Posted in Closely Held Businesses and Business Start-Ups on November 21, 2013
What is astroturfing? Astroturfing (also referred to as "astrosurfing") is defined by Wikipedia as the practice of masking the sponsor of a message to give the appearance that it comes from an independent, disinterested source. In other words, a business owner would be astrosurfing by posting a positive review of his or her business (for example, a restaurant) while using an assumed name or posting anonymously.
According to Wikipedia, the late U.S. Senator Lloyd Bentsen is credited with first coining the term "astroturfing" in this context back in the 1980s in reference to the enormous number of letters he was receiving purportedly from constituents voicing support for various insurance industry interests, "a fellow from Texas can tell the difference between grass roots and AstroTurf...this is generated mail."
While very tempting given the power of social media in today's business world, business owners should avoid this practice at all costs. Most would hopefully agree that astrosurfing is dishonest and unethical at the least, and arguably illegal at worst. The practice distorts and disrupts the potential power of social media to fuel economic growth and could spell the end of your business--from a public relations perspective if not a legal one.
If you want to toot your own horn through social media, or pay someone else to do it for you, then go right ahead, but be honest and transparent in doing so. Trying to use the Internet as a tool to profit through deception may seem harmless, but I suspect will prove to be a regrettable choice sooner or later.
Posted in on November 20, 2013
A great crowd of local franchisors, franchisees, prospects, and other members of the central Virginia franchise community gathered at the Westwood Club for the Virginia Franchise Forum's quarterly meeting. Tonight's featured speaker was Kate Bartosik with FRANdata, who gave an excellent presentation on the current state of the franchise industry and what to look for in 2014 (and beyond). A few highlights of her talk include:
- Franchise systems showed modest, if unspectacular growth, in 2013, with food brands (e.g., quick service restaurants) showing the highest growth rates.
- Among non-food concepts, clothing franchises and child-related franchises boasting the most growth.
- In recent years, franchisors have tended to overestimate their projected development--by an average 20% or more per year since 2010 (hint to franchisors: either revisit your development goals or change your development and sales strategies).
- A new SBA small business lending program could be a promising option for prospective franchisees investing in lower cost franchise opportunities (under $350,000).
- The percentage of franchise systems, particularly mature/established systems that offer FDD ITem 19 financial performance representations (formerly known as earnings claims) has grown in recent years.
- Be wary of franchise-failure rates reported by SBA, for a variety of reasons, the actual failure rates are not nearly as bad.
- FRANdata continues to see a steady influx of new concepts being franchised.
- Franchisors should not focus too heavily on unit economics as much as: (i) thinking beyond the FDD, (ii) meeting the increasingly sophisticated information demands of prospects, and (iii) crafting a compelling development presentation related to performance and support offered by the system.
The Virginia Franchise Forum will return in 2014 for its seventh year providing networking and educational events for the local franchise community, so enjoy the holiday season and stay tuned for updates.