I was at the conference on April 17-18 to run a workshop on franchising, which is viewed in Lebanon as the key to developing home-grown business concepts which can succeed regionally and exported internationally. A few local food franchises have managed to break into other markets in the Middle East and Europe but franchising is still in its infancy here, with just 150 franchise concepts available.

The LBA is driving efforts to develop the industry, with plans to provide expert advice to local investors who want to either buy a franchise and to business owners who want to convert a conventional business into a fully-fledged franchise concept.

It’s an exciting project which will create jobs and encourage much needed investment. But there is much to do and it won’t be easy. The Lebanese economy has suffered from years of domestic political turmoil, clashes between militias related to the situation in Syria, a wave of kidnappings and plummeting tourist revenues.

Now the country has a new problem—refugees from neighbouring Syria pouring over the border. A state of four million people has seen an influx of almost half a million Syrians in the past two years. That means one in ten residents is a refugee. On the streets it is common to hear that food prices have risen sharply as Syrians buy up bread, and that rents have increased as thousands of families seek shelter after fleeing a civil war that has claimed more than 70,000 lives and displaced millions.

From an economic viewpoint, things can seem bleak in Lebanon. Shakey infrastructure irritates residents and dissuades foreign investment. Lebanon also has one of the highest ratios in the world of debt to domestic product—estimated to be about 128 per cent for 2012 according to the C.I.A’s World Factbook. Growth has been stalled by the civil war in Syria and by Lebanon’s own bouts of insecurity.

The news isn’t all bad. In Lebanon’s exclusive economic zone, the offshore area in which it retains rights over any resources, there is a high probability that a significant amount of gas and possibly oil can be found. The prospect is being dangled that hydrocarbon revenues could fix many of the country’s problems, especially Lebanon’s chronic electricity shortage. Power plants are so stretched that even Beirut’s more upscale neighbourhoods see government-supplied electricity cut for three hours a day. Outside the capital power is even more sporadic.

But there are potential obstacles to exploring and developing these resources. For one, Lebanon is in a period of transition after Najib Mikati stepped down as prime minister in March. Consultations are under way to form a new government but the process has been slow as Lebanon’s divided politicians have continued to bicker.

Despite their problems, the Lebanese have an indomitable spirit and there’s no disputing their resilience and determination to bring about change.

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• New U.S. franchised establishments will rise by 1.3% in 2013 vs. 1.4% originally predicted;
• Franchises will add 156,000 jobs this year to a total of 8.2 million, up 1.9% from 2012, but slightly lower than the 2% originally predicted;
• Output from franchises will rise 4.2% to $802 billion in 2013, down from the 4.3% initially forecast;
• The gross domestic product of the franchise sector is projected to rise 4% to $472 billion, down from the 4.1% initially forecast for 2013 and lower than the 4.6% growth in 2012. This is approximately 3.4% of U.S. GDP in nominal dollars.

Within specific franchise industries, real estate will rank first in output growth and grow slightly faster than the franchise sector averages in establishments and employment. Business services and commercial and residential services franchises will rank as the top two sectors in both employment growth and growth of the number of establishments in 2013.

Quick service restaurants — the largest franchise business line — will rank second in the growth of output and will see growth rates of employment and new businesses that are slightly higher than the franchise sector average.

–Maurice Byrne, Managing Director, www.fitkids.ie

Choosing the right people, of course, is crucial to your success. Franchising is all about relationship building and you need to do everything possible to make the right choices. More and more franchisors are using psychometric testing as a guide to the prospect’s chances of making a success of his new venture. Psychometric testing will give you clues as to a prospect’s personality and how he might fit into your network, but that’s all it is—a guide.

You can’t beat intuition, your own, but especially a woman’s intuition. I recommend to all my clients that they should have a woman involved in the selection process. Take it from me, this is essential. It will improve your chances a thousand per cent. Women can see through people, especially men. Men, on the other hand, haven’t got this talent, and very often they’ll pick someone who might look the part but will not have the skills to act the part. It leads to trouble down the line, and we all know how difficult it is to find another franchisee to replace one who has failed.

Another tip: make sure you meet the prospect’s “other half ” before any decisions are made. In addition to demonstrating ambition, energy, and commitment and all the other qualities a franchisor looks for, it is very important that a potential franchisee can offer stable personal circumstances. There will be bad days as well as good days ahead, and after a bad day the franchisee will need the support of his family.

When screening prospects I always ask to meet the prospect’s partner. I like to know that he or she understands exactly what their partner is getting into –and I don’t rely on the prospect to outline the opportunity as well as I can. Occasionally a man will baulk at this suggestion and say something silly such as “That’s not necessary—I make the decisions in my house.” Of course, this isn’t always true! If they don’t turn up for interview together I always suggest another meeting when both people are available. It pays dividends.

Another tip: If possible, find a reason to visit the prospects in their home. While you’re there, take a look around. If the house is untidy or downright dirty, that’s how you can expect them to keep their office, store, or food outlet. Or, if it’s a service you’re providing, expect complaints from the customer about the mess your franchisee has left behind.

As I have said, selecting a good franchisee is not an exact science. It can be a hit and miss process, but the risks can be reduced if you take a few common sense precautions.

If the loan facility is successful, US officials say it can be a model to advance franchising across the globe. What a great idea! I wish all governments would be as pro-active.

The funding is provided by the Overseas Private Investment Corporation (OPIC) the US government’s development finance institution. It mobilizes private capital to help solve critical development challenges. Because OPIC works with the private sector, it helps US businesses gain footholds in emerging markets catalyzing revenues, jobs and growth opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, political risk insurance and support for private equity investment funds.

OPIC supports US foreign policy objectives by encouraging development in regions that have experienced instability or conflict, yet offer promising growth opportunities, such as the Middle East and North Africa, sub-Sarahan Africa and South-east Asia. OPIC’s work contributes to stability and economic opportunity, which helps mitigate risk to US companies investing abroad, and promotes a positive developmental effect for the host countries.

The agency operates on a self‐sustaining basis at no net cost to American taxpayers. It generated net income of $269 million in Fiscal Year 2011, helping to reduce the federal budget deficit for the 34th consecutive year. To date, OPIC has supported nearly $200 billion of investment in more than 4,000 projects, generated $75 billion in U.S. exports and supported more than 276,000 American jobs.

Medium‐ to long‐term funding through direct loans and loan guarantees to eligible investment projects in developing countries and emerging markets. By complementing the private sector, OPIC can provide financing in countries where conventional financial institutions often are reluctant or unable to lend.

OPIC has made it a priority to work with American small businesses which comprise, on average, 80 percent of projects supported by the agency. It offers qualified small businesses a streamlined approval process and direct loans from $100,000 to $10 million with terms from three to 15 years. While the eligible US small business must own at least 25 percent of the overseas project, OPIC may be able to finance up to 65 percent of the total project cost. OPIC has conducted more than a dozen small business workshops around the United States since 2006, educating nearly 1,600 business owners about OPIC products and services.

OPIC’s basic requirement is that its projects have a meaningful connection to the US private sector. It supports projects in a range of industries—from energy to housing, agriculture and financial services. It focuses on regions where the need is greatest and in sectors that can have the greatest developmental impact. Geographically, OPIC services are available for new and expanding U.S. business enterprises in more than 150 emerging countries worldwide.

People often say that motivation doesn’t last. Well, neither does bathing – that’s why we recommend it daily.

Your attitude, not your aptitude, will determine your altitude.

You were born to win, but to be a winner, you must plan to win, prepare to win, and expect to win.

If you learn from defeat, you haven’t really lost.

Sometimes adversity is what you need to face in order to become successful.

Remember that failure is an event, not a person.

Where you start is not as important as where you finish.

Success is dependent upon the glands – sweat glands.

Success is the maximum utilization of the ability that you have.

Every choice you make has an end result.

Lack of direction, not lack of time, is the problem. We all have twenty-four hour days.

Your business is never really good or bad ‘out there.’ Your business is either good or bad right between your own two ears.

People don’t buy for logical reasons. They buy for emotional reasons.

A goal properly set is halfway reached.

If you want to reach a goal, you must ‘see the reaching’ in your own mind before you actually arrive at your goal.

And my favourite: You can have everything you want in life if you just help enough other people get what they want.
This brilliant quote from Zig Ziglar epitomized the man. It tells you not to focus on what you want, but to help other people get what they want. It is the cornerstone of my business philosophy. If you keep this in mind when you plan your content, your events and your sales, you are coming from a place of service.

“By 2015 we are going to have over one million veterans that have exited from active military service who are going to be looking for jobs,” said Franchise owner Sean Falk.

Veterans and business owners know what it’s like to be in the unemployed veterans’ shoes.

“You feel like you have a purpose, you feel a belonging. When they separate from the military they feel like they are cast adrift,” said CEO/Founder of Sport Clips Gordon Logan. Jeff Connally, president and CEO of CMIT Solutions, says: “We love veterans because they are able to deal with a system and whatever comes up and they are committed to excellence.”

Today more than 66,000 veteran owned franchise businesses in the U.S. provide jobs for 815,000 Americans and generate more than $41 billion in economic activity.

By embracing this career path thousands can leave the military knowing they won’t be left behind. “These young men and women have sacrificed so much. They fought for us, so now it’s our turn to fight for them,” said Logan.

Last year more than 6,200 veterans and their spouses embraced franchising as their path to the American Dream.

More than 150 new franchised companies have joined the VetFran initiative since 2011 and there are now now more than 530 franchised brands actively hiring and developing veterans as business owners.
Other findings from the report:

Veterans hire veterans: Veteran franchise owners were 30 percent more likely to have hired a veteran than non-veteran-owned franchise businesses.

Most popular franchise industries: Automotive (16 percent), general services (15 percent), food (15 percent), residential/home services (11 percent) and business services (8 percent).

Enjoying business: Four out of five veterans, or 83 percent, “enjoy operating” their franchise business, while 81 percent “enjoy being part of this franchise organization,” and 79 percent would “recommend to others” their franchise brand.

Good fit: Ninety-five percent of franchisees surveyed believe that veterans are a good fit for employment within their franchise business.

IFA president Steve Calderia says: “Franchising is good for veterans and veterans are good for franchising. Successful franchises run on proven and structured systems, and members of the military are used to implementing systems, following procedures and striving for operational excellence, which leads to success in franchising.”

The scheme came into effect this week and is sure to boost franchise recruitment since €25,000 will go a long way to meet the initial set up costs for most franchises. A borrower can spread repayments over five to seven years at a “commercial” rate of interest (not fixed yet, but I’m told it could be around 9 per cent) and there’s no security requirement.

How does it work? Microfinance Ireland works in partnership with the County and City Enterprise Boards (www.enterpriseboards.ie) who can help with training and guidance in preparing your business plan. They will also conduct an initial evaluation of the quality of your business proposal for a loan application. The first step is to go to your local CCEB and speak to an advisor who will assist you with the application process.  The CCEB will make a recommendation and send the application to Microfinance Ireland who will assess the proposition and contact you directly.

Clearly, you need a business plan that makes sense. The funder’s credit policy will always be focussed strongly on the commercial viability of the proposed business, including the creation and maintenance of jobs.

In the first instance you should approach your bank for a credit. In the event that credit is decline, you are eligible to apply to Microfinance Ireland for a loan. A lack of credit history will not preclude a loan and microenterprises can be in the form of a sole trader, partnership or private limited company.

I hear the first tranch of money being made available is €40 million. It’s not enough to solve everybody’s problem but this initiative will certainly be good news for budding entrepreneurs who wouldn’t otherwise get credit and who were losing hope of ever getting their business off the ground.

See you in the queue!

From the Sunday Business Post Sept 23, 2012

There are countless franchise options available here in Ireland, all with varying start
up costs. While many require a shop front and overhead expenses, a large number,
ranging from commercial cleaning to dance fitness lessons to car repair services, can
be operated from home.

Franchise consultant Tony Fitzpatrick of www.franchiseyourbusiness.ie says there
is evidence of a growing trend towards home based franchises. “The popularity of
home-based businesses has been growing for a while now and one of the driving
factors is the struggling economy.”

Fitzpatrick acknowledged: “More franchise companies have turned to the home-
based model, when possible, since the tightness of credit has made selling the big box
franchise very difficult.

“The flexibility and freedom of running a business from home opens up the
opportunities for prospects with lower budgets to realise their dream of owning their
own business, which is a good thing.”

It’s his view that “as technology becomes more sophisticated, it’s easier than ever to
operate a business from home and still portray a professional image. “

Fitzpatrick added: “The somewhat negative stigma once associated with working
from home is not there any more as the image of the traditional workplace is
undergoing a metamorphosis.

“Working from home offers a number of advantages but people looking at this type of
franchise need to make sure they have the motivation to work alone and keep personal
and professional lives separate.

“Most interest these days is in franchises where the initial fee is €15,000 or less and
the overheads are low, maybe just a car and phone. Having said that, there’s still a
steady demand for coffee bars and restaurant franchises where there is a substantial
capital requirement.”

He asserted: “The big brands will always be popular but opportunities to take up a
new license are few and far between. This has driven potential franchisees to look for
exciting new food concepts which could become the next McDonald’s or Subway.”

Successful Irish businesses that have moved into franchising in the last few months
include Mixgreens, the Galway based healthy fast-food outlet, The House of Tea,
whose flagship outlet is in Rathmines, Dublin, and The Galway Roast, who are
expanding their freshly-brewed coffee franchise.

Looking at the overall picture, Fitzpatrick said: “The difficulty in raising bank finance
is still the biggest obstacle to franchise expansion. Many franchisors have had to
tailor their presentations to suit the market, reducing their initial franchise fee to a
more affordable figure or offering a smaller territory with an option to expand as the
franchisee’s business grows.”

Fitzpatrick reckons: “We should see a difference when the government’s loan
guarantee scheme comes into operation towards the end of the year. Initially, the
scheme will facilitate up to €150 million of additional lending a year to SMEs. The
banks will administer the scheme but the state will give them a 75 percent guarantee
against losses on qualifying loans to firms with growth and job creation potential.”

He speculated that while details have yet to be announced, “it is expected that
banks will be able to loan from €10,000 to €250,000 and up to €1 million in special
circumstances, knowing that if the business goes pear shaped they are exposed to only
25 percent of the funds advanced. We don’t know yet just how much the borrower
will be required to contribute but expect a minimum 10 percent of the overall cash
requirement”

The scheme is expected to give a much needed boost to the franchise industry which
has traditionally relied on banks to part fund new investors. Potential franchisees
should meet the requirements provided they are in good standing and can present a
credible business plan.