as the editor for a journal that targets small business owners, it is a bit over the top for small business writers.

But here's my promise. If our readers can build our Franchipedia to over 500 entries so that it is a robust trade wikipedia, then I will find a way for our franchipedia terms to automatically have a link with words used both inside and outside of the wiki (e.g. match terms that are written elsewhere in Blue MauMau).In the meantime, I hope our contributors will manually link these terms in their articles.

michael webster's picture

500 Entries

Easily done - will be monitoring all blog entries! 

Michael Webster PhD LLB
Franchise News

Paul Steinberg's picture

Mr. Gates & his Canuck clone

Bill Gates writes: if readers would feel comfortable writing Wiki script, then I could immediately upgrade to have that feature and all other features of a full wikipedia. A full wiki can automatically hyperlink terms that are part of the wiki (not outside of the platform, even though the term may still be used inside the same domain).

Now, other than Mr. Gates' buddy in Toronto, does anyone even know what "Wiki script" is?

As we all know, terms may be used outside the domain of the platform to the extent that the hyperbolic feedback loop of the ANSI / ASCI coordinates are paridigmatically-shifted into TRS-DOS.

Both of you need to resile yourself on the Scobleizer blog, where Webster can indulge his twin hobbies of Cuppy-speak and geek-speak.

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400

michael webster's picture

Canuck Geek

Uh, Paul it is pretty easy - we write 500 or more entries in the BMM encyclopedia and Don will provide the software to automatically highlight and link to the correct article. 

Michael Webster PhD LLB
Franchise News

Don Sniegowski's picture

Take a look at our Franchise

Take a look at our Franchise Wikipedia for explanations of each term. I have the words written below and linked to the community's Franchise Wikipedia. By the way, this a community encyclopedia so if you see anything that you want to add to, just select edit and make the appropriate corrections.

Franchise Encyclopedia Of the Community

Hey. I like this Franchise Wikipedia of yours. Pretty neat idea and quite useful.

FranSynergy's picture

Exceed Customer Expectations! Constantly Evaluate!

Darnelle:

Great Question!  I think business owners, including franchisees and franchisors tend to conduct a lot of market research in the development stages of the business.  They identify what it is that customers want, and methodologies for delivering such.  However over time, pieces, parts and components are modified, changed, added, eliminated, thusly dilluting the systems effectiveness.  Not to mention customer preferences are constantly changing.

I think the number one thing a business can do, is to develop a system and implement the system for constantly measuring clientle desires, wants and needs and to systematically adjust to the changing perceptions.  I also think that PROPER EMPLOYEE SELECTION is key, certain personality types tend to place an emphasis on customer service.  In fact a number of Franchisors and Franchise Selection (Profiling) organizations identify customer service focus as the #1 indicator of how well a prospective franchisee will perform.  Take a look at Dynamic Performance Syestems, Inc.

So in summary, I think assuming that what the customer wants today is exactly what the customer will want in the future.  Select employees who genuinely care about customers.  The sincerity will shine through and make the system and the efforts be well received.

Believe & Succeed,
FranSynergy
Synergizing Franchising 1 Franchisee at a time!
www.fransynergy.com

How much have you lost?

You need to do an impact study. How much do you estimate you have lost in sales? Can you get the franchisor to conduct the impact study and determine an equitable recompense? You may have better luck asking for unique items as compensation e.g., additional development rights, territory, time, used equipment or special services instead of direct payment.

This is one of those times you ask the franchisor what they think would be fair and work from that basis. You should tell them that if all the parties come to an acceptable agreement then of course you would sign a mutual release.

Finally, the jihadist on this forum will likely suggest you take a more militant approach and if it is what you want to do be my guest. However I would advise against it, and I make these types of decisions all the time as a franchisor.

RichardSolomon's picture

RATHER GLIB

The statement of facts leaves out too much for anyone to be able to make intelligent recommendations.

You don't just go to your franchisor hat in hand unless you really have no case for going to the franchisor in a more insistent mode.

What people refer to as an "impact study" is usually some abbreviated nonsense like "how much can we show that the new guy got that I might have gotten had he not been there?" There are other factors that allow "impact studies" like that to be rejected out of hand as superficial. The results of "studies" like that (that aren't really studies at all) are usually just your guess is as good as mine level quality.

You might want to go see someone who has some experience dealing with this kind of problem and speak with that person in private with the confidentiality of your conversation protected. In that environment the potentially embarassing questions can be asked and answered without risk.

 

 Richard Solomon
www.FranchiseRemedies.com

RichardSolomon's picture

THE FULL MONTY

On further reflection, this appears to me to be a request for suggestions from someone who already knows he has no basis on which to claim unfair encroachment, and that if he goes hat in hand to the franchisor he will get the brush off.

First, "it was an oversite" is about the stupidest statement a franchisor can make in this situation. For that reason, it was probably not an oversight and that's not what this person was told, or, in the alternative, he was speaking with an idiot who had no appreciation of what he was dealing with. "It was an oversite" is a tacit admission that it was permitted as the product of a franchisor mistake. WRONG POSITION FROM ANY PERSPECTIVE!

No impact study will show that this should not have been permitted. Furthermore, no franchisor is going to do a cost shared impact study in which the franchisee gets to see the result before the franchisor sees it and decides that it agrees with the franchisor's position or needs to be reworked so that it does agree with the franchisor's position. You don't let a potential adversary on any issue get in on the ground floor of how you prepare your position basis materials.

Additionally, if the placement of a store near the territory border by the adjacent franchisee would be an adverse impact on this requesting person, then his placement of a store near the same border would be the same impact on the adjacent franchisee. That produces a ridiculous result because it means that no territory is what it says it is. How does one sort this out?

It is sorted out on a first come, first served basis. Although this requesting person says he planned to put his own store in that neighborhood, he does not say that he has chosen a site and applied for location approval. The adjacent territory franchisee obviously has a site and has moved to obtain approval, and the franchisor had no inkling that this person ever had any intent to place annother store near there. "I planned to put my own store there" is always the story told by the franchisee who was simply asleep at the switch on developing that part of his own territory.   That story is usually worthless.

You don't spend money on "impact studies" until you have sorted out these other factors to see wehther an impact study would even be relevant given the actual facts of the situation. It's pretty hard to show an impact on a store that doesn't exist.

Going to the franchisor for a pity reach around when you have no horses is and should be a useless trip that shouldn't be made. No franchisor who isn't a nut case will give contract ground when the facts show that there was no wrongdoing. 

Richard Solomon
www.FranchiseRemedies.com

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About Don Sniegowski

Don Sniegowski's picture

Public Profile

Don Sniegowski is editor of Blue MauMau, the daily news journal for franchise & small business owners. Call him at +1 (270) 321-1268, tweet @bluemaumau or email don@bluemaumau.org.