so you want to franchise your business?
DESCRIPTION
Franchising is a hot topic right now because it’s a great opportunity to expand your business. On May 1st, our experts – Ned Levitt and Kathy Steffan – ignited in a battle of lawyer vs. accountant to hold a 60-minute webinar on understanding the pros, cons & alternative options of Franchising your business. To listen to this webinar and more from Welch LLP, visit our website at: http://www.welchllp.com/resource-centre/videos/webinars/TRANSCRIPT
Welcome to Today’s Webinar
Questions
• Attendees are in listen-only mode• This webinar is being recorded for future on-demand playback• Your participation represents acknowledgement that we are recording
• Tweet questions & comments to: #WelchFranchise
Windows Mac Tablet
Ground Rules
Presenters
Kathy Steffan, CPA, CAPartner, Welch [email protected]:@welchllpca.linkedin.com/in/kathysteffan
Ned LevittPartner, Dickinson Wright [email protected]://www.linkedin.com/in/nedlevitt
What We Will Cover Today
• What’s so great about franchising?
• What’s so great about buying a franchise?
• Reality Checks
• Is your business franchisable?
• What you will need
• Alternative methods
• Franchise marketing
• What professional support you will need
What’s so great about Franchising?
• Quick Growth
• Less Capital Requirements
• Better return on Capital
• Greater strength on securing preferred locations
What’s so great about Franchising?
• Easier expansion within a geographic area & foreign jurisdictions
• “Owners” more committed than “Managers”
• Preferential supplier deals
• Diversification of Risk
What’s so great about buying a Franchise?
Less risk than starting independent business
Fastest and safest way to become a business owner
Fantastic value in knowledge transfer
Preferred locations
Group buying power – supplies & advertising
Employment
Alternative to Entrepreneurship
Reality Check for Franchisor
• Putting a Successful Business at risk• Franchisor/owner must redirect time away
from the original business• More complicated & difficult financing• It’s a numbers game • License Fees not an alternative form of
financing; See Capital requirement
Is your Business Franchisable?
• Business must be solid & very successful
• Business shouldn’t rely on owners with unique personality traits or location
• Business success should be attributable to unique concept, system or method
• Not favorable if “know-how” is too technical or hard to teach/learn
What you will need…
“Clean” Accounting & Finance Records with record of profitability
Royalty Rate that will work Financing over and above
initial license fees Franchisee Pro-forma
(Budgets & Projections)
Trademark
Brand
What else you will need…
• Franchise Marketing Package
• Someone reliable to take your place in your original business
• Willing & able to undergo career change and develop new relationships
• Working Business Model
Alternative Distribution Methods to Franchising
• Sales Agent
• Dealerships
• Distributorships
• Licensing (Brand & “Know-how”)
Franchise Marketing
• Good Marketing = critical for success• Need someone reliable to
sell the Franchises• Franchise brokers = very
commission driven• Look at your network (family, friends,
employees)• Cost of Franchise Sales very high in
early years (50% of front-end fee)• Future trends: Digital Sales & fewer
trade shows
Professional Support you’ll Need
Attributes– Experience in Franchising– Entrepreneurial
RequirementsAccounting:– Pro-formas for Franchisee– Review Engagement or Audited Financial Statements– Develop Franchisee Reporting Model– Standardized Accounting, Bookkeeping &
Tax Solution for Franchisees– Due diligence & business support partner
Professional Support you’ll Need
Requirements
Legal:• Disclosure Documents• Business Structure• Agreements• Business Support Partner
Q & A
Kathy Steffan, CPA, CAPartner, Welch [email protected]:@welchllpca.linkedin.com/in/kathysteffan
Ned LevittPartner, Dickinson Wright [email protected]://www.linkedin.com/in/nedlevitt