Banks, Remodels And Pizza In A July 20 Franchise Roundup

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Banks See Less Risk In Restaurants

In a revelation that will turn the world upside down, banks like lending to businesses with less risk. I know! I was stunned, too.

When it comes to franchises, peculiarly, restaurants top the list of business types the banks are willing to lend to. I say peculiarly not because restaurants aren’t good, stable businesses—restaurant franchises are some of the biggest earners in the U.S. and across the world—but because restaurants often struggle to get to that point.

I do understand the logic here, though. It’s well-illustrated in this Restaurant Finance Monitor story:

That banks would prefer franchise loans isn’t much of a surprise, and it doesn’t necessarily mean franchises are a less risky business proposition. Rather, banks may believe that franchises offer loans an extra line of defense, because a franchisor might be willing to step in and help a struggling business–or get it sold–rather than see a location fail.

It’s good news for franchises, either way, especially when you add in those non-bank lenders willing to chip in.

Domino’s Keeps Soaring

BizEngine has covered Domino’s remarkable marketing campaign, which transformed not only the recipe for their pizza but also the way the company was perceived. When I was in college, Domino’s pizza was cheap, decent and not much else. Now, it’s viewed as a quality chain pizza, one worth grabbing for your family or friends.

That campaign has led Domino’s to even greater heights in 2011, spurred on by a comprehensive social media campaign that went along with their famed television ads. The whole effort was ambitious and involved an admittance by the company that its products were not up to snuff, which can be business suicide.

There are definitely lessons to take away here, even if the exact model probably can’t be duplicated.

Restaurant Remodels Rewarding

Customers are drawn to the new, the bright and the different, especially if it happens to be a new restaurant. While franchises can’t exactly reinvent the wheel, they can remodel, and they can see a reward for doing so.

Even though the cost is high, an increasing number of franchise businesses are turning to remodels frequently to keep customer interest and sales high:

“Consumers have no attention span anymore, and they’re just off to the next thing very, very quickly,” said Rick Van Warner, president of Orlando-based retail and restaurant consulting firm The Parquet Group.

“People want something that’s clean, more simple,” Van Warner said. “They’re demanding shopping and dining spaces that just have a little bit more sophistication to them.”

It’s certainly something for franchisors and franchisees alike to keep in mind.

Other Useful Links

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