Franchising – Is It a Strategy

That Fits You?

70%of All People Have Thought Seriously about

Owning Their Own Business.

Is it The Right Dream For You?

Common Reasons for Business Ownership

Control your own financial freedom

Build an asset for future sale

Create more control and freedom for

your time

Fair reward - make money for

yourself instead of the company

Emotional fulfillment of building your

own dream

Common Reasons for

Business Ownership (continued)

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

Replace lost income stream

Other?

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 distribution system

Hamburger meat, muffler parts, coffee grounds

Knowledge, training, software, databases

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 motivations or reasons for being a part of a vibrant system

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

Many others…

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.

Entry fee to the point of the completion of the initial training programs

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

Earnings Claims – most don’t, some do

Financial performance data will be obtained from Franchisees

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?

Franchisor should be willing to discuss

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

Franchise Broker/Consultant Value

Delivery of Currencies of Value

Money – help avoid wasting your resources pursuing less than

optimal matches for you

Time – spend my time to help you sort through thousands of

Franchise options

Security in decision making – help you eliminate systems that

don’t fit for you and your characteristics

Knowledge – apply my specialized Franchise knowledge and

experience for your benefit

Franchise Broker/Consultant Value – continued

Provide education about Franchising

Interview/Profile/Discuss/Follow up

Identify characteristics most important to you

Help identify best options for you

Match your qualifications to appropriate systems

Help with selection of systems to learn about

Introduction to appropriate personnel at those Franchisors

Act as a buffer between you and Franchisor

Help with information exchange process

Changed Results Will Only

Happen if You Change Activities!

Is It Your Time?