Franchising 101 Gary Wofford, Franchise Consultant/Advisor Your Guide to a Range of Opportunities This presentation is intended solely to inform and educate entrepreneursabout franchising -- the process, benefits, drawbacks and available resources.Only the individual entrepreneur can determine if franchising is right for him.
What is Franchising?Franchising is a method of distributing goods orservices to consumers. The franchise system ownsthe right to the trademark of the business. Thefranchisee purchases the right to use the trademarkand operating system.Most people associate the word “franchise” withfast food restaurants. But, there are many moretypes of franchise businesses, including everythingfrom advertising to automobile repair, printingservices to party supplies and many more.
The Frantrepreneur Mentality “I’m in “I have the opportunity to business for learn from the success andmyself, but not failure of others.” by myself”. “I want a ‘bottled’ process for success that I can use in developing my own “Why would I work successful business.” for someone else when I can work for myself and reap the "Why would I spend years and the investment rewards of my required to establish a successful brand when I efforts?" could buy a franchise which provides immediate access to a successful business system and a brand name which others already have made successful?"
Franchise Options TYPE: OWNERSHIP: • Traditional retail • Mobile products/services • Hands-on • Work from home • Passive • Part-time/full-time SCOPE:PRODUCT/SERVICE:• 75 categories - an endless • Single Unit Franchise array of possibilities • Multiple Units• Something to match anyone’s • Master Franchise background, skills and • Area Developer interests
Franchise Success Rate Franchises have a 90% + success rate. Most people can’t even predict that they can keep their jobs with a 90% certainty.
Advantages of Buying a FranchiseFranchisor business practices are tightly regulated by the federal governmentFranchisors have a vested interest in your success.The value of a branded franchise business is significantly more than anindependent business.The marketplace has already been checked out by the franchisor anddetermined the system to be successful.The franchisor utilizes collective buying power and passes on the discounts toyou.Local and national advertising for the franchise operation as a whole issupplied by the franchisor.Supervision, training programs and consulting are readily available from thefranchisor.Managerial, operational and accounting systems are in place to facilitate yoursuccess.
Questions To Ask Yourself (continued)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?
Questions to Ask a FranchisorDetermine what assistance the franchisor provides. Do they assist withtraining, store design, location construction, site selection, andfeasibility studies?Do they have any access to demographic studies to get anunderstanding of the audience within the market area?What types of support will the franchisor provide once your franchisehas opened its doors?After the initial investment, will there be additional financialobligations requiring working capital?Does the franchisor offer any form of financing?Ask the franchiser how many franchises have been sold in the stateyou will be operating in during the last 12 months, and how manyhave been opened for business?
Questions to Ask a Franchisor (continued)What types of territorial restrictions and protections have been set upby the franchisor?Is the franchisor planning on expanding within your state? Are theyfocusing on any specific locations?What arrangements are established through the franchisor in terms ofproduct supply?Ask if the franchisor has been forced to terminate any of itsfranchisees and detail the reasons for this decision. Have anyfranchisees failed or gone bankrupt?Are there any current lawsuits pending or past judgments against thefranchisor? What steps are taken to settle disputes between thefranchisor and franchisees?Is there a Franchisee Association or Advisory Board in place?
Questions to Ask FranchiseesHow long have you owned your franchise?Is your franchise profitable?In which month did you reach your breakeven point?Have you made approximately the same profit that was forecast in thedisclosure document?Were your opening costs consistent with the original projections in thedisclosure document?Are you satisfied with the franchisor?Are you satisfied with the product or service?Is the operations manual, clear, up-to-date and adequate?Are you satisfied with the marketing and promotional assistanceprovided by the franchisor?If you had it to do all over; would you purchase this franchise?
Questions to Ask Franchisees (continued)Was the initial training and ongoing support sufficient for you to operateyour business?What was your background prior to buying your franchise and was itbeneficial to your success?Are deliveries of goods provided by the franchisor timely andcompetitively priced?Is the franchisor fair and amicable to work with?Does the franchisor listen and help you with your concerns?Have you or other franchisees had any disputes with the franchisor? Whatwas their nature? Were they resolved fairly?Do you know of any disputes between the franchisor and the government?Do you know of any disputes with competitors?Who are the major competitors?
Should You Use a Consultant?A Franchise Consultant Will... Take the time to educate you on the franchise industry Help you avoid potentially costly mistakes Help you define your qualifications so that you don’t waste your energies and time on franchises that are not right for you or that you are not qualified for Provide valuable insight on franchises that you won’t find on your own Help you present your qualifications to a Franchisor Take an unbiased approach to helping you achieve your goals
Pre-Sale Disclosure FDD Or (Franchise Disclosure Document)•There are 23 items to the FDD – this is an important, if not the most important, part ofyour validation process of the franchise company.1. Description of the franchisor, its 13. Trademarks, service marks and trade names. predecessors and affiliates. 14. Patents and copyrights and Proprietary2. Business experience. Information.3. Litigation history. 15. Franchisee requirement to operate the business.4. Bankruptcy history. 16. Restrictions on sale of goods and services.5. Initial franchise fee and additional costs. 17. Renewal, termination or transfer of the franchise.6. Other fees. 18. Endorsements by public figures.7. Requirements to purchase or lease from 19. Earnings claims (optional). designated sources. 20. Names, addresses, and telephone numbers of8. Requirements to purchase from approved current and former franchisees. suppliers. 21. Financial statements.9. Franchisee’s Obligations. 22. Copies of the franchise agreement and other10. Financing. contracts and agreements.11. Franchisor’s Obligations. 23. Receipt of FDD.12. Territory.
“If you don’t follow your dreams, you’ll be working for someone who did.” -anonymous Your Guide to a Range of OpportunitiesGary Wofford, Franchise Consultant Call Today – 877.455.4749 Denver Office - 303.255.4749 Email: Gary@OwnFranchises.com www.OwnFranchises.com