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Roanoke Entrepreneur Express Franchising Workshop, November 6, 2009


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The Virginia Department of Business Assistance partnered with the City of Roanoke, Roanoke County, Virginia Western Community College, Roanoke Regional Partnership and Roanoke Regional Small Business Development Center to conduct the 5th Entrepreneur Express Workshop with a special section on franchising.

Published in: Business, Economy & Finance

Roanoke Entrepreneur Express Franchising Workshop, November 6, 2009

  1. 1. Is Franchising For You? November 6, 2009
  2. 2. Small Business Impact – U.S. • Represent 99.7% all employer firms • Employ ½ of all private sector employees • Pay 44% of total U.S. Private Payroll • Generate 64% of net new jobs over past 15 years • Hire 40% of high tech workers • Are 52% home-based and 2% franchises Source: U.S. Dept. of Commerce & U.S. Dept. of Labor
  3. 3. Small Business in Virginia Small Businesses constitute 99% of all Virginia businesses. Small Businesses create over 60-80% of all new jobs. Small Businesses account for half of the Commonwealth of Virginia’s contribution to the U.S. Gross Domestic Product - a whopping $160 billion. Virginia is for Business Lovers
  4. 4. Virginia is for Business Lovers • Virginia ranked #1 state for business by last four years. • Ranked #1 most business friendly state by Pollina Corporate Real Estate, Inc. last two years. • Named #1 best states for business by CNBC. Ask VBIC = 866- 248-8814
  5. 5. How to Start and Franchise Operate a Business Presented by: Tom Tanner Roanoke Regional Small Business Development Center
  6. 6. Key to Success in Small Business GP + D + GM + ECS = $$ © © RRSBDC 2009
  7. 7. Why do I need a Business Plan • Forces you to do the necessary research – On the business idea or concept – On the different franchises • Serves as Blueprint for future • Required for investors or bank © RRSBDC 2009
  8. 8. What goes into a Business Plan • Executive Summary * • Description of Business • Definition of Products and/or Services • Market Analysis and Marketing Plan * • Organization and Management Team • Operational Plan • Financial Statements and Projections * • Appendix * Most Important © RRSBDC 2009
  9. 9. Business Research – 9 Step Process 1. What is the product or service you want to sell? 2. Is there a demand for this product in this area? 3. What is the state of the industry? (product life cycle) 4. Who are your competitors? (do a competitive analysis also called SWOT) 5. Who is your target market? (Demographics & Psychographics) 6. How will you position yourself in the market? 7. How will you price your product? 8. Where will you do business? 9. How will you reach your market? (specific marketing, advertising & marketing calendar) © RRSBDC 2009
  10. 10. Franchisor Research 1. What franchisors are offering this business opportunity? 2. Do a SWOT of each franchisor. 3. Do research on internet. 4. Talk to multiple franchisees. 5. SBA loans – check to see if listed on 6. Evaluate the Franchise Disclosure Document (FDD). 7. Evaluate the RISK before signing any document. © RRSBDC 2009
  11. 11. Choosing the Right Legal Entity • Affects personal liability • Affects taxes – personal & business © RRSBDC 2009
  12. 12. Choosing the Right Legal Entity Four Basic Forms of Organization: – Sole Proprietor – Partnership – Limited Liability Company » Legal entity – Corporation » Taxed as “C” or “S” © RRSBDC 2009
  13. 13. Choosing the Right Legal Entity Consider talking to your accountant and attorney before deciding which is best for your company. Other considerations: – Operating Agreement – Partnership Agreement – Buy/Sell Agreement © RRSBDC 2009
  14. 14. Choosing the Right Legal Entity Maintaining the Entity Integrity • Setup before business starts • Setup separate bank account • Do not mix personal & business funds or bills • Sign all contracts & leases in entity name • Sign everything as owner/president etc. • Put insurance in company name • If corporation have annual meeting and maintain minute book © RRSBDC 2009
  15. 15. Steps to Opening Your Business © RRSBDC 2009
  16. 16. Steps to Opening a Business 1. Determine legal entity 2. Check name availability with SCC 3. Check to see if a URL is available ( – click on whois) 4. Register with the SCC your corporation, LLC or/and fictitious name ( 5. Get your FEIN with the IRS ( 6. Register with VA Dept of Tax – also covers Virginia Employment Commission ( © RRSBDC 2009
  17. 17. Steps to Opening a Business 7. Check with Dept of Professional & Occupational Regulation to see if you need any special permits. ( 8. Obtain Business License from local Commissioner of Revenue • Other permits/licenses – ABC, Health Dept, Meals/Lodging/Entertainment taxes • Local fictitious name registration with courthouse • MAKE MONEY! © RRSBDC 2009
  18. 18. U.S. Small Business Administration SBA’s Role in providing Financial assistance • SBA does NOT provide grants • SBA does NOT make DIRECT loans • SBA DOES PROVIDE: Loan Guaranty on loans made directly by banks with the SBA’s backing. of 12
  19. 19. Financial Assistance SBA General Eligibility Criteria ♦ Must be for profit Not engaged in lending, real-estate development, investments or speculation ♦ Must have a sound business purpose ♦ Good Credit ♦ REASONABLE Equity Investment of 12
  20. 20. U.S. Small Business Administration • 7(a) Loan Program ♦ Express Loans – up to $350,000 ♦ Patriot Express – up to $500,000 ♦ Term Loans – up to $2,000,000 • 504 Loan Program ♦ Real Estate and Fixed Assets • Micro-Loan Program ♦ Up to $35,000 ♦ Handled locally by Business Seed (TAP)
  21. 21. What is the RRSBDC • Roanoke Regional Small Business Development Center • SBA funded program, 33 centers in Virginia, 1000 nationwide. • SBDC Mission – Provide no-cost professional business counseling, training & information resources to help start, grow and strengthen Virginia Businesses. • Staffed by paid full-time Professional Counselors © RRSBDC 2009
  22. 22. How the SBDC can Benefit you Through one-on-one Counseling, the SBDC can help you with… • Development of Business Plan • Market Research • Development of Marketing Plan • Workshops • Government Procurement © RRSBDC 2009
  23. 23. How the SBDC can Benefit you Through one-on-one Counseling, the SBDC can help you with… • Technology • Loan Application • Source of Business Financing • Financial Analysis • Permits, Licenses and Taxes • Counseling is at No Cost © RRSBDC 2009
  24. 24. Local SBDC Office Roanoke Regional Small Business Development Center 210 South Jefferson Street Roanoke, VA 24011 540-983-0717
  25. 25. Business Support Resources
  26. 26. The Virginia Department of Business Assistance VDBA supports economic development in the Commonwealth by working with new and existing businesses to provide business and economic development communities with: • workforce incentives • financing • business information and counseling • state procurement assistance • incubator counseling and • educational opportunities
  27. 27. Formula f o r S ucc e s s n ation for decisio - Critical inform making ful - Well tr ained and plenti workforce cture - Approp riate capital stru Ask VBIC = 866- 248-8814
  28. 28. Business Information Services To help businesses get started and to grow. Formation Assistance Virginia Business Information Center (VBIC) 1-866-248-8814 Bridges the 26 state agencies, over 100 programs and over 300 forms that may touch a Virginia business Virginia Central Business Portal ( Covers registration, taxation, licensing Interactive Business Plan CD 5 Step process to a business plan Entrepreneur Express Events 100 Events – 5,000 Trained
  29. 29. Virginia’s Business One Stop Are you starting a business? Virginia’s Business One Stop system can help Winner of the you determine your business formation requirements and can 2009 pre-fill your business registration forms. Governor's Technology Visit to Awards access the Business One Stop System. Create a Business One Stop account. Answer a few brief questions about your business. Receive a list of action items and pre-filled business registration forms. Questions? Contact the Virginia Business Information Center 1-866-248-8814 (804) 371-0438
  30. 30. Ask VBIC = 866- 248-8814
  31. 31. Entrepreneur Workshops • Launched October 2006 • Partnership with Service Providers and localities • Provide information on available resources to start and grow a business • Statewide Program – Over 7,500 reached • Free – ½ Day Session •
  32. 32. Growing Your $ales Workshops Business Sales Growth Program Market Research and Expansion Financing Growth Management Partnered events for SWAM certification and eVA registration Networking of businesses and decision- makers
  33. 33. Growing Your $ales - State Governor’s Executive Order 33 $5 billion market Access to buyers from 171 state agencies Additional $5 billion from local governments 575 localities using eVA system. Small Business Goal – 40% Over 41,490 registered suppliers Over 13,065 participating buyers Ask VBIC = 866- 248-8814
  34. 34. • Examples of Purchasing: – Instant Ice Tea • 01/01/2008 – 12/31/2008 = $29,571.24 - 45 PO’s – Novelty – Specialty Advertising Products • 01/01/2008 – 12/31/2008 = $188,443.27 - 200 PO’s – Grounds Maintenance: Mowing, Edging, Plant (Not Tree) Trimming, etc. • 01/01/2008 – 12/31/2008 = $19,738,138.46 - 1876 PO’s – Tires and Tubes, Passenger Vehicles • 01/01/2008 – 12/31/2008 = $274,029.01 - 255 PO’s – Concessions, Catering, Vending: Mobile and Stationary • 01/01/2008 – 12/31/2008 = $6,995,026.76 - 12889 PO’s – Building Maintenance • 01/01/2008 – 12/31/2008 = $123,372,948 - 8823 PO’s – Earth Moving Equipment Rental • 01/01/2008 – 12/31/2008 = $21,415,289 -1360 PO’s
  35. 35. One–on-One Counseling Sessions • Need Based: – Accessing New Markets/Sales Growth – Tailored Sales Development Solutions – Financing Resources To schedule an appointment, contact: Sandy Ratliff, Business Services Manager 276-676-3768 Email:
  36. 36. Virginia Jobs Investment Program • Workforce recruiting and training – Create minimum 25 net new jobs within 12 months and capital investment of at least $1,000,000 – Minimum entry-level wage of $10.00/hr required. Only full- time jobs are eligible. • Small business workforce recruiting and training – 250 employees or less, hiring at least 5 new full time employees within 12 months of operation and capital investment of at least $100,000 – Minimum entry-level wage of $10.00/hr required. Only full- time jobs are eligible. • Retraining – Small businesses that are retooling and installing new technologies – Company must retrain minimum 10 full-time employees.
  37. 37. Financing Programs • Direct Lending: In partnership with banks and other lenders, we provide direct loans in economic development transactions. We also provide direct loans under specific programs designed to promote environmental stewardship and assist licensed daycare centers and family home providers. • Indirect Lending: We provide loan guarantees or other types of credit enhancements to commercial banks in order to increase access to capital for businesses. • Conduit Financing: We are the statewide conduit issuer of tax-exempt industrial development bonds for manufacturers and 501c3 organizations.
  38. 38. The VSBFA Does Not Give… • Grants • Loans or guaranties of loans without collateral • Loans or guaranties of loans without personal guaranties from all significant owners
  39. 39. “Counselors to America’s Small Business” Live Your Dream. SCORE Can Help. SCORE is a national nonprofit association. SCORE’s mission is to provide small business counseling and training to help America’s entrepreneurs succeed. Local business workshops and seminars Face-to-face counseling in 389 offices Online counseling Free and confidential business advice for entrepreneurs
  40. 40. Virginia Business Incubator – 9 Available in Southwest Virginia – 30 Within Commonwealth – Business Incubator Benefits • Facility designed to assist businesses to become established and sustainable • Benefits – Shared premises and business services – Business advice and mentoring assistance – More details -
  41. 41. Business Incubator Commercial Kitchen Light Manufacturing Space Shared Amenities
  42. 42. Virginia Tourism Corporation • More than 55 million annual visitors • $18.7 billion in economic impact • 210,000 employed in tourism businesses • $4.3 billion salaries & payroll Visit • Tax revenue generated from domestic travelers reached $2.4 billion – $1.2 billion in federal taxes – $529.2 million in local taxes – $731.6 million in state taxes • VTC Tourism Development Division: – Marketing Plans – Business Plans – Research
  43. 43. OTHER AVAILABLE RESOURCES • Virginia Department of Labor – Apprenticeship Program – Combination of on-the-job training and classroom instruction. – Purpose = Company have skilled workforce and reduce turnover. – • Virginia Department of Agriculture & Consumer Affairs – Virginia’s Finest Trademark = Marketing program that promotes foods and foods products grown in Virginia. – Facilitates expansion of agricultural businesses.
  44. 44. OTHER AVAILABLE RESOURCES • Virginia Economic Bridge, Inc. – Non-profit organization to promote the economic vitality of SWVA and the Commonwealth. – Virginia’s Business Pipeline – Online searchable database of more than 23,000 Virginia based companies, business to business marketing & RFP resource – Virginia’s Linked Workforce Showcase – Designed to create business partnerships yielding contracts between SWVA and Northern Virginia by connecting companies in specific industry sectors.
  45. 45. Starting and Growing a Business • Business Formation Assistance – Small Business Development Center Network = – SCORE = – Virginia Business Information Center = 866- 248-8814 – Virginia Central Business Portal = – Virginia Business Incubator Association =
  46. 46. Marketing Resources • SCORE = • Virginia Tourism Corporation = • Virginia Economic Bridge, Inc. = • Virginia Department of Agriculture – Virginia’s Finest Trademark =
  47. 47. If you always do what you’ve always done, You will always get what you’ve always got!
  48. 48. Lets CONNECT at: Sandy Ratliff Virginia Department of Business Assistance 276-676-3768 Online: Twitter: Facebook: LinkedIn -
  49. 49. Top Ten Things To Do Before Approaching A Lender Harold McLeod Roanoke President
  50. 50. DEFINITION OF INSANITY Expecting different results while continuing to do the same things……….. the same way
  51. 51. 1. Be Prepared to Tell Your Story Why is your Business successful and what will sustain it’s success. Have a ‘Business Plan’. Know how you compare to industry / peer groups and be able to articulate this and any significant deviations.
  52. 52. 2. Introduce Your Management Team Who is the management team, and what are their roles? Who makes the business decisions, and how are they made? Do you have a management succession plan? Who will manage the banking relationship?
  53. 53. 3. Know How Much You Need To Borrow and Why What is truly driving the need to borrow? What is your source of repayment, and what collateral is available if needed? Know the limitations of your capacity to borrow. Debt Service Coverage Leverage Collateral
  54. 54. 4. Get Your Financial House in Order Obtain the assistance of a reputable CPA, if one is not already in place and/or hire a dedicated bookkeeper or CFO, if warranted. Internal Accounting Systems (general ledger, A/R and A/P agings, inventory tracking, contracts-in-progress report, etc). Clear Credit Bureaus.
  55. 55. 5. Understand Your Internal / External Historical Cash Flow Sources Understand your company’s historical Cash Flow. Prepare a projected 12-month cash flow statement using “most likely” and “worst case” scenarios. Does your company / stockholders have alternative sources of funds that are available, should the need arise?
  56. 56. 6. Prepare A Capital Expenditure Budget Prepare a capital expenditure budget for at least the next 12 months. Identify your ongoing equipment needs, the anticipated timing, and how you plan to pay for the purchases. You should also indicate if this is routine replacement or planned expansion.
  57. 57. 7. Know What You Owe Know what sums you presently owe other institutions and what approximate levels of operating deposits you maintain. Be prepared to discuss the terms and conditions of your other borrowing arrangements, to include interest rates, scheduled payments, collateral, and personal guarantees.
  58. 58. 8. Expect to Provide the Following as Part of your Credit Request Package Completed loan Application and Cover Letter addressing the need for bank financing and sources of repayment. 3 years business and personal financial statements and tax returns. Listing of terms, commitments, and outstandings on existing loans and lines of credit.
  59. 59. There’s more….…. Recent Interim Financial Statement – especially if 6 months from FYE. Projected Cash Flow Statement covering the next 12 months. Accounts Receivable and Accounts Payable Agings. For Contractors, a work-in-progress report. Brief History of the Company. Resumes on all key Management.
  60. 60. 9. The Unmentionables If you’ve ever filed personal or business bankruptcy, had unsatisfactory personal credit reports, or incurred any company operating loss during the last 3 years, be prepared to explain in detail and offer mitigating arguments. Also be prepared to discuss if you are a party to any lawsuits (as plaintiff or defendant).
  61. 61. 10. Be Prepared For The Meeting The meeting with the banker should include your Senior Management Team, your CPA, and be conducted at your place of business. Allocate sufficient time to discuss your business plan, credit request, and conduct a plant tour (a picture is worth a thousand words).
  62. 62. 1. Be Prepared to Tell Your Story 2. An Introduction to Your Management Team 3. Know How Much You Need To Borrow and Why 4. Get Your Financial House In Order 5. Understand Your Internal/External Historical Cash Flow Sources 6. Prepare A Capital Expenditure Budget 7. Know What You Owe 8. Complete Credit Request Package 9. The Unmentionables 10. Be Prepared For The Meeting
  63. 63. Is Franchising For You? Michael E. Lind
  64. 64. Michael E. Lind • More than 20 years in corporate  world with Fortune 500 company and  spinoff from same firm • Joined FranNet in 2009 after  evaluating other franchise  opportunities • MBA, Averett University • BS, Virginia Commonwealth University • Member: – Business Network International – Greater Richmond Chamber – MENSA – The Venture Forum – The Virginia Career Network
  65. 65. Who is FranNet? • International Franchise Consulting  Firm in business over 20 years • 70 Offices in North America,  Europe, Asia • Worked with the SBA since 1987 • We match folks who want to be in  business with a franchise that  meets their needs. • Clients pay no fee for our services
  66. 66. Before We Begin… • Why business ownership? • Ask Yourself… • Business ownership options • Why buy a franchise?
  67. 67. Why Business Ownership? SUCCESS Fulfillment Flexibility Independence Control Financial Security No More Layoffs Money What is it for you?
  68. 68. Ask Yourself… • Are you self‐disciplined? • Are you self‐motivated? • Do you have a strong desire to succeed? • Does your family support your decision? • Are there financial resources to cover living  expenses while the business is starting up? • How do you handle adversity?
  69. 69. Business Ownership Options 1. Create a start‐up business 2. Buy an existing business 3. Buy a franchise Is this a make or buy decision?
  70. 70. Create a Start‐Up Advantages Disadvantages • Total control • Must create systems • Make all decisions • No training or support • Keep all profits • Fewer financing options • Biggest upside • Time to breakeven • Highest failure rate
  71. 71. Buy an Existing Business Advantages Disadvantages • Cash flow & good will • What is the actual cash  • Actual historical results flow? • Attractive to lenders • What is the good will? • Established location &  • Hidden seller motives customer base • Employee defection • Employees in place • Higher Debt Service • Systems may be in place • Training and support? • Owner financing
  72. 72. Buy A Franchise Advantages Disadvantages • Systems provided • Forfeit some control • Training and support • Revenue is shared • Record of success • Faster start‐up time • Growth path • Reduce risk
  73. 73. Why Own a Franchise? • Over $1.0  Trillion Dollar Business • Only 12% of units are franchised • Franchised units get 43% of the $$
  74. 74. Business Success Survey
  75. 75. Beware of Statistics • Big franchisors skewed the percentages  because they had few failures  • Not all units are still run by the founder • There are no average franchises • You should only care about your success • Make sure the franchise is a great fit for  you and your business and personal goals
  76. 76. About Franchising • Understanding Basic Franchise Terminology – What is a franchise? – What is a franchise disclosure document (FDD)? • Evaluating Franchise Opportunities – What is your reality? – What is the best franchise opportunity? • Avoiding Pitfalls – Planning – Due diligence
  77. 77. What is a franchise? • A right granted (by contract) to use: • Name and trademarks • Products • Business systems • In exchange for: • An initial franchise fee • Ongoing royalties • Other fees
  78. 78. What is a franchise? • A franchisor is a company that grants  (sells) the right to use its name and  trademarks, offer its product or service  and use its business system • A franchisee is a businessperson who  buys the right to use a name and  trademarks, offer products and services  and use a business system
  79. 79. What is the FDD? • The Franchise Disclosure Document  (FDD) is an extensive document a  franchisor must present to any  prospective franchisee disclosing certain  information in compliance with the  Federal Trade Commission’s standards • The source of information for the FDD is  the franchisor
  80. 80. What is the FDD? The FDD covers 23 areas including: • Franchisor information • Business restrictions • Business experience • Franchisee’s obligations • Litigation history • Franchisor’s obligations • Bankruptcy • List of franchisees • Initial franchise fee • Territory • Other fees • Earnings claims • Initial investment • Renewal/Termination • Term • Dispute resolution
  81. 81. Other Terms • The franchise fee is the non‐refundable  purchase of the right to use the franchisor’s  name and trademarks, offer its product or  service and use its business system • A royalty is a percentage of your revenue paid  to the franchisor for the duration of your  business relationship
  82. 82. Other Terms • Other fees may include a percentage of your  revenue paid to the franchisor for: – Advertising/Marketing – Technology • A renewal fee is the fee paid at the end of the  term of the franchise agreement to sign a new  agreement
  83. 83. Other Terms • A territory is the area where you will conduct  your business. • An exclusive territory is the area where you,  and only you, will have the right to represent  your franchise concept. • Typically territories are defined geographically  (zip codes) using various demographics  (population, businesses)
  84. 84. What is your reality? • What are your skills, experience and training? • What financial resources are available to start  a business? • What are your business goals? • What are your personal goals? • Are you willing to be coached and trained? • Can you follow a system? • Are you a team player?
  85. 85. The Question What is the best  franchise opportunity?
  86. 86. The Answer • The one that: – Fits the role you want to have in a business – Requires the resources you have to invest – Fills the demand for a “need” and not a “want” – Meets your business goals – Meets your personal goals • There is neither a “one size fits all” nor a  perfect, risk‐free franchise opportunity
  87. 87. Franchising Myths 
  88. 88. Franchising Myth #1: “Only fast food and retail”
  89. 89. Franchising Fact #1: • Over 3,100 different  franchise companies  • In more than 80  industries  • With over 900,000  operating units
  90. 90. Franchising Myth #2: “Franchises succeed because of the  quality of the product”
  91. 91. Franchising Fact #2: Can you make a  hamburger? Is your hamburger better  than McDonald’s? If it is not the product then what is it?
  92. 92. Franchising Fact #2: It is about the Business System:  • Marketing  • Sales  • Operations • Accounting
  93. 93. Franchising Myth #3: “Successful franchises emerge in a  new industry with no new  competitors”
  94. 94. Franchising Fact #3: Successful franchises  emerge from well  established industries by  creating consolidation.
  95. 95. Franchising Fact #3: It’s The System • McDonald’s started when there was a burger  joint on every corner.  • More recent examples are in Consumer and  Business services
  96. 96. Franchising Myth #4: “Franchises are expensive”
  97. 97. Franchising Fact #4: Total Investment Percent Under $100k $100 ‐ 250k $250k ‐ $500k Over 500k Under $100k 52.5% 6% 9% $100 to $250k 32.7% $250 to $500k 9.2% 33% 52% Over $500k 5.6% Franchise Times Magazine Survey,  Franchising is All Right, Thank You
  98. 98. Franchising Myth #5: “High return requires a high  investment”
  99. 99. Franchising Fact #5: There is no automatic  correlation between the  cost of the franchise and  the potential return.
  100. 100. Franchising Myth #6: “Industry experience is required”
  101. 101. Franchising Fact #6: Only 25% of franchisees are in  the same industry as they  were employed.
  102. 102. Avoiding Pitfalls • Planning – Know what you have • Skills, experience, training • Financial resources – Know what you want • Separate the function of the business from the function of the  business owner • Create a model of the business you want – Know your strategies • Short term • Long term • Exit
  103. 103. Avoiding Pitfalls • Due Diligence – Talk with franchisors – Review the FDD – Validate with franchisees – Visit the franchisors – Consult with professional advisors • Accountant • Franchise attorney
  104. 104. Franchise Selection Business  Model Do not rush through the discovery and due diligence tasks as these are crucial Due  to finding the concept right for you. Diligence Discovery No Financing Great  fit? Yes Launch Planning
  105. 105. Questions? Remember, if you don’t have a dream, the  person you work for probably does...
  106. 106. How To Own A Franchise Michael E. Lind
  107. 107. How To Own A Franchise • Know what you want in a franchise – Your business model – Your strategies • Read the Franchise Agreement and  Franchise Disclosure Document • Identify your risks and rewards • Simplify your search
  108. 108. What Do You Want? SUCCESS Fulfillment Flexibility Independence Control Financial Security No More Layoffs Money
  109. 109. How Do You Find   Franchises  That Are a Great Fit? Separate the function of  the business from the  function of the business  owner!
  110. 110. Franchises Are Not All the Same • Many Units versus Fewer Units • Older, well established versus Newer • Structured versus Flexible Systems • Expensive versus Inexpensive
  111. 111. Define Your Unique  Business Model Identify your: • Business preferences • Business goals • Personal goals • Core competencies
  112. 112. DefineYour Business  Model Business Preferences • Employees • Budget  • Business environment • Full or Part‐time & Hours • Number of units • Type of customers
  113. 113. Define Your Business Model What are your business and personal goals? • Challenge, recognition, prestige • Build equity for retirement • Time for family and interests • Independence and control • Financial security
  114. 114. Define Your Business  Model Core Competencies • Sales?  • Management?  • Customer Service? • Transferrable skills?
  115. 115. What does a great fit look like? Something stable Something safe Something affordable Something I can grow Something I can rely on Something where my Job won’t disappear simply  because of a corporate makeover Most Importantly: Something I Know I Can Do  and Do Well! What else should be on that List?
  116. 116. What does a great fit look like?
  117. 117. What does a great fit look like? Does it have room for growth? Can I develop a strategic market advantage? Is it in a stable, not fad driven industry? Can it meet my financial and personal goals? Do I have the support of my family? NEVER settle for something that does not fit your business model!
  118. 118. Finding a Great Fit Match your business model  with franchisors who are  looking for people with your  characteristics, attributes,  business and personal goals  and business preferences.
  119. 119. Finding a Great Fit • Interview at least 15 to 20 franchisees,  the ones who are doing well and the  failures. • How are you the same or different? 
  120. 120. Plan Your Strategy When you are thinking about  being a business owner, you  should develop a: • Short‐term strategy • Long‐term strategy • Exit (Destination) strategy
  121. 121. Short Term Strategy Find a business you can get into where you will not fail The more research you do the more you improve the odds of success
  122. 122. Long Term Strategy The business must give you  the lifestyle you want and  allow you to meet your goals Freedom, Recognition, Achievement,  Control, Money, etc. (the things that  YOU value the most)
  123. 123. Exit Strategy Your goal is to create a valuable asset  that meets your goals: • Sell the business • Run business past retirement • Keep the business but back away from  the day‐to‐day • Pass it down to the kids • Bring in a manager
  124. 124. Read! • Read the Franchise Agreement – Understand how the agreement impacts your  business model – Understand negotiation is very unlikely • Read the Franchise Disclosure Document – Use as a starting point for a business plan – Understand clearly any earnings claims – Validate with franchisees
  125. 125. Lower Your Risks Concerned about starting a business during poor  economic times?  Lower the risk by looking for businesses with  specific market characteristics. Many businesses thrive in all  economic conditions
  126. 126. Things to consider • Professionals still need training • People still want quality education for their  kids • Homeowners still prefer to fix their homes  rather than move • Businesses still need there offices maintained • Employers outsource and use personnel  companies rather than committing to new  hires
  127. 127. What About The Economy? Growing markets driven by demographics • Residential Repairs & Cleaning • Senior Care Essential services • Automotive • Hair Care • Damage Restoration Business that help other small businesses thrive • Business Coaching • Expense Analysis • Sales Training
  128. 128. Finding A Great Fit • Interview at least 15 to 20 franchisees, the  ones who are doing well and the failures. • How is their business doing? • What worked? • What did not work?
  129. 129. Due Diligence • Ask the hard questions • Current and past franchisees  will let you know the success  or failure rate. • May not be true with an  independent business  owner. 
  130. 130. Professional Advisors Additional Resources You Should Use Accountant Franchise Attorney
  131. 131. Why Franchising Works Proven, systematic approach to  starting and staying in business – Experience – Simplicity – Initial Training and Ongoing  Support – Name Recognition – Sales, Marketing &  Operational Systems – Culture of Teamwork
  132. 132. Why Franchising Works You’re in business: • For yourself • Not by yourself Franchises are a hybrid of a corporate executive and an entrepreneur
  133. 133. Questions? Remember, if you don’t have a dream, the  person you work for probably does...
  134. 134. Michael Lind | Franchise Consultant  FranNet of Richmond | P. O. Box 74241 | Richmond,  VA 23236 Phone: 804‐363‐3217 | Fax: 804‐363‐3217 | |
  135. 135. Entrepreneurial Panel Discussion • Chris Head (Home Instead Senior Care) = 540-537-1277 • Scott Fleming (CertaPro Painters) = 540-819-6473 • Jamie Davis (Donatos Pizza) = 614-416-7772 • Mike Pietrzyk (Firehouse Subs) = 540-890-8962
  136. 136. Survey Completions Please take a moment to complete our survey! Ask VBIC = 866-248-8814
  137. 137. CONTACTS • Sandy Ratliff, Virginia Department of Business Assistance = 276-676-3768 or VBIC = 866-248-8814 • Tom Tanner, Roanoke SBDC = 540-983-0217 • Randy Rose, Virginia Tourism Corporation = 276-988- 6067 • Jill Loope, County of Roanoke = 540-772-2124 • Lindsay Hurt, City of Roanoke = 540-853-5405 • Harold McLeod, Wachovia = 540-563-7675 • Michael Lind, FranNet = 804-363-3217 • John Hunter, SCORE = 540-857-2834