Operations Manual Section C Table of Contentsapi.ning.com/files/T3tXHH9qj1zmP65lB2QXvQ3Ap6WxVnlp41F91CC6QsomDo… · Selecting An Attorney It is important that you choose an attorney

Operations Manual

Section C

Table of Contents

CONFIDENTIAL Revised 5-17-07

Business Procedures

SELECTING PROFESSIONAL ADVISORS ........................................................ 1

FIGARO’S MARKS & TRADEMARKS ................................................................ 3

GUIDELINES FOR USING FIGARO’S MARKS AND TRADEMARKS .................... 4

YOUR STATUS AS AN INDEPENDENT CONTRACTOR ..................................... 5

PAYING TAXES .............................................................................................. 6

INSURANCE ................................................................................................. 11

INSURANCE (REQUIRED COVERAGES) ........................................................ 12

FIGARO’S PURCHASING SPECIFICATIONS ................................................... 18

HEALTH DEPARTMENT REGULATIONS ........................................................ 19

UTILITIES AND SERVICES ............................................................................ 20

BANKING RELATIONS .................................................................................. 21

Operations Manual

Section C

Table of Contents


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SELECTING PROFESSIONAL ADVISORS

From time to time you may require the services of an outside professional. Certainly,

you will need the services of an accounting service for the preparation of your year-end

financial statements. You may already have an established relationship with an attorney. If

not, the guidelines provided below may help you make selections of appropriate

professional consultants.

Selecting An Accountant

In addition to year-end audited financial and tax return preparation, many small

businesses use an outside accounting service throughout the year for a general check on

their accounting practices. The extent to which you use professional accounting services

will depend upon the complexity of your operations and the skill and experience of your own

in-house bookkeeping staff.

Certified Public Accountants (CPA) are licensed and rigorously tested to ensure their

basic abilities. Nevertheless, you should talk to an accountant before you decide to engage

their services. If an accountant is vague or speaks only in the jargon of IRS code sections,

search for someone else who can understandably answer your questions. There is no way

to evaluate an accountant from a listing in the Yellow Pages. It is better to obtain a referral

from someone whose judgment you trust. An accountant should be familiar with the size

and type of your business. The fact that his clients may include large corporations is of no

benefit to you.

An accountant must be asked relevant questions to provide you with the best

service. The following are questions that deserve consideration:

1. Have you overlooked any tax advantages?

2. What funding will you need over the next year?

3. Is a pension plan appropriate? If so, which one?

4. Are you keeping all necessary records and are all required federal and local reports

being made?

5. Do your present systems meet growth needs?

Section H, “Record Keeping,” of this manual offers information on basic accounting

practices. However, if you are unsure about your present situation or your growth needs,

professional help can be well worth the money.

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Selecting An Attorney

It is important that you choose an attorney who is best able to meet your needs.

You will be better prepared to make the right choice if you do some advance homework and

make your selection before legal services are actually required. The following are

guidelines that should be used in making this selection.

1. There is no way to evaluate an attorney from a listing in the Yellow Pages. It is better to

get a referral from someone who is in a business similar to your own and is familiar with

the attorney’s work.

2. For additional references, you may wish to contact your local bar association. Give them

information regarding the size and nature of your business to help them make the right

kind of referral.

3. Try to meet at least three prospects before making your decision.

4. Listen carefully to what each prospect has to say and make evaluations based on the

following:

a. Is this attorney able to deal directly with your concerns?

b. Does the attorney speak in a language you can readily understand or are you

being confused with legal jargon?

c. Do you feel a sense of rapport? (Is this someone you feel you can trust to

handle your legal matters to your best possible advantage?)

d. Is this attorney familiar with the legal problems normally encountered in your type

and size of business?

In addition to professional advisors, one of the best resources can be the state

and/or local Restaurant Association. These organizations can provide you with valuable

information regarding health codes, laws, business licensing, and permits that you may

acquire. Many of these organizations provide many member services that you will require

for your business.

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FIGARO’S MARKS & TRADEMARKS

Figaro’s trade names and trademarks (“marks”) distinguish Figaro’s stores and products

from those of all other businesses. Figaro’s marks are, therefore, very valuable because

they help the public recognize each store as a source of high quality food and service. The

following is a list of trademarks and approved logos that belong to Figaro’s:

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GUIDELINES FOR USING FIGARO’S MARKS AND TRADEMARKS

To preserve and enhance the value of Figaro’s marks, all franchised stores must

strictly adhere to the following guidelines.

1. Each Figaro’s store shall be identified by at least one sign that conforms to

Figaro’s sign program. A Figaro’s approved sign incorporates the marks

mentioned above or as otherwise determined by Figaro’s.

2. All menus and baking instructions shall display the marks exactly as they appear

on the copy or format provided by Figaro’s.

3. Each store may use the marks exactly as they appear in the advertising and

promotional materials and programs prepared and provided by Figaro’s.

4. Subject to Figaro’s Italian Pizza, Inc.’s prior approval, the marks may be used on

the store’s business checks, cards, stationery, interior decor, and promotional

items such as clothing, pens, mugs, belt buckles, etc. Samples of artists’

drawings shall be submitted to Figaro’s Italian Pizza, Inc. for review.

5. Whenever the marks are used, whether in typeset or script, the symbol ® must

be used.

6. The franchisee will promptly discontinue any use of the marks which Figaro’s

determines to be improper.

7. None of the marks or the word “Figaro’s” may be used in a corporate or other

business name (see “Your Status as an Independent Contractor” in this section).

8. Notify Figaro’s Italian Pizza, Inc. immediately if you observe any other business

using Figaro’s marks or similar words or symbols.

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YOUR STATUS AS AN INDEPENDENT CONTRACTOR

Your Legal Business Name

Under the terms of your franchise agreement, you are prohibited from using the

trademarks of the franchisor as part of your legal business name (refer to the section

entitled, “Independent Contractor”). You should only use this name when you refer to: (1)

the products, (2) the franchisor, or (3) the Figaro’s business opportunity:

Business name examples:

Acceptable Not Acceptable

Robert Smith, Inc. Figaro’s, Inc.

D/b/a Figaro’s Figaro’s Corporation

Figaro’s of Oregon, Inc.

Checks, Stationery, And Business Forms

Figaro’s Italian Pizza, Inc. has designed a distinctive logo for you to use on your

checks, letterhead, envelopes, and business cards so as to establish immediate recognition

of your status as a Figaro’s franchise owner. However, your personal identification must

always be included when you use the Figaro’s name and logo. For example, your business

card may read:

“Figaro’s,

“Independently owned and operated by Robert Smith, Inc.”

or

“Figaro’s,

Robert Smith, Inc., owner”

Whatever printed materials you develop must be reviewed and approved in writing

by Figaro’s Italian Pizza, Inc. before they are put into use.

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PAYING TAXES

All employers and employees are subject to taxation by the government. Businesses

and individuals alike must pay both federal and state taxes based on the amount of income

they report at the end of the year. However, businesses are required to file reports and pay

taxes throughout the year as well. It is necessary to figure and report self-employment

taxes, employment taxes (including federal income tax, social security taxes) and federal

employment (FUTA) taxes and state unemployment taxes (SUTA). In some cases, excise

taxes may also apply.

As a result of these complex requirements, a business needs to devote a large part

of its internal efforts to record keeping and tax reporting. Because you are subject to

penalties incurred for late payment of taxes, it is in your best interest to keep accurate tax

records and submit your payments on time.

3. Annual withholding tax summary (W-3 form) due to the Social Security Administration by

the last day of February. This W-3 form reconciles individual employee withholding

taxes (W-2 form) with the quarterly returns (Form 941).

In the pages that follow, you will find an overview of the various Federal, State and

City (local) tax requirements that apply to small businesses. Be aware that other taxes not

mentioned in this section may also be applicable.

We suggest that you consult your accountant regarding tax matters. It is essential

that your tax collecting methods be correctly set up and that appropriate taxes be submitted

accurately and on time. Unless you are prepared to spend countless days in research or

you are already a tax scholar, professional advice is recommended in gathering the

information appropriate to your tax needs.

Conclusion

When it comes to business taxes, there is no substitute for knowledge. Many

headaches and worries can be avoided by getting accurate answers to your questions as

they occur. When in doubt, ask your accountant, state department of revenue, the IRS, the

local chamber of commerce or the small business association in your state.

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FEDERAL TAXES

Employer Identification Number (EIN)

You must have a taxpayer identification number so that the Internal Revenue Service

can process your return. There are two kinds of taxpayer identification numbers – a social

security number and an employer identification number.

If you are a sole proprietor, you need an employer identification number (EIN) only if

you are required to file an excise or employment tax return. Otherwise, use your social

security number. You are a sole proprietor if you are self-employed (work for yourself) and

are the only owner of your unincorporated business.

1. To receive an employer identification number, you must file Form SS-4, Application for

Employer Identification Number, with the Internal Revenue Service Center in your area.

You can get Form SS-4 at Internal Revenue Service or Social Security Administration

offices.

2. You should file Form SS-4 early enough so that you will have a number by the time you

need to file a return or statement or to make a tax deposit. It takes about four weeks for

Form SS-4 to be processed.

The type of business you operate determines what taxes you must pay and how you

pay them. There are five general kinds of business taxes:

1. Income tax,

2. Withholding and estimated tax,

3. Self-employment tax,

4. Employment taxes, and

5. Excise taxes.

Income Tax

Every business must file an annual income tax return. Which form you should use,

depends on how your business is organized.

Federal income and self-employment taxes are pay-as-you-go taxes. Generally, you

will pay the tax during the year as you earn your income. Sole proprietors, partner, or

shareholders of an “S” corporation pay as they go by making regular payments of estimated

tax during the year.

Corporations pay as they go by making periodic deposits of their estimated income

tax as described earlier.

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Self-Employment Tax

Self-employment tax is the social security tax for individuals who work for themselves

such as sole proprietors and members of a partnership.

Employment Tax

If you have employees, you will probably be required to pay employment taxes.

These taxes include the following:

1. Federal Income Tax (FICA):

You withhold the federal income tax from your employee’s wages. However, social

security tax (the FICA, or Federal Insurance Contributions Act), you withhold part from

your employee’s wages and you pay a matching amount yourself. Social security taxes

and any withheld income taxes are reported and paid together.

2. Social Security Tax:

The amount of income tax to withhold from each employee’s paycheck is calculated

using the employee’s gross pay for that pay period and the number of exemptions

claimed by the employee (from W-4 form). The amounts to withhold for social security,

federal and state unemployment taxes are based on a percentage of the gross pay. Your

state Department of Revenue can provide you with similar information relative to state

taxes.

3. Federal Unemployment Tax (FUTA):

The Federal Unemployment Tax system (FUTA) provides for unemployment

compensation or laid-off workers. Federal unemployment tax is reported and paid

separately from social security taxes and other withheld income tax.

Other taxes you may have to pay:

1. Excise Tax

If you are in the business of manufacturing or selling certain products, you may have to

pay excise taxes. There are also excise taxes on certain kinds of businesses and

transactions, and on the use of various kinds of equipment, facilities, and products.

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STATE TAXES

State Income Tax

If you are operating as a sole proprietor or as a partner, you will not receive a salary

as your employees do. There will not be income tax withheld from the money you take out

of your business. To meet your tax obligations, you must estimate your tax liability and file

your income taxes at year-end. Your state’s revenue department will supply you with a tax

guide for small businesses and the applicable forms. Your tax return is filed at year-end as

an individual return and your liability is computed from profits earned by the business in that

year.

State Payroll Taxes – Unemployment Compensation (SUTA)

Most states levy payroll taxes. If you have full-time employees, you must pay your

state’s unemployment compensation. In addition, most states require an unemployment tax

to be paid by the employer. This tax is a percentage of the employer’s payroll and is

generally paid annually. State requirements and tax-collecting systems vary. You should

call your state’s department of revenue for more information on applying for an employer

number as well as receiving any appropriate forms.

Sales Tax

Most states have a tax on retail sales (sales to the end user). This tax varies

depending upon the state. If you will be making any retail sales or collecting tax on a sale,

you must obtain a seller’s permit. You will also be assigned a tax number. Your seller’s

permit and tax number should be kept handy at all times. If you are required to collect tax

on some items and not others, you will need to set up a system of record keeping that

reflects those requirements. In many areas you are not required to collect taxes on sales to

certain non-profit institutions such as schools and churches. These institutions should be

able to provide you with their tax-exempt number. Businesses are usually required to remit

sales tax deposits on a quarterly basis.

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CITY TAXES

Sales Tax

Some cities have a sales tax; however, most sales tax is set by the state.

(Information concerning state sales tax can be found in the previous section, “State Taxes.”)

Personal Property Tax

Some cities or counties levy an annual tax based on the value of your inventory and

equipment. If so, they will send you the form to be filled out and returned.

City Business Tax

Some cities, villages, and towns levy a city business tax. The rate of taxation can be

obtained by calling your city hall.

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INSURANCE

Your franchise agreement indicates that you must indemnify both yourself and the

franchisor against loss. The purpose of this section is to inform you of the types of coverage

that are available, which are required and which are recommended. Within three months

after you have signed the franchise agreement and prior to your store opening, you must

forward a copy of the certificate of insurance to the corporate office. If you ever wish to

cancel or alter your policy, you must give the corporate office twenty days prior written

notice.

Your franchise agreement requires that you purchase the following essential

coverage’s:

1. All risks coverage insurance on the unit and all fixtures, equipment supplies, etc.,

used in the operation of the unit.

2. Worker’s compensation and employer’s liability insurance as well as any other

such insurance required by the state in which the franchise is located.

3. Comprehensive general liability insurance and products liability insurance with

limits of one million dollars ($1,000,000.00) combined single limit including the

following coverage’s:

a. Broad form contractual liability

b. Personal injury

c. Products/completed operations

d. Fire legal

4. Business interruption insurance.

5. Automobile liability insurance, including owned, hired and non-owned vehicle

coverage, with a combined single limit of five hundred thousand dollars

($500,000.00).

6. Any additional insurance and types of coverage as may be required by the terms

of your lease or by the franchisor.

We feel that the coverage’s listed above represents the absolute minimum insurance

necessary for a Figaro’s business.

On the following pages you’ll find a more detailed discussion on “Required

Coverage” and “Desirable Coverage” insurance. We recommend that you discuss all

insurance needs with a qualified insurance agent or broker.

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INSURANCE (REQUIRED COVERAGES)

All-Risks Coverage Insurance

An all-risk policy provides protection for property against all risks or perils except

those specifically excluded.

1. The advantage of this policy is that unusual losses and those that could not be

reasonably anticipated are covered.

2. Most exclusions are similar to those discussed below in connection with broad form

endorsement: earthquake, landslide, flood, freezing under certain conditions, vandalism

during long-term vacancy and some limitations on trees, plants and other outside

properties.

3. Since this insurance is intended to cover accidental and sudden losses rather than the

gradual accumulation of losses that might normally be expected, one exclusion

particularly needed is the exclusion for wear-and-tear losses. Such exclusions are:

deterioration, rust, mold, smog or industrial smoke, damage by birds, vermin or domestic

animals, and settling – cracking, bulging, or expansion – of such properties as

pavements, patios or structural parts of the building.

Your insurance agent will be able to provide you with more information on all-risks

coverage and will develop a policy that can meet the needs of your business.

Worker’s Compensation

The theory behind worker’s compensation legislation completely disregards the old

idea of liability based upon negligence. Rather, it is based on the principle that industrial

injuries are one of the costs of an industrial society and therefore should be paid for by the

society. Regardless of liability, the cost of occupational injuries and many diseases is to be

charged directly to the employer and then passed on to the consumer as part of the cost of

production.

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1. State law determines the level or type of benefits payable under worker’s compensation

policies. However, the principle benefit sections are as follows:

a. Loss of income – This requires the partial payment of wages that are lost due to

an occupational injury or disease. Death benefits are also provided.

b. Medical expenses – Most laws require that all expenses incurred for treatment of

injury or occupational disease be paid by the employer.

c. Rehabilitation – This normally is considered a part of medical treatment and,

therefore, the full responsibility of the employer.

d. Occupational disease – Most state laws include benefits for occupational disease

just as they do for accidents.

2. Not all employees are covered by worker’s compensation laws. The exceptions are

determined by state law and, therefore, vary from state to state.

3. In nearly all states, you are now legally required to cover your workers under worker’s

compensation.

4. Worker’s compensation premiums are based on rates that apply per $100 of payroll.

There are over 600 classifications. The rate for each classification reflects the loss

experience for that particular type of work.

5. Employers in most states can reduce their worker’s compensation premium cost by

reducing their accident rates below the average by implementing safety and loss

prevention measures.

Employer’s Liability

Because worker’s compensation laws are very broad, employer’s liability claims are

uncommon. However, employer’s liability affords you the satisfaction of knowing that liability

claims for injuries not covered by the compensation laws, even though groundless, will be

defended by your insurance company.

Employees may bring suits against employers for occupational diseases not

compensable. However, the employee must be able to show that contraction or aggravation

of the disease was caused by the negligence of the employer.

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Comprehensive General Liability Insurance.

Comprehensive general liability policies insure against claims resulting from the ownership

(or leasing) and operation of a business premises.

1. Legal liability limits of one million dollars ($1,000,000.00) are no longer considered high

or unreasonable even for a small business. Business size is not a factor in determining

coverage. Serious accidents can occur in small places!

2. Most liability policies require you to notify the insurer immediately after an incident

occurs on your property that might result in a future claim. This holds true no matter how

unimportant the accident may seem at the time it happens.

3. Under certain conditions, your business may be subject to damage claims even from

trespassers.

4. You may be legally liable for damages even in cases where you used “reasonable care.”

5. Even if the suit against you is false or fraudulent, the liability insurer pays court costs,

legal fees, and interest on judgments in addition to the liability judgments themselves.

6. You can be liable for the acts of others under your employ. This liability is insurable.

7. In some cases you may be held liable for fire loss to property of others in your care. Yet,

this property would normally not be covered by fire insurance, legal liability insurance or

through requesting subrogation waivers from the insurer of the owners of the property.

(See Fire Legal Insurance in the additional coverage’s, which follow.)

Contractual Liability Insurance

This coverage arises from contracts that require one party to assume another party’s

legal liability. A lease agreement for your business’ space may contain a clause under

which you agree to be responsible for some of the legal liability of the owner of the building

relative to people who are injured on the premises.

Personal Injury

Most liability policies, in addition to bodily injuries, may now cover personal injuries

(libel, slander, and so on) if these are specifically insured.

C/15


Products Liability

This covers liability from products or goods sold, manufactured, or handled away

from your business after you have relinquished possession of the products to others.

1. Products liability claims can be based on any of three legal grounds:

a. Negligence – The plaintiff must prove his/her injuries were directly caused by the

negligence of the seller. It is often difficult to prove the seller failed to use

reasonable care in designing, making or handling the product, or failed to warn

the user of potential hazards. Therefore, claims are usually based on one of the

following two grounds:

b. Breach of Warranty – A warranty is a statement or promise made by the seller

concerning the product being sold; it may be stated (i.e., expressed) or only

implied. Claims are frequently based on the breaking of an implied warranty.

c. Strict Liability – the plaintiff has only to show that:

(1) The injury was caused by a defect in the product.

(2) The defect existed when the product left the hands of the manufacturer.

2. Four out of five product liability claims are settled with payments of under $1,000;

however, an increasing number of cases are receiving large settlements. Jury awards of

one million dollars or more are often based upon computations of expected lifetime lost

earnings and/or medical expenses necessary to sustain the plaintiff for life.

Fire Legal Insurance

This insurance indemnifies you against claims as a result of fires or explosion

occurring on your premises and damaging the property of others. General liability contracts

exclude property in “care, custody, and control” which fire legal liability covers.

Business Interruption Insurance

1. You can purchase insurance to cover fixed expenses which would continue if a fire shut

down your business – such as salaries to key employees, taxes, interest, depreciation

and utilities – as well as the profits you would lose.

2. Under the properly written contingent business interruption insurance, you can also

collect if fire or other peril closes down the business of a supplier or customer and this

interrupts your business.

3. The business interruption policy provides payments for amounts you spend to hasten the

reopening of your business after a fire or other peril.

4. You can get coverage for the extra expenses you suffer if an insured peril, which, while

not actually closing down your business, seriously disrupts it.

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5. When the policy is properly endorsed, you can get business interruption insurance to

indemnify you if your operations are suspended because of failure or interruption of the

supply of power, light, heat, gas or water furnished by a public utility company.

Automobile Liability Insurance

1. You can often get deductibles of almost any amount – say $250 or $500 – and thereby

reduce your premiums.

2. Automobile medical payments insurance pays for medical claims, including your own,

arising from automobile accidents regardless of the question of negligence.

3. In most states, you must carry liability insurance or be prepared to provide other proof

(surety bond) of financial responsibility when you are involved in an accident.

4. You can purchase uninsured motorist protection to cover your own bodily injury claims

from someone who has no insurance.

5. Personal property stored in an automobile and not attached to it (for example,

merchandise being delivered) is not covered under an automobile policy.

6. When a staff member or subcontractor uses his own car on your behalf or if you hire or

rent a car for business use, you can be legally liable even if you don’t own the car or

truck. (See the following two sections for more information.)

Hired Auto Insurance

Hired auto insurance covers you against liability arising out of the use of a non-

owned auto, which you have hired or leased for business purposes.

1. This insurance does NOT protect the owner of the hired auto or any lessee of the

auto. They must provide their own auto liability insurance.

2. Hired auto liability coverage may not be written when the auto is owned by:

a. Your spouse

b. An executive officer or partner of your business. (In the above cases, an

endorsement will need to be added to the car owner’s original policy to

cover this added provision.)

c. An employee or agent who is granted an allowance for the use of his auto.

(See Non-Owned Auto Insurance.)

3. This policy is intended to cover short-term leases. If you intend to enter into a

long-term lease, using and maintaining the autos as if you owned them, the

vehicles should then be covered in the same manner as owned autos.

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Non-Owned Auto Insurance

Non-owned auto insurance protects you against legal liability arising out of the use of

autos you do not own or have not leased or hired while they are being used by others in the

course of your business.

1. This insurance covers any legal liability for the negligence of employees using

their own autos in your business.

2. The owner of the auto must protect himself with his own auto liability insurance.

C/18


FIGARO’S PURCHASING SPECIFICATIONS

Figaro’s purchasing specifications for food, beverages, small wares, and supplies are

located in section F of this manual. The specification sheets are organized by distributor

and provide information on brands, packaging units (e.g., 25# case or #10 can), order

number and proper inventory level. You will be assisted as you place your initial orders for

inventory. Contact your Franchise Operations Consultant if you require additional

information.

Purchasing the food and beverage products for your operation is an important aspect of

product preparation. In order to consistently produce the top-quality products that are key to

your success, you need to follow the product specifications exactly.

Produce

You will need to work closely with your local produce supplier to ensure that you receive

only top-quality fresh product. Unripe or over-ripe tomatoes, soft green peppers, onions or

mushrooms are simply not acceptable. To achieve the taste and visual requirements of a

Figaro’s pizza, you need to use the best quality produce.

Prepared Foods

The particular brands and types of products are chosen for several reasons: 1) they

produce the correct taste and texture; 2) the size of the products allows the correct

coverage; and 3) the preparation of the product produces the desired taste and appearance

(e.g., pre-cooked beef and sausage contain less fat and therefore produce less grease

when the pizza is cooked, etc.) There is a considerable difference between a California

olive and a Spanish olive. If pineapple is not packed in the correct syrup, it will not have the

proper taste we desire. Again, follow the product specifications. If you have any questions

about any of these specifications, call the Figaro’s Italian Pizza, Inc. corporate office.

C/19


HEALTH DEPARTMENT REGULATIONS

Food establishment operations are governed by federal, state, and local health codes.

These regulations deal with the care, storage and preparation of foods, housekeeping

requirements and employee food handling and sanitation procedures – all of which will be

covered elsewhere in this manual. In some locales, the Department of Agriculture is the

controlling agency.

It is extremely important that you contact your local health department as soon as you

have signed your lease. Be sure you understand all the regulations and permits required.

Request the information in writing so you can refer to it later. Be sure any remodeling you

are having done is in compliance with all regulations. And finally, apply for all permits as

soon as possible. Any problem with the health department could delay the opening of

your store.

Food Handlers Certification

Some states require that someone employed and working on the premises be a

certified food handler. In most cases, this involves the successful completion of the

coursework and examination for a food handler’s certificate. Since regulations regarding

this vary from area to area, it is necessary that you contact the health department of your

area and/or the Food and Drug Administration to see if this rule applies for your location. It

is also essential that you familiarize yourself and your employees with your local codes and

make certain you are in compliance with these regulations at all times. For example, some

communities require all employees to secure a permit from the health department. But,

even if the food handler’s regulation does not apply at your location, we nevertheless

recommend that a manager or one of your key personnel enroll in and complete this course

where one is available.

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UTILITIES AND SERVICES

If the terms of your lease do not provide for supplied utilities and services, contact the

supplier of these needed services well in advance of your proposed opening date. Be sure

to ask:

1. Is a deposit required? How much is it?

2. What advance notice is required for installation?

Utilities

You will require the following utilities:

− Electricity

− Water and sewer

− Natural gas

Regular Services

Services which will be required on a regular basis:

1. Telephone – we recommend at least two lines and three instruments

2. Trash collection

3. Window cleaning (optional)

4. Linen service (optional)

5. Payroll service (optional)

6. HVAC and refrigeration maintenance

7. Pest control

Occasional Services:

1. Glass repair

2. Sign maintenance

3. Equipment repair

4. Floor/carpet care

5. Fire systems check

C/21


BANKING RELATIONS

It is most important to develop a good working relationship with a bank in your area.

When you make your selection be sure to go personally to the bank and get to know its

officers. Speak with them directly and honestly, telling them who you are and what you do.

Accounts to Open

Open a checking account under your business’ name. We recommend opening an

account for which you are charged a flat monthly fee. You and the designated bookkeeper

for your store should act as signatories on the checks. Be sure your checks are clearly

imprinted with your business’ name and address. A Figaro’s business is simple enough that

you can draft payroll checks from this account. There is no need to open a separate

account for payroll checks.

Differences Among Banks

To the outsider looking in, most banks look alike. They offer similar services, pay close

to the same interest on deposits, and charge about the same on comparable loans.

However, there are differences among banks. Some of the more obvious differences are in

asset size (reflecting perceived status in the community), net worth (relative stability) region

served, number of specialized departments and general prestige. There are other

differences which may have a significant impact on your new business. They include:

1. Source of Income: If you are dealing with a bank that depends mainly on mortgage

lending for income, your loan requirements may not get much priority.

2. Capacity for working with small businesses: Banks vary widely in this regard. Some

regard a small business as just one more bad risk; others see it as an opportunity.

Some banks have small business loan departments; others don’t.

3. Reputation for staying in when the going gets rough: You can get some interesting

insights into banking behavior by talking to entrepreneurs who have had experience with

a particular bank. Did the bank call in a demand note with an established customer

when the going got rough or did they make an effort to work things out?

4. General creativity of approach: Does the bank just look at your balance sheet and

dismiss you out of hand, or more reasonably try to suggest constructive financial

alternatives? Some bankers are more adept at this than others. In some cases, this

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creativity is fostered not only by the bank, but also by a particular banker or loan officer.

Again, this information may come from references made by other entrepreneurs.

Selecting a Bank

Bank selection is a very important step for the franchisee. You should invest in a good

relationship from the very beginning. If your choice is a poor one and you decide to switch

after a few years, your efforts toward credibility go down the drain. Select the right bank

early and begin grooming your relationship with its officers for the day you really need it. If

you fail to do this, it will be too late to start shopping around when you face a cash crunch.

The following are some guidelines for bank selection:

1. Develop a list of criteria; then refine them into questions you will ask the various bank

officers you interview.

2. Ask other entrepreneurs to describe their experiences with their banks. After you’ve

talked with a few people, a general pattern will emerge. Be sure to find out who their

lending officer is at each bank.

3. Ask your accountant, lawyer, or friends for recommendations on banks and bankers.

4. Talk to a few different banks, even if you already think you know where you want to

bank.

5. When you interview the banking officer, be sure to ask for some small business

customer references.

Grooming the Relationship

You will maximize your chances for long-term cooperation if your banking relationship is

active rather than passive. Some of the steps you can take to ensure a good banking

relationship include the following:

1. Keep your banker informed.

This applies whether or not you have a loan outstanding. Place him on your public

relations mailing list, your recruit newsletter, etc. Be sure he gets a set of yearly

financial statements.

2. See your banker in person.

Bankers are big believers in “pressing the flesh.” Once a month is probably too often,

but once per quarter, invite him to your facility to review your operating results and

projections. Have lunch and establish some human contact.

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3. Start borrowing.

Even if you have adequate working capital, establish a good record for your business

borrowing and timely repayment. If you don’t have adequate working capital, then you

probably need a bank loan – and this will be a good time to start learning how to use

bank credit constructively.

4. Meet your targets.

If you acquire a reputation for sloppy cash management, over-optimistic growth

projections, poor operational planning or feeble follow-through on your plans, your

banker will turn lukewarm on your account. A few minor targets met on time, within

budget, and early in the game, will go a long way toward building confidence and

credibility in the banking relationship. You can be sure your banker will be looking to

see if and when you hit your targets.

Documents

Operations Manual Section C Table of Contentsapi.ning.com/files/T3tXHH9qj1zmP65lB2QXvQ3Ap6WxVnlp41F91CC6QsomDo… · Selecting An Attorney It is important that you choose an attorney