This month we are going to discuss a very relevant topic in the whole multi-retail arena: gift cards and gift certificates.  More and more franchise establishments are using gift cards, and they are becoming increasingly important for specialty shops and restaurants.

Trademarks, copyrighted works, trade secrets and proprietary business information form the core of any franchise system, and are frequently a company’s most valuable assets.  Trademarks, including service marks, logos, slogans and trade dress, define the brand identity as presented to the public.

Without exception, the success of any company, including a franchise company, is directly related to its leadership.  Conversely, the root cause of a failed enterprise is without question the product of the decisions (and non-decisions) of its leader.  Obviously then, determining when to replace the leader or the management team of a company will likely play a key role in determining the future of the enterprise.

This time of year a person’s thoughts turn to taxes, and the latest tax act is euphemistically called “The Small Business and Work Opportunity Tax Act of 2007.”  This new tax act does not have a lot of good news, but it does provide a few special benefits to the franchise owner.

As background to this article, I would like to reference the recently distributed Asian American Hotel Owners Association (“AAHOA”) publication that listed their 12 points for fair franchising.  (AAHOA is an influential hotel group.)

The selling price of franchise businesses has significantly increased.  Nearly every week someone asks us if it is time to sell.  Even though it may be an appropriate time to sell in terms of the market, it may not be the appropriate time to sell in terms of your business cycle or being prepared for selling.

Once a year this column attempts to provide the franchise business reader with tax savings and year-end planning ideas that are unique to the franchise world.  The ideas in this column are starting points to discuss with your tax advisor and possibly incorporate into your year-end planning.

For many years franchise financing has been effectively illustrated as a continuum.  On the far right of the continuum is the most conservative type of financing - senior debt.  Senior debt is dominated by banks and large commercial finance companies (e.g., GE, Bank of America, Wells Fargo and other groups).

Two key words in the franchise finance world for 2006 will be “multiples” and “activity.”  It is apparent, through recent and pending transactions, that the valuation Multiples (the cash flow from the target business times a multiple) are at historic high levels.

Last month’s column highlighted ways franchisees can be effectively compared, both to other franchisees within their franchise system or franchisees in general.  A comparison approach is very subjective but this industry lives on comparisons.  Even without this competitive approach, it is important to understand a franchise business in relation to other franchise businesses.