FranchisingIs It a Strategy That
Fits You?
Is Franchising Right for You?
• 70% of all people have thought seriously about owning their own business.
• Is it the right venture 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
• 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?
What is a Frantrepreneur
“Frantrepreneur”
(fran*tre*pre*neur) n.
One possessing the desire to be a business
owner -- without the desire to recreate the
wheel -- by following a proven system for the
benefit of personal and professional goals.
The Frantrepreneur Mentality
• “I’m in business for myself, but not by myself.”• “I have the opportunity to learn from the success and
failure of others.”• “I want a ‘bottled’ process for success that I can use in
developing my own successful business.”• “Why would I work for someone else when I can work for
myself and reap the rewards of my efforts?"
What is a Franchise?
Franchising is a method of distributing goods or
services to consumers. The franchise system owns the right to the
trademark of the business. The franchisee
purchases the right to use the trademark and operating system.
Franchise Statistics• Franchise businesses account for about 50% of all retail
sales in the United States.• 1 out of every 12 business is a franchised business.• A new franchised business is opened every 8 minutes of
every business day.• Franchise businesses employ more than 14 million
Americans.• There are an estimated 1,500 franchise companies
operating in the U.S. doing business through more than 316,000 retail outlets.
• More than 75 industries use franchising to distribute goods and services to consumers.
Franchise Opportunities
Most people associate the word “franchise” with fast
food restaurants. But, there are many more
types of franchise businesses, including
everything from advertising to automobile repair, printing services to party supplies and many
more.
Categories of Franchises
• To name just a few options…• Accounting/tax services * Hotels, Campgrounds• Transportation * Computer/Electronics• Clothing/Shoes * Cosmetics• Fitness * Florists• Foods * Packaging/Shipping• Fitness
Call us for a complete list of options!
Well-Known Franchises
• McDonald’s * Curves (fitness centers)• Alphagraphics * Block Buster• Dale Carnegie * Century 21 Real Estate• Radio Shack * Molly Maid• Great Clips * Subway• Big O Tires * Baskin Robbins
Franchise Success
• Franchises have a 90%+ success rate.
• Most people can’t even predict that they can keep their jobs with a 90% certainty.
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 systemHamburger meat, muffler parts, coffee
grounds Knowledge, training, software, databases
Franchising – What’s It All About?
• 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
Elements of a Franchise
• 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 Franchise Systems
• 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
Value of Franchise Systems cont…
• Collaboration – Share best and worst practices with similar people
• Systems continually adjusted, changed, & improved
• Training systems
• Sales & marketing strategies and systems
• Manuals & other documentation
Value of Franchise Systems cont…
• 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
Entry to a Franchise System cont…
• 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
Entry to a Franchise System cont…
• 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.
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
Making an Informed Decision cont…
• 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
• 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
Questions to Ask Yourself
• How much capital do you have to invest?• How much liquid assets do you have?• Do you require a specific level of annual income?• Are you interested in pursuing a particular field?• Are you interested in retail sales or performing a
service?• Do you want a part-time or fulltime opportunity?• How many hours are you willing to work?
Questions to Ask Yourself
• Do you want to operate the business yourself or hire a manager?
• Do you want to have employees?• Do you want to have inventories?• Do you want to have Accounts Receivables?• Will franchise ownership be your primary source of
income or will it supplement your current income?• Would you be happy operating the business for the
next 20 years?• Would you like to own several outlets or only one?
Facing the Fears – Realizing the Dream
• 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
Realizing 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
• 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
• 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
Franchise Broker/Consultant Value
• 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
Golden Opportunities
If you don’t follow your dream, you will be working for
someone who did!
Contact Information
Traci Mousetis, OwnerBen Adamo, Owner
www.AffordableBusinessConcepts.comOffice: (480) 626-2287Fax: (480) 706-0385
Toll-free: 866-388-3576E-mail: [email protected]