“It’s a very challenging time for financing,” says David Pikoff, who co-founded the company with his brother Stuart. “However, because our concept is so unique and different and the entry point to get in (is not cost-prohibitive) since it’s a home-based business, we’re doing exceptionally well and going against the grain.”

Games2U provides mobile entertainment that includes a game theater as well as laser tag, a human gyroscope, and a seven-foot-tall robot, along with other games that they plan to debut over the coming three months.

“It’s well beyond just the video-game offering at the consumer level,” Pikoff says.

Though the company’s primary client core is birthday parties, but approximately 30 percent of its business is comprised by events at schools, churches, festivals, carnivals, and other venues, according to Pikoff.

Three years ago, Pikoff and his brother decided that they were burned out on working in the corporate world and wanted a change.

“We just wanted to do something fun and light-hearted that we could truly enjoy,” David Pikoff says. “Our little motto is that work should be all fun and games.”

The brothers’ original intent was to purchase an existing franchise in the Austin/San Antonio area and build up that business. However, the marketplace offerings threw them a curveball.

“We did a lot of research and just couldn’t find anything that was unique, that we could sink our teeth into,” Pikoff says. “So we decided to start this business.”

“We put a few trucks on the road, went through our key learnings, build a back-end operating system, wrote training manuals, and (designed) the workings of the company,” Pikoff says.

In March 2008, Games2U began franchising. The company currently has 94 franchises and Pikoff projects that they will sell approximately 350 units next year.

Current Operations

Of course, the current international economic climate is not kind to businesses of all stripes, including franchises.

“The franchising industry probably goes the same way as all industries go,” Pikoff says. “It’s a very challenging time for financing.”

However, he believes that the relatively low cost of entry for a Games2U franchise differentiates the company from other franchisors. Initial costs range from $99,000 to $199,000 based on which entertainment vehicles and options a franchisee selects.

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It is true that there are fees associated with the initial startup of a franchise, but that fact by itself shouldn’t dissuade you from deciding to venture this direction. After all, there are expenses related to the startup of any type of business. You need to ask yourself what you are getting in terms of business support and marketing advantages when you choose to buy in to a franchise.

Three ‘Pros’ for Franchising

1. You Gain a Healthy Head Start with Brand Name Recognition
If you choose to start your business from the bare ground, you’re at a disadvantage in terms of name recognition from the beginning because no one will ever have heard of your brand before. While you can surely raise awareness for your company’s namesake, it takes time, energy, and money. When you open a new locale of a known franchise, you’re already ahead in the race when it comes to name recognition. A major bonus associated with franchise ownership is the simple fact that prospective and existing customers are already likely to know about your brand names and company before you even open up for business.

2. Solid Support Channels from Corporate
Being an entrepreneur can turn out rather lonely. When you’re launching a small business by yourself– or even with a few partners – you end up on your own when it comes to deciding what to do first, next, and so on. In franchising however, although you’re an independent small business owner, you have teams of people in place at the corporate offices with a duty to assist you, as well as other franchise owners in other markets. They have experience with the same issues you’re facing and can offer ideas, help, and advice. So, even though you have the autonomy of entrepreneurship, when you own a franchise you aren’t really all by yourself.

3. Smart Preparations Can Lead to Quick Success
There are a handful of ways through which opening a franchise can build a platform for success in your favor. First, the business has already experienced success elsewhere, or it wouldn’t be a franchise at this point. You already know that the concept is viable when you choose to open a franchise, because it’s already operating in another locale. The system works; it’ll be your choice whether or not it’s a workable business for your market and to make it succeed. Further, overall, franchise start-ups have a much higher success rate than other small businesses. Trust what works, what has always worked and those whose success depends on yours.

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Interviews with franchisors with businesses on the Top 100 list showed that there is no one
path to successful international expansion. Selling a master license is a common strategy,
but by no means the only route, as Coffee News USA discovered.

“In those countries that are doing well, we will leave them alone. If we take back
countries we will run them from here for awhile and then sell them once we have someone who
can do Coffee News well there,” said Bill Buckley of Coffee News USA.

Other companies like PakMail have tailored a business model that can be easily reshaped
into different foreign economies.

“We are open to further international expansion and prefer to establish master licensees
outside of the U.S. The Pak Mail operating concept is pretty easy to adapt to foreign markets as evidenced by the success of our franchises in Mexico,” says PakMail’s Sandy
Lasky.

There will be many cultural roadblocks for the franchisor to overcome when opening in a
foreign market. “Knowing the culture, language and business processes, as well as ensuring
successful product distribution,” are some of the problems that PuroClean encountered when
it launched its Canadian operation. However, it found a solution that changed the way it
did business in the country.

“By having a native Canadian manager running operations in Canada, PuroClean has been able
to overcome typical obstacles faced when entering a foreign market,” said PuroClean’s
Natalie Zupo.

Launching a franchise on a global level takes time and patience. But the rewards can be
limitless, as the success of the Top 100 Global Franchises has shown.

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Why Small Businesses Fail
A novel could be written about the reasons why small businesses fail. One of the major reasons is from miscommunication between owners, or owner and investor. Take a new restaurant for example: A passionate chef and a wary investor will most likely butt heads when it comes to what makes the most financial sense to each one. And there is guaranteed to be some disagreement along with what each believes to be money well spent verses too much.

Undercapitalization
According to business researchers, the general rule of thumb for beginning small businesses needing a loan is “to have a sum of money at least equal to the projected revenue for the first year of business in addition to anticipated expenses.” For example, if the restaurant owner believes he or she will make $200,000 in revenue for the first year, with $250,000 in building and starting up expenses, than they should have no less than 350,000 available. Otherwise, the restaurant owner could be faced with huge amounts of debt or bankruptcy.

Poor Planning
Without an accountant, advisor or proper funding, small businesses can aim high but end up falling short and blow their opportunity to do it right and become successful. The first step they can take is to get the assistance from a small business origination service that help small business owners reach their financial goals and give them the assistance they need to be successful in all areas of their business.

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It’s all part of Italian businessman Luigi Cremonini’s strategy
to tap into Russia’s “huge potential” by making “huge investments.”

Italy’s Cremonini Group will open a new meat-processing plant in
the Moscow region to produce hamburgers for McDonald’s by year-end as it moves
to build a full production chain in Russia, Cremonini told The Moscow Times.

The founder of the Italian giant, one of the largest food
companies in Europe, is not at all dismayed that the plant will cost twice as
much as expected or that Russia’s cattle population is steadily declining.

“We strongly believe in the prospects of doing business in
Russia, and this is why we decided to make a strong direct investment, 100
million euros [$148 million], to build the meat-processing plant in Odintsovo,”
he said in an interview Wednesday.

“We are already a supplier of beef for McDonald’s restaurants
across Europe and will now make hamburgers for the Russian branch of the
international fast-food chain,” he said.

The Odintsovo plant, which will occupy 25,000 square meters,
will initially produce 25,000 tons of meat products per year and increase in
capacity to 50,000 tons in a few years, he said. Work on the plant started in
2007.

The plant will be operated by Cremonini’s local subsidiary,
Marrusia.

McDonald’s,
which is rapidly expanding worldwide and plans to open 30 new restaurants in
Russia this year, has processed its own food needs but said it needed Cremonini
to keep up with growing demand.

“Due to an extensive McDonald’s expansion in Russia, the
decision was made to outsource the production facilities of ZAO
Moscow-McDonald’s Food Processing Complex,” McDonald’s said in an e-mailed
statement Thursday.

“Marrusia … will ensure production, storage and delivery of meat
products for McDonald’s restaurants,” it said. “Supplies are planned to begin
with the opening of the partner’s facility.”

The plant will provide 10,000 tons of meat to McDonald’s next
year.

Cremonini said he saw the plant as a strategic investment and
was cautious in predicting when it might break even.

“In normal conditions, you would expect to justify your expenses
for a project like this in 10 years, but Russia is a country where it is kind of
difficult to make this kind of precise calculation,” he said.

Cremonini stressed, however, that only major investments work in
Russia and said his company has invested more here than in any other country
outside Italy.

“This is a country with great perspectives, so the logic behind
this is simple: huge potential, huge investments,” he said. “At the beginning,
we of course made a business plan outlining a lot of unpredictable factors, so
we are quite aware of what we got ourselves into.”

Cremonini Group was founded by Cremonini in 1963 and entered the
Soviet market in 1985, supplying meat to the state-owned trade concern
Prodintorg. The company started to target Russian consumers in the late 1980s
and set up Marrusia in 1998. In 2008, the company reported turnover of 133
million euros in Russia, up 5 percent from the previous year. The group’s total
consolidated revenues were 2.2 billion euros, an increase of 6.6 percent.

The new Odintsovo plant will become the final stage of a
full-cycle production chain that the company intends to build over the next few
years, starting with several small slaughterhouses in the Orenburg region.

“Our strong conviction is that if you want to succeed in this
country, you have to produce and to process here. You cannot consider Russia
just as an export market,” Cremonini said.

The businessman would not disclose exact investment figures for
the Orenburg region, saying only that the amount would not be as big as in
Odintsovo.

“Judging by the experience of our Odintsovo project, we prefer
not to disclose figures,” he said. “Initially we planned to invest 45 million to
50 million euros in the Odintsovo project, but the final cost doubled.”

The major challenge during the construction of the plant in
Odintsovo was meeting all official rules and regulations, he said.

“It was an incredible adventure to both meet the timing of the
construction and respect all the formalities,” he said. “In Europe, we sometimes
think that we have the highest construction, hygienic and other standards, but
this is not true. In Russia you have to multiply everything by two.”

The reason the company plans to build several small
slaughterhouses instead of one big enterprise is the relatively low density of
the cattle population in Russia.

“In Italy, we have two big slaughterhouses that each process
1,000 cattle per day,” Cremonini said. “In Russia, it’s better to have
several smaller plants in different areas of the country where the cattle
population is concentrated.”
 

He said his company’s principle was to build slaughterhouses no
farther than 500 kilometers from cattle farms in the interest of the humane
treatment of live cattle during shipping. He said he had calculated all the
possible risks of shipping meat from Orenburg to the Moscow region.

“If the trucks can cover the distance from the slaughterhouse to
the plant in two days, there is no problem for us,” he said.

The distance between Orenburg and Moscow is roughly 1,500
kilometers.

Cremonini would not speculate about the possible costs of
highway bribery, a common phenomenon in Russia that poses a serious obstacle for
quick transportation and increases costs.

“Regarding highway bribery, we have never faced this kind of
problem,” he said. “Anyway, if there are some difficulties in this country, they
are absolutely the same in all the other countries of the world.”

During the last decade, meat production has dropped by 55
percent, according to statistics from the Agriculture Ministry. But Cremonini
said “meat” was too general a term, and pork and poultry should be separated
from beef, which requires a more complicated production process.

“Poultry and pork production is now doing pretty well, while
beef production is decreasing,” he said. “In order to organize pork and poultry
production, all you basically need is cereal to transfer fodder into animal
protein — and Russia is rich with cereals — while beef production is more
complicated.”

In January, there were 20.7 million head of cattle in Russia,
down 2 percent from the same month in 2008, according to the State Statistics
Service.

In order to efficiently produce cattle and beef, you have to
“produce” cattle farmers, Cremonini said.

“And this is the problem in Russia — you need people to produce
cattle, and finding such people and stimulating them to grow cattle takes a very
long time,” he said.

“This industry has been destroyed in the last 20 years,” he
said. “It is a very slow and long-term process to rebuild the cattle
population.”

Most sectors of the Russian economy has seen a significant business slowdown caused by an abrupt drop in demand for almost all kinds of goods and services, by a reduced scope of financing opportunities and available loans and, as a result, by numerous payment failures. All spheres of business, including franchising businesses, have to react to it in different ways.

The first and most wide-spread reaction to economic difficulties is to cut down on expenses and to start to economize on everything. At present it is vividly illustrated by mass lay-offs and payroll reductions. In the retail industry it can also be seen in the reducing number (or complete abolition) of free services, e.g. free plastic bags in supermarkets. The ultimate stage of this kind of measures is a partially or completely frozen business. It happens either in the form of shorter working hours or of an indefinite period of total inactivity. From the buyers’ point of view, to cut down on expenses and to save on everything one can save on means fewer purchases and less expensive counterparts of usual goods. At the same time certain companies – with a few franchising concepts among them – have managed to take advantage of the economic crunch. For instance, many QSR’s have increased their sales volume due to the fact that new clients have turned to fast food restaurants from higher priced cafes.     

The second type of reaction reflects changes in corporate policies that aim at stimulating the demand. This kind of measures includes various discounts and promotion activities. Franchising stores are lavishly decorated with bright posters announcing unbelievable discounts – sometimes 50% or even 70%. It is mostly seen in the garment and footwear retail chains. The second type of reaction to the economic hardships also covers certain attempts to help buyers with financing a purchase. For example, one of the largest Russian car factories – Gaz – offers its buyers to pay a portion of the interest rate in case a bank loan is involved in the purchase of a car. The regional government of Nizhniy Novgorod (where the factory is situated) also tries to incite people to buy Gaz cars. The official offer is 50,000 rubles (about 1,640 USD) to everyone who decides to exchange their old car to a new one from the Gaz plant.

Most far-sighted entrepreneurs and top managers choose the third type of reaction – to critically study the range of their goods and/or services in order to change it in accordance with the current situation. The same car factory – Gaz, for instance, has announced a soon to appear new variation of their popular model with a much cheaper engine. Retailers and wholesale companies have also started to offer “anticrisis” versions of their goods and services.

The forth way to react to the difficulties of the world economy is less widely spread and includes attempts to improve and optimize marketing and sales techniques. However, more and more entrepreneurs turn to analyzing the efficiency of advertizing and opt for cost-effective partisan marketing instead of more conventional means of advertizing. 

Franchising concepts in Russia start to change as well against the background of the above mentioned changes in different spheres of business. The general drop in demand for all kinds of goods and services has affected the potential buyers of franchises, i.e. the investors. Some time ago buying a franchise was considered as one of the safest ways of capital investment but now the situation has changed. The profitability of many franchising concepts reduces. Potential investors understand it and show less interest in buying franchises. The number of investors in the retail sector has significantly decreased. Unfortunately, some Russian franchising concepts have already faced forced closings of their franchisees. Although none of the Russian franchisors have shut down so far, there are already a couple of cases of totally frozen businesses.    

Speaking about the garment and footwear retail chains it is worth mentioning that the worst situation is seen in the mid-priced segment. Clients can be now divided in two basic groups: those who don’t feel any difference because of the world economic crunch and are used to buying whatever they like constitute the first group and tend to buy expensive goods; and the rest of us who have to be more careful with their spendings fall into the second group and buy predominantly cheap goods. There is less and less demand for mid-priced goods. Thus retail stores of this price segment are forced to shut down. It can easily be seen by a growing number of free spaces in shopping centers. Therefore, the drop in demand also affected the development and introduction to the market of new franchising concepts in Russia, especially in the retail sector.    

Nevertheless, potential investors who are willing to invest their money in a new business with the help of a franchising model can still be found in Russia. First of all, they are the people who try to secure their capital against inflation and vague economic perspectives.

The economic crunch revealed the most stable businesses. These are the companies that increased their sales volume instead of reducing all activity. And sometimes it happens not “instead of” the crisis but “thanks to” it! The majority of these businesses fall into the production and service spheres which can be regarded as a positive trend (taking into consideration the fact that there are not so many production franchises either in Russia or in Western countries). Investors are more willing to start a new business in the sphere of production or services than in the retail sector as in the longer term this type of investment is considered more secure. The investors’ interest to the above mentioned spheres is also influenced by the following factors:  

1. Many qualified specialists have been laid off in these spheres and are now eager to work, even for a lesser salary.  
2. A growing amount of unoccupied commercial real estate gives a chance to find an appropriate property with a lesser rent.  
3. Buying a franchise helps to start a new business in a short period of time and thus to diversify the existing business assets reducing commercial risks.
4. And the most important factor – any franchising concept must have reliable proof of its success. If the business overcomes the economic hardships and moreover introduces a new franchising concept to the market, it is worth studying this business offer. “Crisisproof business” may become a new quality mark for a franchise.   

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In a playing field already flooded with some of the biggest names from Europe and around the world, Sacoor Brothers, although already a household name in its home country, was going to have to face up to some tough competition.

It had to go for the jugular.

And that, according to Gonçalo Veloso, who spearheads Sacoor Brothers’ international operations, meant going back to fundamentals.

“We were very strong on our service style, that is what has defined us from the start. We knew that if we provided the best service, people would come,” he says.

There are now six Sacoor Brothers stores in the Middle East, of which four are in Dubai. Two more are scheduled for the region, a fifth in Dubai and a new one in Kuwait, which will bring the total number of global stores to 55 before the end of the year, says Veloso, whose company recorded an annual turnover of €50 million (Dh261.4m) last year.

“Part of our success is because there was a need for a brand such as ours in the mix. There are few companies that offered the kind of service style, the quality and the retail environment and our price points,” he says.

Like its first store at Dubai Festival City, each Sacoor Brothers outlet features live classical music during peak hours, a “Sacoor Lifestyle Zone”, which includes a bar service offering tea and coffee and a dedicated tailor’s room service, so customers can walk in and walk out with fitted clothes.

A monthly audit system is employed to monitor all franchises and outlets around the world.

The service style in the UAE is slightly different from the brand’s Portuguese stores, says Veloso.

“It’s better and grander because we wanted to differentiate ourselves in a new market. We wanted to stand out by offering things other retailers didn’t.”

Globally, Sacoor Brothers has also invested heavily in advertisement, sponsoring famous Portuguese and Brazilian personalities.

Current campaigns include stars from hugely successful TV series CSI: Miami and Prison Break.

Started by four brothers in Lisbon in 1989, the brand covers a range of men’s, women’s and children’s ready-to-wear, including shoes and accessories. Starting off with Spain, Belgium and Romania, its international expansion in the Middle East has now become a priority to the brand, says Veloso, whose company has partnered with Bahrain-based Jawad Business Group in the region, which also owns the franchise of brands such as Mango, FCUK and Accesorize among others in the Middle East.

“The region is characterised by a very particular social and economic conjuncture and the acceptance of top European brands is a reality. Then there is the potential it has, making it a fantastic marketplace.”

Despite the travails of being part of the current international retail market, the UAE and the region has however shown strong growth numbers for the brand.

“Our store at Dubai Festival City posted a 23 per cent sales increase in July from the same period last year, while our Portuguese stores showed 14 to 15 per cent growth,” says Veloso, who recently supervised the opening of a new outlet at The Dubai Mall.

Another store is scheduled to open before the end of the year at a new mall in Mirdif.

The company has also adopted various branding modifications keeping in mind the sensibilities of the regional market and the customers it wants to win. “If you look at our Portuguese and European stores, our brand is usually associated with our logo, which is a greyhound, and which features prominently in all our properties. But in keeping with cultural and religious sensitivities, all our Middle Eastern stores feature the Sacoor name instead of the logo,” he says.

“I think this is a great example of just how important this market is to us and the faith we have in our customers here.”

Uncertainties in global markets have, however, halted other expansion plans for now, says the official.

“We only want to focus on the best projects and on markets that we are confident with. At this point in time, we don’t want to risk anything. We need to know and see to be sure.

“I think now the focus should be on building up the brand,” he says.

For now, Sacoor Brothers is finalising expansion plans in Poland and as markets heal, will look at entering Russia, Ukraine, Lebanon, Syria and Jordan. South East Asia is also on the road map.

“These are difficult times for everyone, the crisis is hitting us all, everywhere. I think the most important thing for us is to focus on current plans and build on what we have and aim to continue to give the best,” says Veloso.

Colombiano Coffee House’s rich history & concept is inspired by a mythical love story taking place as far as 1923, with the opening of “Coco’s Coffee shop” in Costa Rica. Colombiano Coffee House is not your conventional corner Bistro/Café. With its terrific food and drink menu, it is the spice of Latin Taste, combined with the excitement of Latin Life, for a completely enjoyable and satisfying experience in a chic, comfortable environment. Colombiano Coffee House is thrilled to have IFG representing them in Russia and other parts of the world. “We personally believe that IFG is extremely well-experienced in Russia,” says Colombiano Coffee House’s Director of Development, “and the probability of obtaining serious contacts which will lead to signed Franchises is much higher with IFG than with others.”

Currently operating in Lebanon, Qatar and Abu Dhabi, Colombiano Coffee House understands that, when it comes to Food & Beverages, including Coffee, people all over the world want quality. O. Victor Lattanzi, CEO of International Franchising Group, LLC notes, “The Colombiano Coffee House concept is terrific, not just for the customers, but for the owner-operators as well. They are going to love the concept, the coffee, the smoothies, the food and the culture.”

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