Common Reasons for Business Ownership 

  • Being in control of your own financial freedom.
  • Create an asset for the future that can also be sold or passed down to your family.
  • Opportunity to work with your family.
  • Control of your time.
  • Quality of life.
  • Build wealth.
  • Eliminate debt and achieve real cash flow.
  • Build your dreams.
  • Eliminate the threat of job loss.

Franchising – What’s It All About?

  • Franchising is not a business or industry itself – it is a business strategy.
  • Franchisor designs a strategy to penetrate and dominate a marketplace…
    • Knowledge
    • Training
    • Software
    • Databases
    • Analytics.
  • Leverage the resources of stakeholders who have similar goals and a unified way of thinking.
  • Strategic partnership.

Elements of a Franchise

  • Brand – it’s more than a name… it is the representation associated with the products or services delivered in a memorable and satisfying experience.
  • Operating System – a world-class institutionalized 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– what empowers a Franchisee to become better and better at delivering a memorable experience and drastically improve overall performance.
  • Franchisee – the individual business owner who represents the Brand in their town.

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

  • The fear of change, failure and the unknown are perfectly natural.
  • Naysayers are everywhere, and we call them the “fire hose brigade”.
  • Listen to advisers, but continue to trust yourself no matter what.
  • Face it, feel it and blast past it.
  • There isn’t a “perfect time” where all the stars align..
    • Opportunity,  financial resources,  market conditions and demographics.

Changed Results Will Only Happen if You Change Activities!