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Francorp
The World Leaders In Franchising
www.Francorp.com FRANCHISING YOUR
BUSINESS
Artūrs Beiers
Francorp Baltic
Rīga, LIAA
20.02.2014 www.francorpbaltic.com
Francorp
• Francorp International
• Francorp Baltic
• Francorp Connect
45 Countries served from 12 regional offices (950 Million population):
– United States, Canada
– Dubai, Kuwait, Saudi Arabia, Egypt
– Malaysia, Singapore, Thailand, Indonesia
– Argentina
– Chile
– Mexico, Central America, The Caribbean
– Japan
– The Philippines
– Lebanon
– India
– Pakistan
– Latvia, Lithuania, Estonia
Francorp in the world
Some of our clients
Reasons to Franchise
• Money
• People
• Time
Ways to Raise Capital
• Internally Generated
• Debt
• Venture Capital
• Franchising
Example:
Client: White Castle vs McDonalds
Founded: 1921 vs 1955
Is product unique: yes vs no
#units in 2013: 350 vs 35,000
Organic Growth vs Franchising
1. Expansion with a minimum of capital 2. Motivated managers because they have stake in the profits 3. Eliminates the day-to-day responsibilities of management 4. Provides rapid expansion 5. Creates a steady stream of income 6. Enhances cash flow for advertising and R&D 7. Generates money for the development of more company-
owned stores 8. Helps to enter unknown markets 9. …and many other advantages
Advantages of Franchising
How to create a franchise?
Many entrepreneurs believe that
the first thing they need to
franchise their business is a
franchise agreement.
1. Franchisability study
2. Strategic planning & Program structure
3. Legal documentation
4. Operational documentation
5. Franchise marketing / sales
A Successful franchise program
How to create a franchise?
Goals and objectives
Competition
Franchise formats
Franchisee profile
Costs
Services
Strategic Planning
Floor value >> Do not sell below this price
Ceiling value >> Competition in franchise sales
Perceived value >> What people think you are worth
– Analogies will be wrong 100% of times
Franchise Fee
Ongoing Revenue
• Royalty Percentage Based
Average 6%
Gross Sales
Weekly
• Product Sales
• Technology
• Must Provide Ongoing Value
Regional
Local
National
International
• Media
• Budget
• Creative material
Advertising Fee
Anarchy / damage to prestige
Rushed decisions
Wrong franchisees
Lack of consistency in:
– Territories – Fees – Controls
Absence of Strategic Planning
How to create a franchise?
Based on strategic decisions
Prevent litigation
Eliminate conflicts
Franchise sales tool
The Franchise Legal Documents
Legal Issues of Franchising
• Franchise Agreement – Period
– Renewal (Cost – no cost)
– Other conditions
• Brand protection
• Intellectual property and concept protection
Lack of protection for the franchisor
High risk of franchisee desertion
High risk of “system piracy”
Risk of franchisor breaching his own franchise agreement
Legal Docs with No Strategic basis:
How to create a franchise?
Operations Bible
Audit guide / Quality assurance
Training manual / Textbook for training courses
Franchise sales tool
Teaching piece for franchisees
Legal reflection
Frame of reference to refresh franchisee
Operations Manual
Anarchy
Impossibility to audit
Lack of consistency
Excessive training time
Lack of control over initial investments
Risk of breaching the agreement
Absence of Operations Manual
How to create a franchise?
The only goal of a franchise marketing program is to generate
ready, willing and able candidates
Franchise Marketing
Descriptive brochures
Ads
Videos
Trade shows
Direct mail
Internet
Franchise Marketing - Components
Consistency between goals and actions
Optimize marketing investments
Measure results
Optimize the use of time
Focus on RWA candidates
A professional marketing plan
Francorp Success Stories Francorp has franchised 37 of the worlds TOP 100 Franchise (as rated by Entrepreneur Magazine)
How Long Does it Take?
6-9 months
All franchise documents (Franchise strategic plan, Franchise legal documents, Franchise operations manual, Franchise marketing plan) are highly customized
Francorp
The World Leaders In Franchising
www.Francorp.com
Artūrs Beiers
T.+371 29176156 abeiers@francorp.com
www.francorpbaltic.com
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