Franchisee Best Practices Best practices are those practices most important in the pursuit of excellence and those most financially rewarding with respect to owning and operating successful FASTFRAME franchises. This document is designed to be dynamic rather than static. As such, we encourage and welcome the sharing of Best Practices from our network of dedicated and knowledgeable franchisees to make our system stronger and our stores more successful and profitable. As a business format, FASTFRAME offers an abundance of competitive factors to exploit as business owners and, thus, many opportunities to excel. Traditional retailing has very few competitive factors to exploit (location, exclusivity, and price being the dominant ones). Competitive factors associated with FASTFRAME store operations include these plus retailing, design, consulting, light- manufacturing, inventory management, effective pricing strategies, creative problem solving, and even some engineering. Competition is much less a concern if you can beat your opponents in most or all available competitive factors. The more competitive factors available to you, the more opportunities you have to excel in your marketplace. How do we apply competitive factors? In other words, how do we differentiate ourselves from our competitors? Generally speaking, we can: 1. Turn a competitive factor into a competitive disadvantage, a negative differentiator, i.e. disappoint and lose the customer to a competitor. 2. Accept competitive neutrality with no differentiation. We all see too many businesses that are competitively neutral and non-differentiated due to lack of awareness and/or lack of action. Many differentiate solely on price and/or location value (being in the right place at the right time). 3. Turn a competitive factor into a competitive advantage, a positive differentiator for the business, i.e. a focus on outperforming the competition. At the implementation level, this is achieved through operational excellence, commonly described as Best Practices. By developing Best Practices and sharing them with others in our franchise network we strengthen both our system and our individual store operations. What are these Best Practices and how do we, as FASTFRAME owners, exploit them? Best Practices can be broken down into Inclusive Best Practices (which come with the franchise) and Conditional Best Practices (in large measure these are up to the franchisees themselves to exploit). INCLUSIVE BEST PRACTICES FOR FASTFRAME FRANCHISEES: 1. BRAND: The “FASTFRAME Expert Picture Framing” brand conveys speed, expertise and quality. Further, our Guarantee Program conveys confidence and reliability. Demonstrate and communicate these characteristics at every opportunity. Convey to clients that we’re focused and efficient, not “quick and dirty.” 2. LOCATION: Location very much matters as customers want convenience. Especially since it generally requires two visits by the customer for every store transaction—once for placing the order and another for picking up the finished product. Visibility is a major source of new customers for us as franchisees. If allowed by your city and/or center, obtain a small, tasteful, and portable form of signage or display which can be placed outside to draw attention to your store. Change up your displays regularly with artificial flowers or plants, balloons, or a large visible bow…something tastefully unusual and eye-catching. Consider leasing a slot on your center’s marquee, if available. 3. OWNER/OPERATOR PRESENCE: We’re in a relationship business. Relationships form on first customer contact (by phone, coming into the store, or at networking events). Make it count! Let customers know when they are working with the owner and that you personally will be involved in giving them a great experience and quality product. Show that you’re proud of what you do. 4. HIGH MARGIN SALES: High margins give operators latitude to compete on price, and, more importantly, offers tremendous profit potential when operating above break-even. As an example, at 14-15% Cost of Goods Sold (COGS) plus 10.5% in Royalty and Marketing fees implies that about 75 cents of every dollar above Break Even (the point at which Fixed Costs are covered by sales) goes to the owner. Extrapolating, that’s $75 of every $100 in sales. On the contrary, discounting removes $75 from the owner’s pocket for every $100 in awarded discounts. Keep this in mind when tempted to discount. 5. MARKETING: We have professional-looking online and print marketing materials available to us as franchisees. Augment FASTFRAME USA’s efforts with local programs and initiatives of at least 2% of sales for a 5% minimum total marketing investment. Smart marketing is not the place to cut back on costs as it can be a downward spiral. Spend your marketing funds carefully and wisely. Your local marketing dollar has the potential of yielding more long-term profitability by spending to attract new clients rather than just re- marketing to existing clients. Your loyal existing clients already know you and your creativity and will come back to you often. They shouldn’t need re- enticing with “fat coupons”, so use your local marketing budget and incentives to primarily mine for new clients rather than having a primary or exclusive marketing emphasis on existing clients. Maintain your local website and social media presence with up-to-date local content. Highlight your capabilities and share your interesting projects with your followers. Promotion can be less costly than marketing and can achieve effective or superior results; however, it may require more time and effort on the part of the owner or responsible employee. 6. PRODUCTION AND WORK PROCESSES: Our value-added processing (converting materials into something greater than their original value) creates enhanced profit potential versus traditional retail key-stoning. Production materials should be pre-positioned for framer optimization. Special order materials should be clearly marked with client’s name, ticket number, and due date. As a general rule, tickets should be fully documented for the framer and should stand alone as sole documentation for framing production. Anticipate framer questions to minimize framer judgement calls and be specific in both the instructions and original condition of art. You can either make a sketch of multiple openings, image placements or jersey foldings or, even better, take a photo during the design process and attach the printed photo to the job ticket. Job stream your production with 3-7 simultaneous tickets to enhance productivity. So, rather than taking one ticket and working on it to completion tackle all the production day’s mounting, then all of the mat cutting, next all of the frames, and finally all of the glass cutting and cleaning, ending up with all of the fittings. 7. TECHNOLOGY AND EQUIPMENT SELECTION: Our franchise provides experiential guidance to avoid over and/or under investment in equipment and technology selection such as saws, under pinners, worktables, and point of sale and visualization technology. Use of our version of LifeSaver technology helps in minimizing price objections, gives us a readable standardized format, as well as access to a multitude of reports for successfully managing inventory, costs, average ticket, and usage, just to name a few. If you need to purchase new equipment consult first with FASTFRAME USA Support Staff to be sure you’re making the best purchase for your needs. 8. MULTI-STORE PRESENCE: The fact that we are part of a network of franchisees both nationally and internationally validates us. Further, the ability to open satellites or full line stores in our exclusive territory elevates our presence and stature as business owners in our local area to leverage purchasing and gain economies of scale. If there are multiple stores in your area, it’s rewarding to socialize at least annually so the staff and owners get to know each other while having a picnic. Consider having a local framing competition where each store frames the same chosen print. Share with your vendors what you’re doing and request that one of their representatives judge the framing competition. Also, ask the vendor to sponsor either the gathering or supply products necessary to frame the chosen piece. Award a trophy to the first, second, and third place designs. Take a photo of the framers and their store owners holding the trophies alongside their framing entry and put the image on social media, your cash wrap, and in your photo album. People enjoy being recognized for a job well done. Keep the trophy on your cash wrap and proudly show clients. 9. LIMITED STAFF: Because we generally are owner-operated, open sociable hours, and operate a single shift 6 days a week we have a much smaller need for employees. Confer with FASTFRAME USA Support Staff to be sure you’re not over or under staffed as both have undesirable consequences. 10. NON-PERISHABLE INVENTORY and STYLE/FASHION RESILIENCY: Our inventory doesn’t ripen or otherwise go bad so our investment in inventory is preserved. Many of our framing projects involve common/standardized materials so these are great materials to buy in larger quantities for a better price. Employ the Usage Reports provided in Lifesaver to figure out which materials are your best sellers and to determine which should be bought in larger quantities as well as which materials to phase out. 11. MATERIALS & CRAFTMANSHIP GUARANTEE: FASTFRAME USA is the industry leader with its Guarantee Program. Very few other custom crafted products offer a guarantee that the client will be delighted with their choices in the final product. Using the Guarantee Program removes a client’s fear/hesitancy and solidifies in their mind that you care about their project enough to re-do it, if necessary. Oftentimes the re-do results in an upgrade of materials for additional revenue and, if not, the net cost is at your COGS for all the re-work materials.