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Evaluating franchises


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A 15minute overview on how to evaluate franchise opportunities

A 15minute overview on how to evaluate franchise opportunities

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  • You may ask, OK so what exactly do I get for my money. What will the franchise provide me that would be hard to do by myself.
  • Transcript

    • 1. Evaluating Franchises
      Presented By
      Robert Glenister
      (408) 689-2545
      A 15min overview
      On how best to
      Evaluate Franchises
    • 2. The Quest for the Good Life
    • 3. What’s driving the interest in self employment?
      Unemployment = 9.6%California = 12.4%
      6.3M people have been out of work 6 months or longer9.5M Involuntary part time workers
      US Bureau of Labor Statistics January 2010
    • 4. The Definition of Insanity ?
    • 5. The Definition of Insanity?
      Doing the same thing over and
      over again and expecting a different result. - Albert Einstein
    • 6. Why Do Independent Businesses Fail?
      The E Myth Revisited
      By Michael E. Gerber.
      Fatal assumption #1: Doing what you know, love and enjoy will bring success.
      Fatal assumption #2: By working hard in the business I will be successful
      Fatal problem: By working ‘in’ the business instead of ‘on’ the business you in essence buy yourself a job and you run out of the time & energy needed to do the most important work of an owner- marketing, promoting and managing the business.
    • 7. What makes a franchise different?
      Already successful
      Systemized business operations
      Transfer of knowledge and best practices between franchisor and franchisees and franchisee to franchisee
      Team approach to running a business
      A franchise is the agreement or license between two legally independent parties which gives:
      • a person or group of people (franchisee) the right to market a product or service using the
      trademark or trade name of another business (franchisor)
      • the franchisee the right to market a product or service
      using the operating methods of the franchisor
      • the franchisee the obligation to pay the franchisor fees for these rights
      • the franchisorthe obligation to provide rights and support to franchisees
      Owns trademark or trade name
      Provides support:
      • (sometimes) financing
      • advertising & marketing
      • training
      Receives fees
      Uses trademark or trade name
      Expands business with franchisor’s support
      Pays fees
    • 9. Fees?
      Franchise Fee:
      Typically $15k - $50k
      One time Payment to join the franchise
      Typically 5-8% of Gross Income
      Paid Monthly
    • 10. Broad Industry Perspectives
      AAccounting/Tax Services Advertising/Direct Mail Automotive Products & ServicesB Beverages – Coffee / Juices
      Beauty Care & ServicesBusiness Services Business/Management Consulting CCell Phone Provider (Kiosk)
      Check Cashing/Financials Services Children’s Services (Education, Nannies)Clothing & Shoes Convenience Stores Computer/Electronics/Internet Services Construction – Materials, Services and Remodeling Cosmetics
      Disaster / Cleanup Services
      Dry CleaningDistribution and Vending – DVD, Ice Cream, Beverages Drug TestingDivorce Resolution ServicesEEducational Products & Services
      Elderly Care ServicesEmployment Services Environmental Services Equipment – Commercial Cleaning FFinancial Services Fitness Florist Shops Food - Baked Goods/Donuts/Pastries Food – Candy/Popcorn/Snacks Food – Coffee / Smoothie BarFood – Deli/Sandwiches/Subs/Wraps Food – Ice Cream / Yogurt Food – Pizza Food – Restaurants Food – Specialty Franchise Consulting
      HHair SalonsHealth Care & Personal Care Services Home FurnishingsHome Inspection
      Home Restoration / MitigationHotels/Motels JJanitorial & Commercial Cleaning Services JewelryKKids
      LLawn ServicesLeasing- Equipment MMaid & Residential Cleaning Services Management & Training
      Massage CenterPPackage Preparation/Shipping/Mail Services Painting Services Payroll Services Pet Services Photography
      Photo/Video/Document to Digital
      Pre-employment Screening Services Pressure Washing & Restoration Printing/Copying Services Publications
      RReal Estate & Services Recreation – Equipment & Supplies Recreation – Exercise & Sports Retail Stores – Women
      SSecurity Systems & Services Senior Care/Adult Care
      Skin Care SpasSports & Services Solar Installation
      TTanning CentersTelecommunication Services Tools & Hardware Transportation Services Travel Agents & Services WWeight Control
    • 11. What does a Franchise Provide that helps me Succeed?
      • A Proven Revenue Stream and a National brand name
      • 12. Exclusive territory
      • 13. In depth training plus on-going 1-2-1 coaching (weekly)
      • 14. Your first 90 Days (varies) Action Plan to Jumpstart your business
      • 15. Help to enable you develop and execute your business plan
      • 16. Leads generated from national web site, 1-800# and possibly national contracts
      • 17. On-going Marketing analysis
      • 18. Virtual Office – Providing all your back-office needs
      • 19. Email and phone support
      • 20. Assistance with licensing requirements
      • 21. Camera ready artwork
      • 22. Pre-start marketing program
      • 23. Your own web site
      • 24. Assessment Tools
      • 25. Operating Manuals
    • Apart from Size what else would be good to know?
      Franchisee Satisfaction
      Average Gross / Net Income
      Potential for continued growth
      Franchisee Ratings
      -Overall quality rating of franchisor - 92%
      -Would you Recommend franchise to someone else - 94%
      -How would you grade initial training - 96%
      -How would you grade opening and launch support - 96%
      -How would you rate quality of products/services - 93%
      -How would you grade technical support by franchisor - 94%
    • 26. How much money do I need?
      Franchises can range from less than $20k to over $4M with
      most Home Based in the $50-$100k range.
      Retail is typically $150k-300k
      Typically you can borrow up to ¾ of Total Investment through SBA . (Total Investment includes the Franchise Fee + all expected startup costs)
      Example Startup Costs:
      Computer and specialized software
      Deposit and first 3 months rent for retail/commercial space
      Outfitting of retail or commercial space
      Leasing and outfitting of specialized car, van or truck
      Initial cost of inventory for first 3 months of business
      Initial marketing and advertising costs for launching business
      Business License, Insurance and sundry expenses
      Wages for staff for first 3 months
    • 27. Financial Assistance
      Small Business
      7 A
      Community express
      Benetrends – Self Directed 401k’s
      Peer to Peer Lending Sites
      Bay Area Local Finance Specialist:
    • 28. Franchising vs. Independent BusinessesWhy is franchising so successful?
      A proven system
      Training and ongoing support
      Being in business for yourself, but not by yourself
      Win-win relationship … starts with mutual benefits and grows from there
    • 29. Questions to Ask Yourself
      Am I willing to follow a system?
      Am I willing to work hard?
      Do I have access to startup capital?
      Can I support myself during the early months?
      Are family and friends supportive?
      Will I do whatever it takes to ensure success?
      Does the business model support my goals?
    • 30. But what if I fail?
      Thomas Edison held 1093 patents – most of which proved to be commercial failures.“I have not failed. I've just found 10,000 ways that won't work.”– Edison
      He did however have one or two successes that more than made up for it !
    • 31. Recommendations :
      Richard Y Yang
      “Robert was an invaluable resource and help as a business and career coach when I was investigating starting my own business. The best thing I liked about Robert was that he had your interest at heart, and it was never about pushing you into something. It was a great experience working with him.” July 27, 2009
      Top qualities: Great Results, Personable, High Integrity
      Ravi Fernando
      “Robert was excellent in coaching me through the franchise purchase process. His unbiased inputs and support throughout made the entire process manageable. Robert stayed in touch even after the transaction and introduced me to business networking to help move my new business forward. He is a great asset to have around during this major career transition …” July 23rd 2009
      Top qualities: Great Results, Personable, High Integrity
    • 32. “I hope you have enjoyed this brief presentation.”
      “Your success isour only business”
      Robert Glenister
      To learn more visit: Phone:(408) 689 2545Email: