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Executive Viewpoints— IFA’s 2013 Board of Directors

Jania Bailey, CFE
FranNet Franchising, LLC

FranNet predicts a very strong 2013 with sales up as much as 30 percent. A soft job market is very good for our business as more people are looking for alternatives to the corporate world. Our biggest challenge is the fear of the unknown tax and regulatory environments combined with a still tight credit market. The biggest opportunity lies in the overall number of people that need to take control of their futures. As more people realize that the job market is going to continue to struggle, we have more opportunities to place franchisees.

Melanie Bergeron, CFE
Chairwoman of the Board
Two Men And A Truck International, Inc.
IFA Treasurer

The biggest challenge facing our business in the next year is uncertainty in the form of taxes, regulation, health care and the overall impact of these factors on our economy. On the upside, Two Men And A Truck has made several changes since the last recession; we are lean and efficient, have overhauled our IT, improved and streamlined all of our business processes. We have never been so poised to add on franchises with continued focus on quality customer service, franchisee profitability and community outreach. We’re ready to jump in and make 2013 a great year.

Susan Black-Beth, CFE
Chief Operating Officer
Super Wash, Inc.

My crystal ball shows 2013 as a very trying year. The negative sentiment in the small- business community with regard to the expense of health care reform, the personal impact of tax increases and the lack of incentive for people to take a risk and try to get funding to open their own business could be very hard for franchisors to manage. Many franchisees are also still feeling the effects of the challenging economy which makes everything more difficult. That being said, trying times provide franchisors an opportunity to innovate and show their unwavering support of their franchise partners.

Joseph Bourdow, CFE
Senior Advisor

With the national election finally behind us, and with some anticipation of a bit more cooperation and compromise in Washington, we remain hopeful. We are hopeful that the slow but steady improvement we have seen on so many fronts will begin to accelerate in the coming months as we gain more certainty over taxes and the many other unanswered questions that affect us.

Charlie Chase
President and Chief Executive Officer
FirstService Brands

Franchising distributes economic benefit and risks proportionately, it does not concentrate wealth in the hands of the few; it provides the direct opportunity for balanced geographic wealth distribution for thousands of regional owners. It is, perhaps, the greatest form of branded multi-point business organization ever invented. Our biggest challenge is to find the right people to grow with, in times when success and wealth are unseemly. Our biggest opportunity is to engage our existing franchisees to push past external issues and focus on finding innovative ways to delight existing and future customers.

Mitch Cohen
Baskin Robbins/Dunkin’ Donuts of Bayshore, N.Y.

I think it is always good to look at opportunities in our business first before identifying all the challenges. Our opportunities in 2013 are to finally start to have developmental growth in our network of locations. Since access to capital has gotten a little better and real estate in our market and surrounding markets have prime real estate available, 2013 would be the time to resume the plan we created in 2009. Our biggest challenges to achieve this goal right now are the uncertainty of the fiscal cliff, the outcome of the government’s decision on taxes, as well as health care reform and the effect it could have on our overall cost of doing business.

Rocco Fiorentino, CFE
Swiss Farm Stores

Looking ahead, I realize that many of us in the franchise industry will be challenged with financing our growth plans; however, rising costs for products and increasing costs for personnel are also real concerns. Dealing with raising prices is just not as easy today as it may have been in the past. Technology has changed the way people shop and compare. There is an app for almost anything you can think of. Technology will also provide solutions for some of these challenges and allow us to market to a much broader customer base at a much lower cost and utilize apps for our customers to shop with us.

Aziz Hashim
President and Chief Executive Officer
NRD Holdings, LLC
IFA Secretary

The biggest challenge for 2013 remains the uncertainty in fiscal and regulatory policies.  Investment planning and budgeting for the long term are difficult due to numerous unknowns that hamper forecasting. The opportunities continue to lie in efficient operations. Brands that are well managed and are good operators are able to draw business away from mediocre ones. Until real growth comes back, it’s a market share battle. There will be clear winners and losers.

Michael Joblove
Genovese Joblove & Battista
Supplier Forum Chairman

We are optimistic regarding the business climate next year. The current fiscal issues in Washington will necessarily be resolved by the first quarter. With certainty, businesses will once again begin to expand. There is plenty of capital on the sidelines waiting for resolution of the present crisis.

Darrell Johnson, CFE
President and Chief Executive Officer

There is a lot of pent-up demand by consumers and a need for businesses to invest after years of cash hoarding.  The headwind and therefore the biggest challenge we face is continuing uncertainty.  Uncertainty causes hesitation which perpetuates a slow, choppy recovery. In 2013, uncertainty can be removed in two ways. First, it is up to Congress to address the fiscal cliff. Any actions, whether viewed favorably or not, will remove uncertainty and therefore help consumers and businesses make decisions.  Second, uncertainty is also removed with better information. Sorting through the noise will reveal opportunities ahead of the crowd.

Steve Joyce
President and Chief Executive Officer
Choice Hotels International
IFA Vice Chairman

In 2013, we need to continue to build on the relatively strong year we had in 2012.  To get there, Congress must do its job and address the long-term spending issues facing the country including needed fixes to health care reform, the tax code and entitlement programs.  Access to credit is slowly improving; we need to keep the spigot open and economic recovery on course so our industry can continue to create jobs and put the country back to work. Value continues to drive consumer behavior and at Choice, we are looking to see strong same-store sales and growth of plus 4 percent.

Saunda Kitchen, CFE
Mr. Rooter of Sonoma County, Calif.
Franchisee Forum Chairwoman

During the past few years, we have weathered one of the worst economic storms in our business history and are stronger and smarter. One of the biggest challenges we face in 2013 is the uncertainty surrounding tax regulation. We have the opportunity to expand into services we haven’t previously offered, but will need to secure credit to finance equipment and personnel. This opportunity and possible expansion will require more employees and create more jobs in our community. However, more employees will mean more regulations and some business stifling requirements. Working through the uncertainty this administration brings to small business will be our biggest hurdle for 2013.  Entrepreneurs are by nature optimistic problem solvers. Our outlook for business in 2013 is to remain growth focused and expansion ready.

Mark Kirsch, CFE
Plave Koch PLC

I am cautiously optimistic regarding franchising, and my business, in 2013.  As a law firm, we share many of the same concerns of our clients. We have to continue to deliver value amid increased costs and heighted expectations. Despite dealing with economic uncertainty in several key areas, franchisors, franchisees and suppliers are experiencing improvements, albeit uneven increases in profitability or growth. We look forward to working with franchise executives to implement lessons learned from several years of belt tightening. And we expect growth in mergers and acquisitions and private-equity investments in franchising, international development and expansion of smaller and mid-sized franchise systems.

John Kujawa, CFE
Vice President, Franchising
McDonald’s Corporation
Franchisor Forum Chairman

Our 2,200 McDonald’s USA franchisees are small-business owners who represent what the U.S. free enterprise system stands for: entrepreneurial spirit, limitless opportunity and financial independence. The men and women who own McDonald’s restaurants are working through the challenging environment by remaining focused on serving our customers and their local communities. Consumers and businesses alike are anxious for the economy to swing back up. The McDonald’s legacy champions the spirit of free enterprise. We are staying focused on our business strategies and prioritizing value for our customers as the economy continues to recover.

Gordon Logan
Founder and Chief Executive Officer
Sport Clips, Inc.

2013 is shaping up to be our biggest and best ever, with over 200 new locations projected. All of us are nervous about tax law revisions/increases and how that will affect our ability to expand our businesses, as rapidly as we could with a more reasoned approach to taxation, and controlling government spending. We are a very labor-intensive business, therefore we are very concerned about the health care mandates and how they will affect our business. We are determined, however, to adapt as necessary and will work to turn the challenges into opportunities.

Jon Luther
Dunkin’ Brands, Inc. and Arby’s Restaurant Group, Inc.
Immediate Past Chairman

Now that the election is over, at least we know what we have got, but long-term spending is a major issue. We have to get our fiscal house in order at the federal level. If the house is put in order, consumer confidence grows and 2013 could be a better year than 2012. There are still questions, though. Will Obamacare be adjusted and tweaked so it’s more palatable for our franchisees? And can we stop the proliferation of regulations at the state and local level?

Robert McDevitt, CFE
Senior Vice President, Franchising
Golden Corral Buffet & Grill

My outlook for 2013 is best described as cautiously optimistic. The biggest challenges facing our business at Golden Corral in 2013 look a lot like the challenges that faced us in 2012.  First, we are working to overcome commodity cost pressures in grains, dairy and beef. Second, consumer confidence and uncertainty still have not fully recovered and without some change in trajectory among our political leadership there is little hope that these will improve much. Our biggest opportunity in 2013 is to continue to leverage our position in the value category.  With consumers being tight with their discretionary dollars, we must find ways to continue to be a realistic and relevant option.

Barry Miller
Sylvan Learning Center of Girard, Ohio

I believe that business will continue to recover during 2013. We have seen a slow, but encouraging increase in revenue due to new initiatives and investments in the business.  This combined with increasing consumer confidence and a recovering economy, should allow for growth and profit improvement as compared to 2012.  That being said, we still are faced with many of the headwinds that began in 2008: Restricted credit for remodeling and expansion, the prospect of higher taxes and adverse government policy. These factors are likely to impede a strong recovery. Therefore, the uncertainty in these areas creates the largest challenge to success in 2013 and beyond.

Catherine Monson, CFE
Chief Executive Officer
FASTSIGNS International

Businesses will be challenged by increasing regulations, the cost and burden of Obamacare, increased taxes and the growing power grab by unions. With President Obama re-elected, we can expect more pro-union, anti-business regulations and decisions by the NLRB and unions targeting small businesses to build their ranks. The ballooning debt and the inability of our government to take meaningful action to reduce government growth, reduce government spending and get to a balanced budget will drag on our economy’s growth. Franchisors with access to capital can provide growth in units as people want to control their destiny. FASTSIGNS will continue to coach our franchisees to remember the lessons of 2008 and 2009:  effectively manage expenses, work proactively to build profitable sales and build cash reserves. We expect to increase our number of locations and generate positive same center sales in 2013.

Karen Powell, CFE
Chief Executive Officer and Founder

Generally we are robust about 2013 and believe it will be a great year for franchising. As more people look control their destiny, we believe that franchising is a great option for those looking to chart a new course. We’re focused on increasing our brands’ unit economics, our highest priority. The world is changing and we are working to evolve our brands to 2.0, the next iteration of our coaching. We are diligently examining what, how and why we do what we do. The why? Customer demands for products and services are changing. We are researching and asking our franchisees and their clients questions about what latent demand might they have that has not yet been expressed or addressed. Once we determine this, we can address the changing methods to reach clients to offer them what they seek.

Todd Recknagel, CFE
AM Conservation Group, Inc. and
Mr. Handyman Board Member

2013 is surrounded by uncertainty on many levels with plenty of regulations, health care mandates and a divided Congress, but in times of uncertainty there is great opportunity. There is opportunity to continue to gain market share and expand most franchise businesses. Incremental increases are a great way to improve your business through new technologies. It is time to set aside the old ways of doing things and embrace the new; the old economy is not coming back. Lenders are opening up to help solid business opportunities grow and the rates have never been better. I continue to be amazed by the opportunities I see and believe the transitions in 2013 and 2014 may be a bit rocky, but the best is still ahead.

Steve Romaniello, CFE
Chairman of the Board
FOCUS Brands Inc. and
Managing Director
Roark Capital Group

The biggest challenges and opportunities vary among the companies we work with. We are fortunate to partner with excellent managers running terrific, well-positioned brands, and as a result there are many more opportunities than challenges. We expect 2013 to be better than 2012, although it could be even better.  One consistent theme I hear is that the continued uncertainty, particularly around health care and the tax code, have caused many of the brand’s franchisees to pull back on their growth plans.

Michael Seid, CFE
Chief Concept Officer

Well-managed, franchising is resilient.  It is entrepreneurially driven, able to successfully evolve and meet economic cycles, regulatory challenges and competition. Many franchisors adapted since 2007 and are entering 2013 leaner and better able to effectively support growing franchise systems. Others focused instead on the economy, taxes and government failures, and their challenges will continue. MSA has worked with clients to adapt and focus on supporting their franchisees, revisiting their franchise offerings, redefining their franchisee profiles and creating opportunities. Along the way we helped develop a few new franchisors as well.  2012 was fine and I expect 2013 to be outstanding for MSA and for franchising overall.

Shelly Sun, CFE
Chief Executive Officer and Co-Founder
BrightStar Franchising, LLC

The biggest opportunity for BrightStar Care in 2013 is the increased emphasis within the health care system to improve outcomes and reduce costs. We’ve invested in clinical talent, developed evidence-based programs, and enhanced our field staff training to put our franchisees in the best place possible to establish strong partnerships with local health care organizations to reduce hospital readmissions by delivering high-quality, cost-effective, clinically based care in patients’ homes. The biggest challenge for our business in 2013 will be to adapt to the persistent economic uncertainty based on the impending fiscal cliff, as well as potential effects from certain health care and labor legislation.

Jeffrey Tews
Multi-Unit Franchisee
BrightStar Healthcare of Madison, Wis.
Franchisee Forum First Vice Chairman

The biggest challenge I face in 2013 is caused by the health care reform act implementation in 2014.  With 400 employees, 150 of which are full time, it is a challenge preparing for the financial impact on our business, our clients and our employees with the uncertainty and changes surrounding the act. An opportunity next year is also federal-government driven. Medicare rules changes prompting penalties to institutions for readmissions will open new markets for our in-home care specifically focused on newly discharged clients.

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