10 Steps to Finding the Perfect Franchise

By Lewis Trio I ’ve been in the franchise industry for twenty years. I’ve been the president of my own franchise company, and I’ve owned and operated multiple franchises grossing millions of dollars and employing hundreds of people. I’ve put literally hundreds of people into business for themselves and I’ve watched many “We don’t need a lot of become millionaires and still others fail information, we just miserably. And the reasons were often in the basic investigation and understanding need the right of the franchise investment and not information” spending enough time or due diligence on what franchise they should own. People spend more time investigating the purchase of a riding lawnmower (about 12 hours according to Consumer Reports) than they do on making an investment decision that will affect them and their families for the rest of their lives. An old college professor of mine once said “we don’t need a lot of information, we just need the right information” So I didn’t succumb to the rage and write an eBook and then try to sell it for $49.99 over the internet. Like David Letterman’s top ten countdown I’ve reduced those volumes down to ten very important steps. Some of them are “go no go” and some of the steps I admit have a lot of sub steps but I’ve found that if you follow my outline (which is the same process I take my clients through) that you should either reach the decision that you have no business investing a franchise or like the majority of people who read this, your dream of owning your own business can be a dream come true! Now let’s get started!©The Franchise Learning Channel 2009 Page 2

Have a family meeting and discuss the fact that you want to go into business for yourself. Solicit everyone’s input and concerns. Even the kids have a stake in the decision. If the family isnt onboard dont do it! Don’t overlook the extended family. Everyone has a Uncle “know-it- an “kn all” who can be a real negative force when you are struggling through the start up period. Look at your finances. How long can you afford to live without a paycheck? For three months? Six months? How much can you afford to invest? The franchise company is only required to tell you how much money will be needed to start start-up and operate the business for the first three months. ness The most commons forms of financing are home equity loans and loans from a retirement account. Consider financing carefully. Most g franchise companies do not model their P&L with debt service as a routine expense. Any financing will come out of the “bottom line”. My advice to my clients has always been finance the expansion phase of your business not the startup. Plus financing is much easier (and cheaper) to obtain when you have a track record to show the bank. Will the franchise company do some financing for you? It depends. I know of one company in the industry who does financing in the industry but sets up payback terms which virtually has the franchise owner paying out all of their profits in debt service. And they say they outlawed indentured servitude!©The Franchise Learning Channel 2009 he Page 3

Ask yourself "are you a team player?" Be honest with yourself. Franchise companies all have a system. And they want people that will follow that system. If you cant be coached you probably shouldnt look at a franchise. Can you handle calculated risks? You have to trust that management is making decisions in the franchise owners’ best interests. Can you work within their system s’ interests. and get along with their staff? Do you want to stick with what you know? Or do you want to tackle a new industry or learn a new skill? Choose the industry carefully. You want to be in a healthy and growing sector sec of the economy that isnt saturated with your products or services. -You want to narrow your search down to three or four choices. Make a folder for each and compile a comparison chart. Like the example below you should try and give each company a grade. It’s OK to change the grades as you go through the “discovery” process with each company. It’s important not to list too many businesses it takes time to review each franchise. Don’t make the lawnmower mistake!Franchise Advertising Support Training Real Estate TotalSubway 10 5 8 10 33Instant Tax 5 5 4 3 17Snap Fitness 5 9 9 6 29Jazzercise 8 7 9 5 29Table 1 This is an example. Add as many ranking columns as you would like. - -Contact each franchise company and ask theses question: How Big Is The Market? Is it oversaturated? Show you the research? Has the franchise company done their©The Franchise Learning Channel 2009 he Page 4

homework? 1. Who are The Competitors? 2. What make their model different? Better? 3. How will they compete with the “big names” if there are any? 4. Is The Franchise Scalable? Can you grow? Are there restrictions on that growth? 5. What are the franchise companys growth plan plans? Are they growing or just selling franchises? 6. What exit strategies are available? Can you get out if you are not happy? Not making money? -Ask for a copy of the Franchise Ask Disclosure Document as it is called in the industry "the FDD". This is in two basic parts. Part 1 is referred to as the "disclosure" and is similar to a mutual funds prospectus that you are given before you buy the fund. It discloses the officers, financial history, and earnings informa information (if available) in all 23 required disclosures the franchise company The Franchise Disclosure is required to report to every Document is sometimes referred to as the “FDD” or potential buyer. the “Disclosure document”. Some people still may refer ref Part 2 is a copy of the franchise to it as a “UFOC” which was the predecessor document contract. In Part One there must be information identifying the franchisor and information its affiliates and describing their business experience. Information identifying and describing the business experience of each of the franchisors officers, directors and management personnel responsible for franchise services, training and other aspects of the franchise program.©The Franchise Learning Channel 2009 he Page 5

Information about any previous bankruptcies in which the franchisor and its officers, directors and management personnel have been involved. A description of the franchise agreement conditions under which the franchise may be repurchased or refused renewal by the franchisor, transferred to a third party by the franchisee, and terminated or modified by either party. A description of the continuing payments franchisees are required to make after the franchise opens. Plus the following: 1. Information about any restrictions on the quality of goods and services used in the franchise and where they may be purchased, including restrictions requiring purchases from the franchisor or its affiliates. 2. A description of any assistance available from the franchisor or its affiliates in financing the purchase of the franchise. 3. Descriptions of restrictions on the goods or services franchisees are permitted to sell. 4. A description of any restrictions on the customers with whom franchisees may deal. 5. A description of any territorial protection that will be granted to the franchisees. 6. A description of the training programs provided to franchisees. 7. A description of the involvement of any celebrities or public figures in the franchise. 8. A description of any assistance in selecting a site for the franchise that will be provided by the franchisor. 9. Statistical information about the present number of franchises, the number of franchisees projected for the future, the number of franchises terminated the number of franchises the franchisor has decided not to renew and the number of franchises repurchased in the past. 10.The financial statements of the franchisors. A description of the extent to which franchisees must personally participate in the operation of the franchise. 11.Statistical information about the present number of franchises, the number of franchisees projected for the future, the number©The Franchise Learning Channel 2009 Page 6

of franchises terminated the number of franchises the franchisor has decided not to renew and the number of franchises repurchased in the past. 12.A description of the extent to which franchisees must personally A participate in the operation of the franchise -Ask them:  How much money they make?  How long did it take for them to reach breakeven?  Does the franchise company support them them?  Would they do it again?  Ask them anything you want. (Remember they had to do the same thing when they were thinking about buying buying-just like you) -Discovery Day is like a Open House where the franchise company invites potential buyers to the corporate headquarters. Its a chance to meet the senior executives of the company. Sometimes the franchise company will let you look through their operating manuals or visit a training class. -The entire process takes The anywhere from 30 to 60 days, not counting any travel time. For a days, more in-depth review of the process download the Introduction to depth Franchising booklet below. You are making what might be the biggest decision of your life take your time and have fun fun!©The Franchise Learning Channel 2009 he Page 7

Lewis Trio. Senior Mentor and President of the Franchise Learning Channel. Lewis brings his twenty years of experience both as a franchise owner and a franchise company president. He started his career as a regional president of Fantastic Sams where he helped develop some 70 ped franchises employing hundreds of people and grossing millions of dollars annually. He eventually sold his company and started the Franchise Learning Channel. Providing help and support to hundreds of men and women who wanted to start their own business. Most recently he worked with their the Roni Deutch Tax Centers helping them to establish their franchise in the tax preparation industry. Lewis has experience in every phase of franchise operations and development and is an easy guy to work wit with a great sense of humor. He is the FLCs resident expert in Master and Area Developer franchises. Call me with your questions at 800 800-750-0094 or email me at 0094 ltrio@matchpointnetwork.com. How We Help I’m associated with the MatchPoint Franchise Consulting Network. Our ting Network fee is paid by the franchise company, so there is no charge to our company, clients for our services. In other word our services are free to you should we decide to work together. Matchpoint was founded in 2006 with a mission of helping companies expand their franchise networks and improve their system profitability©The Franchise Learning Channel 2009 he Page 8

by reducing Franchisee recruitment costs and improving the quality of new Franchisees coming into a system. While there are many unique aspects of the MatchPoint Franchise Consulting Network system, what makes MatchPoint different from all others within the industry can be classified into three categories – the three pillars of MatchPoint Franchise Consulting Network success: Better Informed Quality Candidates: Information and Education are the foundational elements of the MatchPoint system. By pre-screening franchise candidates and providing them with a base of information and education, all parties to a Franchise purchase transaction end up winners. In addition to providing potential franchise purchasers with the free consulting services of a MatchPoint Consultant, MatchPoint is leading the industry in providing individuals free online e-learning education. Our modules include: Franchising Basics (how franchising works, business structure, are you cut out to be a franchisee?, principles of success) How to Buy a Franchise (finding the right franchise, doing due diligence, evaluating unit economics) Franchise Marketing (attracting and keeping customers, referral and loyalty marketing, building the brand) Leadership and Motivation (goal setting, mentoring your team, setting the standard, re-imagine your business and life) Growing Your Business (positioning your business for growth, technology and infrastructure, standards vs. growth)©The Franchise Learning Channel 2009 Page 9

Franchise Assessment Profile: Through a unique and sophisticated profiling system called the MatchPoint Personal Franchise Assessment Test, MatchPoint consultants can help potential franchisees narrow the playing field to only those franchise systems that offer them the best opportunit for success. opportunity In 2006 the Personal Franchise Assessment Test was created by MatchPoint. MatchPoint developed the MatchPoint Personal Franchise Assessment Test after thousands of hours of dedicated research in the dedicated Franchise field since 2004. This unique and sophisticated profiling system helps individuals narrow the playing field to only those Franchise systems that offer you the best opportunity for success. Professional Franchise Consult Consultants: MatchPoint is committed to setting the standard for Franchise Consultant expertise, professionalism and service. The Personal Franchise Assessment Test provides MatchPoint Consultants with unique insights into the skills, experience and personality of each individual. This insight and knowledge helps the MatchPoint Consultant identify the opportunities that best match an individual’s needs. MatchPoint operates the largest physical office of Franchise Consultants in the industry, where Franchise Consultants receive Consultants regular briefings from leading Franchisors around the world. Well informed Franchise Consultants are uniquely positioned to offer the best advice and value to individual franchise buyers.©The Franchise Learning Channel 2009 he Page 10

Take the FREE franchise test to find out what franchised businesses best align themselves to your skills and interests. Paste the link below or simply type into your browser http://freefranchisetest.com add your contact information and the voucher number 63424-02.©The Franchise Learning Channel 2009 Page 11

10 Steps to Finding the Perfect Franchise

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