LAST WORD

Udo Schlentrich, director of the William Rosenberg International Center of Franchising at the University of New Hampshire, has become one of the industry's few experts. Michael McCord photo

What do you know about franchising? If you're like me, you know a lot and nothing much at all.

It's safe to say most Americans have eaten at franchise restaurant of some type (McDonald's, Olive Garden), slept at a franchise motel or hotel (Hilton, Super 8), made a pit stop at a franchise coffee shop (Starbucks, Dunkin' Donuts) or had an oil change at a franchise shop (Jiffy Lube).

Franchises are ubiquitous to the point of invisibility, which is why most of us have no clue about the economic impact of franchising, which generates more than $1 trillion (yes, trillion) annually, covers 75 industries (and growing), more than 785,000 businesses, and directly and indirectly employs around 20 million Americans. Raise your hand if you didn't have your first or second job in a franchise shop of some sort.

Udo Schlentrich, director of the William Rosenberg International Center of Franchising at the University of New Hampshire, told me that franchising is uniquely American phenomenon born of the country's entrepreneurial zest that is also becoming a global presence.

Even a brief conversation with the delightfully informative Schlentrich yields a wealth of interesting data. For example, in the next two years an estimated 500 new food franchises will be launched. Or did you know that while Krispy Kreme had difficulties breaking into the New England market (it had some serious competition with a regional heavyweight called Dunkin� Donuts), the doughnut company has grand designs for the Middle East and China?

And speaking of China, it has become the promised land for franchising -- not a surprise given the untapped potential market of discretionary spending gone wild amid an economic boom to beat them all.

"I've been in a McDonald's in Shanghai that has 600 seats," said Schlentrich, an Austrian native and trained European hotelier with an eye-opening resume. He's also a true franchising industry expert in a field with few experts.

The independent research center is the brainchild of William Rosenberg, the late founder of Dunkin' Donuts who, Schlentrich said, was not only a franchising genius but one who wanted to spread the fruits of his vision to the entire franchising universe. In fewer than five years the center has developed a reputation for becoming the clearinghouse for franchising financial and development information.

(Schlentrich himself could be the answer to an exotic franchising trivia question -- he's encountered the franchising industry's founding holy trinity of franchising. He met Rosenberg; served Howard Johnson -- yes, that Howard Johnson -- while working as a young crew member on a cruise ship, and hosted Ray Kroc, the man who transformed McDonald's into a global juggernaut, at a four-star hotel in London.)

Schlentrich and Rosenberg Center research guru E. Hachemi Aliouche normally get more calls from Wall Street analysts than reporters because the center's quarterly financial reports on the franchising industry's top 50 public companies are a must read in the investing field. The reason is because franchise corporations are hot, very hot. The Rosenberg Center Franchise 50 Index has a 80 percent rate of return higher than the S&P 500 Index -- and a majority of franchises deal mostly in discretionary income sales which make them attractive to investors.

Schlentrich has been on both sides of the franchising fence. He has been an international hotelier who got his start working for the family inn-keeping business and a manager who has opened independent and franchise hotels. He has been there (say, Australia) and done that (was hired to set up the original food operations at the World Trade Center in New York.)

At this stage of his career, he's become a convert to the gravitational power of franchising and has become a friendly adviser and ombudsman to prospective owners and investors.

"Franchising isn't for everyone but it can provide a faster economic avenue of achievement," he told me. Investment costs can be steep ($25,000 to $300,000 and higher) and the operating payback percentage can also be high but they buy a proven brand name, tested business plan, a turn-key operation and an assistance network often unavailable to an independent business.

As we all know too well, the flip side of the repetitive necessity of franchising is the homogenization of the commercial landscape and social experience. But Schlentrich appreciates both sides of the argument. As an example, he is interested in the growing numbers of older workers in franchise restaurants.

As with young people who are getting their first jobs -- and often their first taste of out-of-home or school discipline -- the elderly are looking for some extra income. But there's more, Schlentrich explained.

"They are also interested in the social environment, in getting out and being with younger people."

Early child education centers is one of the more interesting concepts that Schlentrich thinks will catch public attention in the near future. The reason, Schlentrich said, is simple -- supply and demand.

"Everybody wants a Baby Einstein."