1. LEARN THE SECRETS TO
Finding the Right Franchise for You!
The Entrepreneur's Source
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2. Congratulations. You’ve just taken the first step toward taking control of your success.
Whether you’re the seasoned business professional looking to add a franchise to your
existing portfolio, an up-and-coming entrepreneur or simply a person looking to be their
own boss, we are here to help.
This guide was designed with you in mind – giving you the basic information you need to
identify the franchise opportunity that’s perfect for you. We’ll help you understand the
industry’s terminology and share with you the breadth of businesses offering franchise
opportunities, so that you’ll know the best questions to ask the franchise you are
investigating. We’ll even help you with complex, personal items, such as assessing the kind
of lifestyle you’d enjoy and calculating your net worth.
This guide is sponsored by our franchise partners – and they are eager to help you
realize your entrepreneurial goals and share their opportunities with you. These partners
are the top franchises in their industries. They represent thousands of people just like
you... enterprising individuals who had the courage and the drive to take the first step to
realizing their dreams. When our partners contact you, please take advantage of this great
opportunity to learn not only about their unique offering, but also about yourself.
THE ROADMAP TO SUCCESSFUL FRANCHISING
3. WITH A FRANCHISE,
THE ODDS ARE IN
Why is it that the majority of independent businesses
fail, whereas the majority of franchise businesses
succeed? When most entrepreneurs go into business
for themselves, they often know “how” to do the
technical work of the business but may not know as
much about the strategic parts of developing a profitable
business. On the other hand, a franchise business
allows you to invest into proven business systems and
strategies that have worked for many other business
people, just like you.
The franchise concept lets you apply a proven method
that, when followed correctly, will yield strong,
predictable results. The experience the franchisor gives
you is invaluable, as is the help you’ll receive with things
like site-selection, employee training, marketing and
inventory. A franchise gives you a proven system that is
already working for others. It reduces the learning curve
and helps prepare you to be as successful as possible.
Can franchising be as big as it appears to be? “The
Economic Impact of Franchised Businesses,” conducted
by PricewaterhouseCoopers, calculated the total
“I had a desire to be directly rewarded
economic impact of franchise systems at $2.3 trillion.
for the effort I put into my job.”
Yes, that’s trillion with a “T!” This accounts for over
11 million jobs from over 900,000 businesses.
But don’t focus on just the numbers, because this is
a very personal decision. Think carefully about your
skills, as well as the lifestyle you want and type of work
you’re most passionate about. Franchising lets you
follow your dream by doing something you love, while
eliminating much of the risk and guesswork that usually
accompanies a new business start-up.
4. 1. Name Recognition… Everyone knows about 4. A Proven Method… Your franchisor gives you a
Subway® or McDonald’s®. How many people know proven model that has been successful for others
about your local hardware store or video rental like you, eliminating the guesswork and minimizing
location? Not many. Think about how long it took the risks associated with going it alone!
to build the brand and the benefits associated with
them. 5. Access to Capital… You’ll likely need to borrow
money to start your business or expand your
2. Strength in Numbers… You probably aren’t operations. Many successful franchisors have
the only franchisee. By having a network of people financing programs already in place for qualified
doing the same thing you’re doing, you can share applicants or existing owners. If they don’t have
ideas and get quick feedback to help solve problems direct financing, the franchisor can help you secure
and strengthen your market position. financing, simply with the strength of their brand.
3. Improved Buying Power… It’s simple economics:
the more you buy, the cheaper the price. Having
tens or hundreds of partners buying the same
goods will significantly reduce the price.
THE FIvE STRENGTHS OF FRANCHISING
5. yOUR SUCCESS bEGINS by
ASkING THE RIGHT qUESTIONS.
In order to determine which franchise is the right fit for you, start by asking the right questions. First, think about
your personality, then ask about specific franchises and compare the answers to find the best franchise for you.
Franchise The Winning
Part One: Will you be a successful franchisee?
The desire to own your own business is undoubtedly
the most important reason to invest in a franchise. This
allows you to be independent, control your own future
and attain financial success. However, before purchasing a
franchise, you should ask yourself the following questions
to determine if franchising is right for you.
1. Are you a motivated self-starter?
» Thriving franchisees are persistent, confident
and driven. These individuals tend to have high
energy levels and are usually more sales directed.
Also, they are eager to follow the established
procedures that have worked for franchisees
before them. If you’re not willing to follow the
proven franchise system, this is not an investment
you should make.
2. How much do you want to run your own business?
» Building and managing a business is not easy. It’s “ I wanted freedom to build my own team
to move the business forward.”
important that you have effective people skills, because
you will be interacting with employees, customers and
vendors on a daily basis. Being a people person is key
to running a successful franchise.
6. “That some achieve great success, is proof
to all that others can achieve it as well.”
3. What is your background?
» Any previous experience working in retail, customer service or any other business where you
interacted with the public is a solid foundation for a successful franchisee. Skills such as bookkeeping,
computer knowledge or other technical expertise are also a plus. These skills, combined with your
past employment and education, can help determine if you are suited for a specific franchise industry
or franchising in general. (Just remember that many franchisors do not require specific industry
experience, as many have in-depth training sessions and are willing to work with you.)
4. What type of work is most appealing?
» What type of work makes you happy? This is an extremely important question, since you will be
intimately involved in running this business every day. Make sure your needs are compatible with the
rules and restrictions established by the franchisor.
Your desired lifestyle
1. Are you willing to relocate?
» Some franchises may or may not have an opportunity for you in your area.You should have the answer
to this question prior to speaking with any franchisor.
2. How many hours are you willing to work?
» Certain franchise structures will require longer hours than others and a more “hands on” approach.
Deciding how much time and effort you are willing to commit is significant in choosing a franchise
3. Are you comfortable managing others?
» Franchises differ by industry, but many require hiring employees. Determining how many people, if any,
you would like to manage will help decide the franchises that are best for you. There are franchises that
do not require any employees and allow you to work alone, if you choose.
4. Owner-operator versus owner-investor?
» Before beginning your investigation, you should ask yourself if you’re looking to run the business
everyday or want someone else to run it for you. Determining how involved you would like to be in the
business is essential. Franchisors may or may not allow someone to be an absentee owner and this can
help narrow your search.
“I wanted to build
financial security and
didn’t want to be subject
to company downsizing,
mergers or buyouts.”
7. Your financial resources
Most franchisors screen and qualify based on financial resources such as assets, liabilities, net worth and sources of income. Below
is a work sheet to help assess your financial situation to understand where you fit, financially, with each opportunity you investigate.
Net Worth Calculator
Cash on hand $ _________ Notes payable to banks $ _________
Stocks and bonds $ _________ Mortgage $ _________
Retirement plans $ _________ Automobile(s) loans $ _________
Real estate $ _________ Credit cards $ _________
Automobile(s) $ _________ Other: _______________ $ _________
Money due to you $ _________
Other: _______________ $ _________
Total Assets $ _________ Total Liablities $ _________
Total Net worth (total assets minus total liabilities): $ _________
Annual Income Calculator
Sources of Income
Annual salary: self $ _________
Annual salary: spouse $ _________
Bonus: self $ _________
Bonus: spouse $ _________
Dividends and interest $ _________
Real estate income $ _________
Other: _______________ $ _________
Total Annual Income $ _________
Part Two: Evaluating the franchise opportunity
There are hundreds of franchisors within many different categories. Trying to find the “right” one can seem over-
whelming. Finding the answers to the following questions can help make the decision-making process easier for you.
1.What type of franchise is it?
» When thinking about franchising, most people think strictly of owning just one unit, in one city.
However, there are many different types of franchising methods and understanding them prior to
investigating can save you a great deal of time. The following is a list of the most common types of
Single-Unit Franchise – You purchase a franchise from the franchisor and operate this
individual business in one location or area.
Sequential Franchise – You purchase additional franchises after the initial single-unit franchise.
These additional units are approved on an individual basis and you will most likely need to hire
managers to run the units.
Area Developer – You own the rights (for a fee) to a specific area and will be expected
to develop a certain number of franchise units within an agreed time frame.You may also be
responsible for running the units but will need to hire mangers to assist you.
Subfranchisee – You own a single-unit or multiple units, but instead of reporting to the
franchisor, you report to a subfranchisor or master franchisee.
Subfranchisor or Master Franchisee – Similar to a franchisor, you are responsible for
assisting subfranchisees in a given territory. Within this territory you are expected to provide
on-going support to the owner-operating franchisees.
8. 2. What industries offer franchises?
» Name an industry you are interested in and, most likely, there’s a franchise opportunity for you. Here’s
a chart that shows the top 18 industries providing franchise opportunities.
As you can see, virtually the only limits you have
are your own desires.Whether you want to sell
children’s clothing, run a plumbing service, operate
a restaurant or provide sales training to executives,
there are franchise opportunities for you.
Franchise Opportunties by Industry
Sports & Recreation Automotive
Service Businesses 2%
Building & Construction
8% Fast Food
1% Maintenance Services
9. 3. What franchise industries are growing the fastest?
» FRANdata, the leading source of information and analysis concerning franchising, provided the following
data to the IFA citing which franchises are growing the fastest, based on the number of new franchise
concepts entering the marketplace.
Not only are there opportunities in almost any
industry you can think of, each industry is growing.
The tremendous growth rates in franchising mean
more opportunities for you to evaluate.
10. Franchise Categories
4.What costs are associated with starting a franchise?
» Initial capital investment varies based on the industry and the
type of franchise business. Total start-up costs can range from
$20,000 to over a million dollars, depending on the franchise,
Bridal location and cost of real estate. In addition to the start-up costs,
there are often continuing royalty fees that typically range from
Business Service three to eight percent of gross revenues. It’s important to examine
all expenses involved prior to purchasing a franchise to help discover
Children’s Business any hidden overhead. The following is an itemized list of costs
typically associated with owning a franchise:
o Advertising fees – Franchisors may require you to contribute a
Computer/Internet percentage of your sales to an advertising fund for nationally-run
campaigns. In addition, franchisors may also ask you to spend a specific
Financial Services amount of money on local advertising per month.
Food/Restaurant o Opening inventory – Many franchisors will require you to purchase
supplies and inventory directly from them rather than an outsourced
Health/Fitness company. The opening inventory usually consists of enough supplies to
run your business for at least two weeks.
o Equipment and signage – Different equipment is needed for various
Lodging businesses. Generally, payment plans can be arranged for most large
equipment purchases. In addition, franchisors have signage packages to
Maintenance keep their brand streamlined.
o Working capital – You will need a specific amount of initial working
capital to operate your business. This is needed to pay for employees,
operating expenses and additional miscellaneous costs until you start
Photography/Video o Real estate/leases – You will need to purchase or lease a property – and
these costs will either go to your franchisor (which is uncommon) or to
Real Estate a real estate agent.
Retail o Training fees – To attend training programs, you may have to pay for
travel, lodging and meals. These costs are usually not covered by the
Securities franchise fee and can add up quickly if you need to take others to
training with you.
o Insurance – It is necessary to have health insurance (for you and your
Senior Care Service employees) – as well as fire, occupancy, inventory, burglary, workers’
compensation, accident and general liability insurance.
o Operating licenses, permits, deposits and prepaid expenses – These
Travel miscellaneous costs are determined by the franchise and the area for
11. 5.What are the benefits of a specific franchise?
» When looking at different franchises, it is important to look at what they offer you as a potential franchisee.
The most important benefit, of course, is having a standardized franchise system. But it’s important to
determine what other benefits are being offered, like:
o Operational and management training
o Employee training
o Site selection and demographic research
o Real estate construction and assistance
o Grand opening assistance
o On-going support
Obviously, in order to find a franchise that best fits you, it is essential to do as much research as possible.We
recommend starting your search online by visiting the company’s website.Then check with the Federal Trade
Commission (FTC), Better Business Bureau (BBB) and the International Franchise Association (IFA) for any possible
red flags. Once you have narrowed your search down to a specific franchise, pay attention to their responsiveness
to your inquiries.This will show you how they work on a day-to-day basis. Also, many franchisors are required by
specific states to provide prospective franchisees with their Franchise Disclosure Document (FDD).To find more
information on FDD’s, check your state government office.You should read their disclosure document closely, as it
contains information regarding the company’s past business experience, franchisees and legal history.
Also, it is wise to visit the company’s headquarters and, if possible, attend one of their staff meetings prior to signing
the franchise agreement.You can see firsthand how they treat their employees and get a feel for attitude and culture.
Another way to gain insight ino the opportunity is to talk to current franchisees to get the true “insider’s view.”
Part Three: Choosing the perfect franchise
The screening process for a franchise is a two-way street; you need to interview the franchisor just as much as the
franchisor needs to interview you.Working through the first two parts of this section will give you a head start
toward what you are looking for and what a franchise provides.
Ideally, for you to be successful, the franchise you choose should match with your financial resources, experience
and personality traits. It must also be a business that is well suited for your talents and strengths – and complements
your goals, lifestyle and interests.
Finding a franchise is not easy, just as owning a business isn’t easy. Asking the right questions and doing the right
research will help you immensely. And by reviewing this guide, you have taken the first step toward your success.
12. IMPORTANT TERMS yOU SHOULD kNOW…
Advertising fee: The fee that is paid annually or FTC (Federal Trade Commission): A federal
monthly by the franchisee to the franchisor to assist agency charged with enforcing antitrust laws and
in the corporate advertising expenses. prohibitions against false, deceptive or unfair trade or
BBB (Better Business Bureau): An organization advertising practices.
that acts as a trusted intermediary between IFA (International Franchise Association):
consumers and businesses. Founded in 1960, is a membership organization of
Discovery day: A day to visit a franchise’s corporate franchisors, franchisees and suppliers.
office to learn more about the offer, meet key players Liquidity: Assets that can quickly be turned into
and top management, and get a feel for the corporate cash without a significant loss such as checking
culture. accounts, savings accounts and money market
FDD (Franchise Disclosure Document): The accounts.
Federal Trade Commission’s mandated disclosure Net worth: Total assets minus total liabilities of an
document that gives a wealth of information about individual.
the franchisor. Owner-investor: The franchisee will purchase the
Franchise: Authorization of a right or brand name franchise unit but will hire someone else to manage
to a person to sell or distribute the company’s goods and run the unit, otherwise known as absentee
or services. ownership.
Franchisee: The one who is granted a franchise. Owner-operator: The franchisee will run the
Franchise agreement: Positions the nature of the franchise unit him or herself.
business and the expectations of the franchisor. Renewals: Franchise agreements generally expire
Franchise broker: An agent between the buyer after 10-20 years. After the initial agreement, the
and the seller. Can represent either the buyer or the contract can be renewed but not always under the
seller. same original conditions. A renewal fee is usually less
Franchise fee: An up-front fee for the right to than the original franchise fee.
purchase a franchise. Royalties: The franchisor receives a cut of the sales
Franchise termination: A franchisor can end your franchise generates usually on a percent basis.
your franchise agreement, usually occurring if the SBA (Small Business Administration): An
franchisee does not pay the royalties or abide by the independent agency of the federal government to
franchise restrictions. aid, counsel, assist and protect the interests of small