The Franchise Industry Is Growing
Customers at these times of economic difficulty have second thoughts about spending their money on untried businesses. They would rather spend on tested brands. It is in this context that the IFX Enterprise has scheduled a three-day conference in Las Vegas. The Las Vegas Business Press says this summit will guide potential suppliers on franchising fundamentals – how and where to offer their products for franchises.
The franchise industry is on the rise, with 784,802 franchises projected to be in business by year’s end. At the end of 2010, there were 765,723 franchises, according to the 2011 Franchise Business Economic Outlook, published by The International Franchise Association.
The reason? Patrick Walls, chief operating officer of Capriotti’s, said it’s because people want a sure thing.
Investors are more likely to pour their money into these turnkey businesses during uncertain economic times than an independent venture.
“People are comfortable with household names,” Walls said. “They know what they’re going to get.”
When you order a Big Mac from one McDonald’s restaurant, chances are, it will taste exactly the same at a McDonald’s across the country. Franchisors can control the quality and specifications of a product by limiting the suppliers from which franchisees order.
For instance, Capriotti’s uses Butterball-brand turkey at all of its locations. If another turkey supplier were to try to sell its meat to the company, it would have to go through Capriotti’s corporate office to do so.
Walls said he has seen potential suppliers approach local franchisees and market to them, which is incorrect.
“We have very strict criteria,” he said. “They could not make the decision.”
IFX Enterprise, a consulting firm for franchise organizations and suppliers, is trying to bridge the gap between franchisors and potential suppliers with its business model. The company is hosting its first Las Vegas-based conference Oct. 19-21 at the Signature at MGM Grand. The event is aimed at supplier-type companies.
“Franchisors are always looking for new and better products from suppliers,” IFX Enterprise CEO Dan Martin said.
The IFX Franchise Supplier Executive Summit will try to teach current and potential suppliers about the economics of franchising and how they can change their model to better fit a franchise.
“The franchising industry as a whole is a very dynamic industry,” Walls said.
Because of that, Martin, who formerly was the chairman of the supplier board of directors for the International Franchise Association, created a blueprint for suppliers to follow when approaching potential franchisor partners. The workbook gives 138 strategies in linear form that businesses can use when they leave the conference. Martin said the blueprint represents the franchisor’s viewpoint.
Entry costs $497 per person for the three-day event. Martin expects 30 to 50 supplier companies to attend.
Interested businesses can register to attend on the conference’s website, ifxsuppliersummit.com.
Educational sessions will be offered at the three-day event, including a shark tank panel of franchisors that will critique five suppliers’ approaches. Martin said attendees can expect a complete education on franchising fundamentals.
These fundamentals are slated to include ways to increase revenues, maximize exposure, increase market share and reduce costs.
“The takeaway is significant,” Martin said.
Walls he said he’s interested in the conference because it seemed like an opportunity to network in a nonthreatening environment.
“My guess is there will be a lot of business done,” Walls said. “It’s win-win.”
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