Understanding Franchising - Part 2

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Part 2 cover the Franchise Disclosure Document, why they exist and how to use them as a tool to make a smart decision on which franchise is right for you.

Part 2 cover the Franchise Disclosure Document, why they exist and how to use them as a tool to make a smart decision on which franchise is right for you.

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Transcript

  • 1. Presented by: Marvin L. Storm
  • 2. Review: Types• Extreme Entrepreneurs• Innovator Entrepreneurs• Founder Entrepreneurs• FranPrenuer
  • 3. Review: What is• Licensing Concept vs. Buying
  • 4. Review: Benefits• Brand• Valuation at exit• Learning curve reduced• Technology• Marketing• Support• Systems are a significant competitive advantage
  • 5. A Brief History of FranchisingTwo Type of Franchise Business Models? - Trademark Franchising - Business Format Franchising - History of Franchise Regulations  The McDonald’s Story  Fraud & Abuse in Franchising  UFOC in 1972-1978  FDD adopted in July 2009
  • 6. Franchise Disclosure Document Discussion ______ Understanding the Document, Its History and How to Use It
  • 7. Franchise Disclosure Documents Our Discussion on the Franchise Disclosure Documents Will Be Done in Four Discussion: ________1.Overview of the Disclosure Docs2.A Brief History of Franchising3.The Disclosure Section4.The Franchise Agreement
  • 8. Franchise Disclosure Documents• What is the Franchise Disclosure Document? Three Parts to the FDD1) The Franchise Disclosure2) The Franchise Agreement3) The Exhibits Guarantees, General Release, Confidentiality Agreement, Consent To Transfer, Financial Statements, State Addenda To the Disclosure Document, Operations Manual - Table Of Contents
  • 9. Franchise Disclosure Documents• What is the Franchise Disclosure Document?• Why is the FDD required?
  • 10. Franchise Disclosure Documents• What is the Franchise Disclosure Document?• Why is the FDD required?• Three Things to Understand about the FDD?
  • 11. Franchise Disclosure DocumentsThree Things to Understandabout the FDD?1) The intent of the FDD is to provide any and all information that the Federal Trade Commission and your State Regulators believe you need to know to make an informed business decision.
  • 12. Franchise Disclosure DocumentsThree Things to Understandabout the FDD?2) Use it to gain an understanding of the creditability of the franchisor management team, the financial terms for start up, ongoing fees and how the franchisor protects the brand.
  • 13. Franchise Disclosure DocumentsThree Things to Understandabout the FDD?3) Gain an understanding of the contractual obligations of both parties and how the franchise system works.
  • 14. Review: Key Understandings About the FDD• Intent• Team, financial terms, fees and brandprotection• Obligations and how the system works
  • 15. Questions???