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SME Chapter 4
 

SME Chapter 4

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    SME Chapter 4 SME Chapter 4 Presentation Transcript

    • Franchising and the Entrepreneur
    • The Franchising Boom!!!
      • Sales of $1 trillion from virtually every product or service imaginable.
      • More than 5,000 franchisers operating some 600,000 outlets worldwide.
      • Franchise sales account for 50% of total retail sales.
      • A new franchise opens somewhere in the world every six-and-a-half minutes, and in the United States, every eight minutes.
    • Franchising
      • Franchising – semi-independent business owners pay fees and royalties to a parent company in exchange for the right to sell its products and services under the franchiser’s trade name and often to use its business format and system.
    • Types of Franchising
      • Tradename
      • Product distribution
      • Pure (Business format)
    • Why Buy a Franchise?
      • Franchisees benefit from the franchiser’s experience.
      • Franchisees get a proven business system and avoid having to learn by trial-and-error.
      • Franchisees earn a great deal of satisfaction from their work.
      • Before buying, ask: “What can a franchise do for me that I cannot do for myself?”
    • Benefits of Franchising
      • Management training and support
      • Brand name appeal
      • Standardized quality of goods and services
      • National advertising program
      • Financial assistance
      • Proven products and business formats
      • Centralized buying power
      • Site selection and territorial protection
      • Greater chance for success
    • Drawbacks of Franchising
      • Franchise fees and profit sharing
      • Strict adherence to standardized operations
      • Restrictions on purchasing
      • Limited product line
      • Unsatisfactory training programs
      • Market saturation
      • Less freedom
    • Ten Myths of Franchising
      • Franchising is the safest way to go into business because franchises never fail.
      • I’ll be able to open my franchise for less money than the franchiser estimates.
      • The bigger the franchise organization, the more successful I’ll be.
    • Ten Myths of Franchising
      • I’ll use 80 percent of the franchiser’s business system, but I’ll improve upon it by substituting my experience and know-how.
      • All franchises are the same.
      • I don’t have to be a “hands-on” manager. I can be an absentee owner and be very successful.
    • Ten Myths of Franchising
      • Anyone can be a satisfied, successful franchise owner.
      • Franchising is the cheapest way to get into business for yourself.
      • The franchiser will solve my business problems for me; after all, that’s why I pay an on-going royalty.
      • Once I open my franchise, I’ll be able to run things the way I want to.
    • What Do Franchisers Look for in a Franchisee?
      • Experienced?
      • Hard Working?
      • Team Player?
      • Leadership & Management Skills?
      • Risk Averse?
      • Educated?
      • Financially Stable?
      • A Desire to Succeed?
      Yes No Maybe
    • What Do Franchisers Look for in a Franchisee?
      • Experienced?
      • Hard Working?
      • Team Player?
      • Leadership & Management Skills?
      • Risk Averse?
      • Educated?
      • Financially Stable?
      • A Desire to Succeed?
      Yes No Maybe
    • What Do Franchisers Look for in a Franchisee?
      • Experienced?
      • Hard Working?
      • Team Player?
      • Leadership & Management Skills?
      • Risk Averse?
      • Educated?
      • Financially Stable?
      • A Desire to Succeed?
      Yes No Maybe
    • What Do Franchisers Look for in a Franchisee?
      • Experienced?
      • Hard Working?
      • Team Player?
      • Leadership & Management Skills?
      • Risk Averse?
      • Educated?
      • Financially Stable?
      • A Desire to Succeed?
      Yes No Maybe
    • What Do Franchisers Look for in a Franchisee?
      • Experienced?
      • Hard Working?
      • Team Player?
      • Leadership & Management Skills?
      • Risk Averse?
      • Educated?
      • Financially Stable?
      • A Desire to Succeed?
      Yes No Maybe
    • What Do Franchisers Look for in a Franchisee?
      • Experienced?
      • Hard Working?
      • Team Player?
      • Leadership & Management Skills?
      • Risk Averse?
      • Educated?
      • Financially Stable?
      • A Desire to Succeed?
      Yes No Maybe
    • What Do Franchisers Look for in a Franchisee?
      • Experienced?
      • Hard Working?
      • Team Player?
      • Leadership & Management Skills?
      • Risk Averse?
      • Educated?
      • Financially Stable?
      • A Desire to Succeed?
      Yes No Maybe
    • What Do Franchisers Look for in a Franchisee?
      • Experienced?
      • Hard Working?
      • Team Player?
      • Leadership & Management Skills?
      • Risk Averse?
      • Educated?
      • Financially Stable?
      • A Desire to Succeed?
      Yes No Maybe
    • What Do Franchisers Look for in a Franchisee?
      • Experienced?
      • Hard Working?
      • Team Player?
      • Leadership & Management Skills?
      • Risk Averse?
      • Educated?
      • Financially Stable?
      • A Desire to Succeed?
      Yes No Maybe
    • Franchising and the Law
      • Key protection is the Uniform Franchise Offering Circular (UFOC).
      • Franchisers must deliver a copy of UFOC before any offer or sale of a franchise.
      • The UFOC contains information on 23 topics, including:
        • franchiser’s business experience
        • franchise fees and costs
        • lawsuits involving the franchiser
    • Detecting Dishonest Franchisers
      • Claims that the contract is "standard; no need to read it."
      • Failure to provide a copy of the required disclosure documents.
      • Marginally successful prototype or no prototype.
      • Poorly prepared operations manual.
    • Detecting Dishonest Franchisers
      • Promises of future earnings with no documentation.
      • High franchisee turnover or termination rate.
      • Unusual amount of litigation by franchisees.
      • Attempts to discourage your attorney from evaluating the contract before signing it.
      • No written documentation.
      (Continued)
    • Detecting Dishonest Franchisers
      • Claims to be exempt from federal disclosure laws.
      • "Get rich quick" schemes, promising huge profits with minimal effort.
      • Reluctance to provide a list of existing franchisees.
      • Evasive, vague answers to your questions.
      (Continued)
    • How to Buy a Franchise
      • Preparation, common sense, and patience are vital ingredients in choosing the right franchise.
      • Evaluate yourself - What do you like and dislike?
      • Research the market.
      • Consider your franchise options.
      • Get a copy of the franchiser’s Uniform Franchise Offering Circular (UFOC) and study it.
    • What Should You Look For?
      • A unique concept or marketing approach
      • Profitability
      • A registered trademark
      • A business system that works
      • A solid training program
      • Affordability
      • A positive relationship with franchisees
    • How to Buy a Franchise
      • Preparation, common sense, and patience are vital ingredients in choosing the right franchise.
      • Evaluate yourself - What do you like and dislike?
      • Consider your franchise options.
      • Get a copy of the franchiser’s Uniform Franchise Offering Circular (UFOC) and study it.
      • Talk to existing franchisees.
      • Ask the franchiser some tough questions.
      • Make your choice.
    • Franchise Contracts
      • Note clauses covering:
      • Termination
      • Renewal
      • Transfers and Buybacks
      40% of New Franchisees Sign Contracts Without Reading Them !!! Contract
    • Trends Shaping Franchising
      • International opportunities
      • Smaller, nontraditional locations
      • Conversion franchising
      • Multiple-unit franchising
      • Master franchising
      • Piggybacking (Combination franchising)
      • Serving aging baby boomers
    • Franchising Web Sites
      • Entrepreneur’s Franchise Zone http://www.entrepreneur.com/Franchise_Zone/FZ_ FrontDoor /0,4670,,00.html
      • Subway Sandwiches and Salads http://www.subway.com/
      • Auntie Anne’s Pretzels http://www.auntieannes.com/