Is Franchising a fit for you?

70%of All People Have Thought Seriously about Owning Their Own Business.

Common Reasons for Business Ownership

  • Control your own financial freedom
  • Build an asset for future sale
  • Create more control and freedom for your time – Quality of Life
  • Cash flow for debt elimination
  • Emotional fulfillment of building your own dream
  • Create wealth
  • Satisfaction and happiness in day-to-day activities
  • Build an asset to pass on to family members
  • Create an opportunity to work with family
  • Remove threat of job loss
  • Having control

Franchising – What’s It All About?

  • Franchising is not a business or industry itself
  • Franchising is a business strategy
  • Franchising is a strategy of the Franchisor designed to penetrate and dominate a marketplace
  • Efficient marketing system
    • Knowledge, training, software, databases, analytics
  • Leverage growth through resources of stakeholders
    • Knowledge, experience, effort, purchasing power, financial
    • Similar goals & unified thinking among participants
    • Strategic-Partnership

Elements of a Franchise

  • Brand – the Franchise name associated with the products or services delivered in a memorable and satisfying experience
  • Operating System – institutionalizes an excellent service delivered in a memorable experience so it can be done over and over again from unit to unit in a consistent manner
  • Support System – helps the Franchisee get better and better at delivering the service in a memorable experience – helps a Franchisee improve their performance
  • Franchisee – the individual that represents the Brand in their local community

Value of Systems in a Franchise

  • Reduced Risk – Proof of success is in place
  • Operating System – Success Formula has been established for you
  • You don’t have to re-create the wheel – or many wheels
  • Other Franchisees with their ‘feet on the street’ – emulate the best advice & support from the Franchisor – position of experience
  • Collaboration – Share best and worst practices with similar people
  • Systems continually adjusted, changed, & improved
  • Training systems
  • Sales & marketing strategies and systems
  • Manuals & other documentation
  • Letters, contracts, agreements, documents – all in place
  • Development costs – shared resources
  • Purchasing power

Entry to a Franchise System

  • Franchise Fee
    • The Franchise Fee is the cost of putting the Franchisee into the business of the Franchisor, not as a partner, but as a participant.
    • Access to all of the Franchisor’s systems
  • Royalty Fee
    • The Franchisor’s share of the customer’s money generated by each Franchisee using the Franchisor’s systems
    • The oil that makes the engine run
  • Advertising & Marketing Fee
    • Used to build Brand presence to benefit all members
    • Advertising campaigns, marketing campaigns, co-op programs, Search Engine Optimization, Creative Artwork, collateral development costs, etc.

Evaluation – Making an Informed Decision

  • System of discovery – two-way exchange of information
  • Step-by-step qualification system should be in place
  • Open & honest exchange of information
  • 30 – 120 days to complete the due diligence process
  • Should never feel pressure to move too quickly, yet the information you need must be accessible – usually on a schedule set out by the Franchisor
  • Includes open access to all Franchisees in the system
  • The goal is to feel comfortable to make an informed decision about becoming Strategic-Partners

Franchisor Disclosure – Get All of the Pertinent Information

  • Exchange information on a fair and equitable basis
  • Formal Disclosure Documents
  • No decisions – documents for 14 days
  • Cooling off period – final documents for 7 days
  • Full disclosure of all Franchisees
  • Financial performance data

Important Consideration – Exit Strategy

  • How will the business be valued at time of exit?
  • Do the customers/clients carry an ongoing future cash flow value?
  • How will the value be affected by changing demographic conditions?
  • How will the value be affected by changing competitive environment?
  • Franchisors help with resale

Facing the Fears – Realizing the Dream

  • Common and expected fears – we all have them
  • Fear of change, failure, unknown – perfectly natural
  • Naysayers are everywhere – the ‘fire hose brigade’
  • Listen to advisors but trust yourself too
  • Face it – feel it – blast past it – the only path to the dream
  • It will never be the perfect time where all the stars line up
    • Opportunity
    • Finances
    • Family
    • Market Conditions
    • Demographics
    • Advisors

Changed Results Will Only Happen if You Change Activities!