Think Franchising - The Benefits Of Franchising And Services Overview

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Brief summary of what franchising is and the services offered by thinkFranchising …

Brief summary of what franchising is and the services offered by thinkFranchising

- What is Franchising?
- Advantages of Franchising
- Potential Disadvantages of Franchising
- How to build a successful franchise
- The Franchising Process
- thinkFranchising services
- Why use thinkFranchising?
- What can we do for you?

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  • 1. think FranchisingThe Benefits of Franchising and Services Overview Keith Adams thinkFranchising
  • 2. think Franchising Agenda• What is Franchising?• Advantages of Franchising• Potential Disadvantages of Franchising• How to build a successful franchise• The Franchising Process• thinkFranchising services• Why use thinkFranchising?• What can we do for you? Agenda
  • 3. think Franchising What is a Franchise?• Commercial relationship whereby a party (the franchisee) sells goods or services to end customers which are:  Identifiable by a trade mark or other symbol  Directly or indirectly required to meet quality standards prescribed by another party (the franchisor) where the franchisee operates under the trade mark What is Franchising?
  • 4. think Franchising What is Franchising?• Product format Franchising  Company (Franchisor) develops trade name and business operating system  Franchisor licenses and contracts use of the name to deliver products or services to end customers to a third party (Franchisee)  Usually bounded by a fixed (renewable) term and territory  Examples - Coca Cola,• Business format Franchising  Company (Franchisor) develops brand name and business operating system  Franchisor licenses and contracts use of them to third party (Franchisee)  Usually bounded by a fixed (renewable) term and territory  Examples - McDonalds, Regus, Subway What is Franchising?
  • 5. think Franchising Sectors utilising franchising• Automotive • Hotels & Motels• Business Services • Maintenance• Childrens Businesses • Personal Care• Financial Services • Pets• Food/Full-Service Restaurants • Recreation• Food/Quick-Service Restaurants • Retail• Food/Retail Sales • Services• Home Improvements • Technology What is Franchising?
  • 6. think Franchising Advantages of Franchising – Selection and Incentives• Better mechanism for selecting and incentivising franchisee than employees  Franchisees are highly motivated • Business ownership • Employment by choice  Overcome issues of ‘Adverse Selection’ • Poor performance borne primarily by franchisee  Easier to attract high performers • High performers will achieve high earnings  Staff retention v employees • Franchisees won’t walk away easily • Maximise benefits from investment in training  Highly incentivised • Profit motivation means increased efficiency, lower overhead, less waste • Positive effects on the franchise brand  Significant reduction in time to establish outlets Advantages of Franchising
  • 7. think Franchising Advantages of Franchising – Resourcing for Rapid Growth• Efficiency in obtaining resources for Rapid Growth  Finance • Ease of raising growth finance via franchisees and network  Franchise fees  Management Fees • Minimises (and often eliminates) debt • Lower finance costs • Efficiencies – benefits of economies of scale and market leverage  Human Resources • Consistency of recruitment process  Less management overhead  Economies of scale Advantages of Franchising
  • 8. think Franchising Advantages of Franchising – Potential for Rapid Growth• Potential for Rapid Growth  Why? • To benefit from economies of scale (e.g. advertising) and market leverage • To minimise development costs (e.g. application development) • To gain early access to desirable outlet locations • Add shareholder value!!!  Fast Speed of Growth • Synchronized with finances and human resources  Increased efficiencies and competitive advantage • What does/doesn’t work  Ability to invest • People • New products • Marketing • Capital assets  Ability to expand Internationally Advantages of Franchising
  • 9. think Franchising Advantages of Franchising – Financials & Management• Lucrative Financial Model  Financial Risk is minimised • Proven model, risk shared with franchisee  Return on Investment v company managed • Fewer employees • Reduced monitoring costs • Lower working capital (can even be negative!!!) • Smaller up-front investment • Lower running costs - Franchisees pay for running of outlets  Benefit from economies of scale  Improved profitability due to learning from the expanded network• Easier to manage  Franchisees become effective and highly motivated managers  Quality Control is relatively simple  Allows franchisor to focus on business improvement Advantages of Franchising
  • 10. think Franchising Potential Disadvantages of Franchising• Difficulty in defining how the business system works• Legal framework is too complicated• Poor franchisees• Costs to setup franchise are too high• Lack of expertise• Cost to buy expertise• Poor franchise network performance• Too much work for Franchisor• Difficult to find suitable franchisees Potential Disadvantages of Franchising
  • 11. think Franchising How to build a successful franchise• Select the right industry• Understand advantages of franchising• Understand disadvantages of franchising• Make sure the business concept can be franchised• Adopt the right policies to manage the franchise system• Find the right approach to franchise support and assistance• Develop the right strategy towards franchisee territories• Price the franchises appropriately• Develop the right strategy towards system expansion• Understand the legal and institutional environment of franchising• Recruit, select and manage franchisees effectively How to build a successful franchise
  • 12. think Franchising The Franchising Process - Feasibility• Feasibility Study  Assess feasibility to franchise the business  Ability to systemise  Potential income and profitability  Network Management Costs• Feasibility Presentation and Report  Report on feasibility study  Contract proposal with thinkFranchising (If appropriate) The Franchising Process
  • 13. think FranchisingThe Franchising Process – Franchise Planning• Develop Franchise Development Business Plan  The opportunity  History  Products & Services  Marketing – Segments, Competitors, Pricing  Funding Requirements  Financial Forecasts• Secure Funding (if required) The Franchising Process
  • 14. think Franchising The Franchising Process – ‘Franchise Ready’• Get Business ‘Franchise Ready’  Training System  Operations Manual  Sales & Marketing Manuals  Legal Agreements – Franchisee, Terms of Trading, Protect Trademarks  Business Support Systems – IT, Marketing, Legal, HR, Finance, Accounting, Training etc  Network Performance Management  Franchisor System Preparation• Setup and monitor Pilot Operation (if required) The Franchising Process
  • 15. think Franchising The Franchising Process - Recruitment• Franchisee Recruitment  Specification  Advertising and Marketing  Response Handling  Response Analysis  Interviews  Contracts The Franchising Process
  • 16. think FranchisingThe Franchising Process – Network Support & Development • Franchise Network Support  Mentoring  Training  Networking  Dispute Resolution  Brand Marketing  Advertising & PR • Franchise Network Development  New product Development  Market Research  Marketing Development & testing  Efficiency improvements  Technology  Supplier Assessment The Franchising Process
  • 17. think Franchising thinkFranchising Services• thinkFranchising provide all of the services required to ensure the success of your Franchise  Compile Feasibility Study  Develop Franchise Development Business Plan  Secure Funding (if required)  Get Business ‘Franchise Ready’  Setup and monitor Pilot Operation  Franchisee Recruitment  Franchise Network Support  Franchise Network Development thinkFranchising Services
  • 18. think Franchising Why use thinkFranchising? – Client Benefits• Long term Partner, not Supplier  We work in partnership with you to ensure the success of your franchising network (see ‘How to build a successful franchise’)• Performance related fees  The vast majority of our fees are based on the performance of your Franchise network• Access to experts and best of breed services  We partner with world class suppliers to give your Franchisees access to ‘best of breed’ services Why use thinkFranchising?
  • 19. think Franchising Why use thinkFranchising? – Client Benefits• Win, Win, Win system  Because our fees are performance related, we ensure that franchisees are effectively recruited, trained, managed and developed  Result is your franchisee wins, you win and we win!!!• Minimal Financial Risk to you  Only low, initial up-front development fees  Any further fees to thinkFranchising directly relate to network recruitment and performance• Flexible remuneration mechanisms  Subject to negotiation but can be based on any combination of equity stake, % of gross profit, % of sales, &% of net profit, fixed monthly fee Why use thinkFranchising?
  • 20. think Franchising thinkFranchising – What we can do for you• Incorporate Franchising into your Business Model  Compile Feasibility Study  Develop Franchise Development Business Plan• Setup Pilot Operation concurrently with you setting up the business  Get Business ‘Franchise Ready’  Monitor Franchise Performance  Suggest and Trial Improvements• Once Pilot successful, Establish Franchise Network  Franchisee Recruitment  Franchise Network Support  Franchise Network Development thinkFranchising – What we can do for you