I’ll take a Big Mac and the Crawfish Bisque

Twenty years ago when I went to Hong Kong for the first time, I was amazed out how cheap McDonald's was. I know, go all the way to the Far East and what are you doing eating that American crap! I am a very adventurous eater, I try anything. I love to eat strange foreign things. Breakfast however is a different story. Asian breakfast is just too bland. When it starts with a bowl of rice porridge, things can only go downhill from there.

I recently went to Hong Kong again and found myself transported back 20 years. McDonald's is still cheap there! The Economist magazine puts out a Big Mac Index every year showing the price of a Big Mac in 120 countries. (Check out the chart I posted, you will need to click it to enlarge the chart). The purpose is to show purchasing power parity and the over or undervaluation of foreign currencies against the dollar. For example you will pay over $7 US Dollars for a Big Mac in Scandinavia and only $1.41 in China. This shows the overvalued Kroner and the Chinese Yuan is undervalued to the US Dollar.

The second cheapest place to buy a Big Mac in the world was Hong Kong. The interesting piece of this fast food puzzle is the Hong Kong Dollar has been pegged to the USD since 1983. Hong Kong also has relatively high labor costs now and the rents so high you would get vertigo writing the check each month. Hong Kong, Tokyo, Manhattan and London are always neck and neck for the highest commercial rents in the world.

So what gives? When I can go to Causeway Bay and order two English muffins, sausage and scrambled eggs and orange juice for $2.50 US and get a bowl of crawfish bisque for an extra .80 cents, this is fast food heaven! I find the McDonald's Hong Kong prices 60% cheaper than Manhattan prices.

With a pegged currency the only explanation is the lack economic restraints. Could 60% of the costs be chalked up to regulatory and bureaucratic fat? According to the Heritage Foundation’s annual Index of Economic Freedom ranking, they put Hong Kong again at #1 for 2008 for economic freedom. http://www.heritage.org/Index/country.cfm?ID=HongKong

Hong Kong runs a tight ship. Last week they announced that they had an extra 5 Billion (In US Dollars) they needed to return to tax payers. This was not an American style rebate to help juice the economy by printing more money. It was an actual old fashion kind of surplus. The kind that you have when more money is left over after you pay all the expenses, you know those strange exotic types of surpluses. The tax payers will get a 75% rebate on their taxes paid and the checks will be sent out over an 11 month period. When asked why so long to get the rebates out, finance minster Tsang said, “we do not want to send out the checks immediately because we fear taxpayers will spend the money and worsen inflation”.

What a contrast to the politicians here in the America. They want people to spend it, and fear they might save it.

Can high tax rates, soaring budget and trade deficits and a choking regulatory environment explain why a Big Mac is 60% more expensive here than in Hong Kong? I think so, I would love to hear your take on it. Meanwhile “I’ll take the crawfish bisque and some fries to go please.”

Local franchisee solves big financing problems for small companies.

I had a chat with Brian Birnbaum, the CEO of Liquid Capital. They have been providing receivable financing for the past eight years and have a very interesting franchise model. Low start up costs for franchisee, global reach and I have never heard of anyone franchising in this space before.

The market for receivable financing is a 1 trillion dollar market worldwide. The client that needs the money is usually miles or continents apart from their vendors or suppliers that have their inventory or products. From a credit risk stand point how can they bridge the gap and still have a funding alternative if I am not a fortune 1,000 company?

You see, if you have size, global banks line up to give you a variety of solutions. The real opportunity is the inefficient market of the small business operator. They have slipped through the financing cracks of the major banks and wire house funding companies because they are too small and expensive to service.

Liquid Capital realized if they could get a local Franchisee that could operate without an office, process the risk centrally and provide receivable financing to the Franchisee to market locally, They could put together a bunch of small niche local needs into one giant global factoring company.

Liquid Capital intends to become the Starbucks of receivable financing and they are well on their way. Listen as Brian explains how the market works. What they do for the franchisees and what services the franchisee can provide their clients. Go to liquidcapitalcorp.com to learn more.

Play it now!

Hey buddy can you spare 168 Billion?

Did the last “tax rebate debate” go a little too fast for you? It went scary fast for me. Remember the good old days; you know the “2000 Bush tax rebates.” Ah, the fights, the deals, the arm twisting, it was like a six month battle before they decided to give 38 billion. Last time it was $300 and $600 but no kid credits. This round they threw in kids and some small business and franchise incentives and rounded it up to 168 Billion in less than a month! The rebates grew in size by 300% since the 2000 rebates! I am predicting the next slowdown they will probably announce 600-700 billion dollar rebates and they will approved them within a week.

In this case I wish it was just election year political prostitutes that allowed the give-a-way to happen so fast. I see a problem much greater than politics at work here. I am not against lower taxes, I am against rebates. It never fixes the problem, it makes it worse. Like some chronic spender that runs to the check cashing store and pays 1% a day because they need it now. They never took the time to stop and fix the problem permanently; it is easier to just put off the hard decisions for another day. The government just ran to the corner check cashing store and cut itself 168 big ones.

We are in the biggest bubble in the history of the world and they are trying to just move the paper economy from one bubble to the next. When they want you to “spend” the rebate and not “save” it, that is a huge clue how much hot air is in the system.

The reality, we are broke. The United States is broke. Well “we still have more ink in the printer” broke. A 3.1 trillion dollar budget for 2008, who are we kidding? That is 10k per man, woman and child! So my friends in Washington have budgeted $60,000 for my family of six this year as my proportional share of this year’s federal budget. I don’t want to sound ungrateful but “what do I get for my 60k and do I need to pay it this year?”

You see giving rebates are much easier pills to swallow politically than having the guts to bite the bullet and take out a machete to the entire system. We can at least get really good at giving great rebates! You know “vote for us, we know how you love rebates and we bring em to ya big and fast, like In-N-Out Burger without all the mess!”

If you ever want a real eye opener, Jump on a plane and go to Dubai. You will find a country that provides a better standard of living for all it's citizens than the United States does! Here is the real trick. No income taxes! The place is absolutely fantastic and just shows you that a good, intelligent, honest King, beats a democracy hands down. Democracies are great at smoothing out the Lyndon Johnson types and moving on, no big deal. Unless a good King is willing to live 300 years, it is a safer bet to run a democracy. The big down side, as democracies mature, it’s the inertia of the spending that goes into the election cycles that makes even honest men and women slaves to their constituencies. We just have too much invested to elect an impartial politician today. It is not their fault; they run on what is popular. Paying for our past financial mistakes now is not popular. I am sure I might have ruffled a few red white and blue feathers with that one, but before you respond, you need to make a trip to Dubai first.

Dubai has a modern, global, safe, laid back, resort feeling drenched in happy people. Did I mention duty free shopping and free emergency medical care for everyone? I could do an entire story about Dubai, but let Uncle Sam show you a slice of the good life; just buy your ticket with your next tax rebate!

CEO Hand and Stone Massage Spa interview

John Marco the CEO of Hand and Stone Massage had a big idea. He was a physical therapist for 23 years when he realized creating a national branded chain of massage day spas would be a hit. He noticed a new trend emerging. When people received a massage as a gift, they told everyone about it. When someone received a fruit basket or other corporate gift, they never talked about it. The word of mouth nature of a spa treatment could be explosive. To him it had to be “available and affordable.” Listen in has John takes you through how he opened his first store in 2004 and why innovation is key to a great spa business experience.

http://handandstone.com/

Interview with COO of Play-N-Trade on Franchise Whale

If you wanted to create a recipe for a massive gamer franchise, what ingredients would you put together?

• A dash of customer common sense, “Try before you buy.”

• Executives with experience at the most successful retail story of all time, Starbucks!

• Executives that launched a million title game, Tony Hawk Pro Skater.

Throw in some experience at Pepsi and you have one very experienced team to run your great franchise concept. Right?

Imagine how cool it would be to have all of that in one guy in your COO office.

I had a great chat with Tom McMahon, the new COO of Play-N-Trade. He has a broad base of experience to draw on, hands on gamer branding and a real down to earth approach about building the fabric of a franchising company. If you have been on this blog for a while, you will know I am a big fan of Play-N-Trade’s simple approach to gaming and franchising. Listen to the entire interview. Tom will give you some very specific tips for any entrepreneur, even if gaming is not your thing.

www.playntrade.com

Listen to Interview:

Buy a Franchise with your IRA without payments or penalties.

I learned something last year I never knew before about franchising. I know it came as a shock to my wife as well. I actually do not know everything! I did tell her about the study I read regarding that housework has a devastating effect on creativity. That anything repetitive will create mental ruts that are hard to drive a creative dune buggy out of. I impressed upon her mind that my creativity’s happiness is essential to her financial security, yea it did not work, but this will.

If you are hungry to take the plunge and buy a franchise or invest in someone else’s big idea, you can do it without taking out a loan or paying any penalties.

It is perfectly legal to use your IRA account to fund it. Yes the government rightly rationalizes, hey if the stock boys can blow a hole through your IRA the size of a dump truck full of money, why not let the actual owner of the cash give it a try on their own?

I had a fantastic interview with Rob Purnell, the Director of Shepherd Capital Partners, to enlighten us on the rules of self funding. This is actually an old law but because the brokers and investment bankers do not get their equity and bond lovin, you never hear about it! I have seen this happen again and again. If the establishment does not have a financial reason to tell you about these great tools, they will bury them in the backyard.

Rob is in the bay area, but he can consult anyone regardless of where they live about the rules. Go to shepherdcapitalpartners.com, and listen to the audio now by clicking the player below. The other option, you will find a podcast you can grab-n-go on the right side bar listed as "Franchise Financing" to listen at the gym.

Interview with CEO of EYESthere on Franchise Whale

How would you like to review 72 hours of security footage of your business in 5 minutes from a laptop on the beach?


If you believe business and personal security is a huge growth market like I do, listen to this CEO.

I had a great chat with Rick Rene the CEO of EYESthere. Listen in as Rick shows you simple solutions to a very complex problem, remote security monitoring. We also dive into the perfect franchisee profile, what markets are still available and what someone needs to do next to find out more. I was a little worried before I interviewed Rick when I heard he had an Accenture background. I feared he might be on the wrong side of the marketing track. As we talked about his entrepreneurial experiences and the way they simplify a very complex problem, my fears were overblown. You have a solid operations mix with marketing savvy in this CEO. I think you will find their mission statement refreshing as well.

The competition I see out there are selling complexity and they are wrong. I like this market and I like selling simplicity. Thanks for sharing Rick. Please jump out to eyesthere.com

and listen right now to this 6 minute interview.