2. • 10 Years experience in the
Franchise Industry
• 27 Years Healthcare
Management experience
• 14 Years Independent
Consulting experience
Linda Belford
Franchise Placement
Specialist
3. Who is FranNet?
• 25 year old International Franchise
Consulting Firm
• Over 70 Offices in North America
• Worked with the SBA since 1987
• We match people who want to be in
business with a franchise that
meets their needs.
• NO COST!
4. Topics for Discussion
• Why Business Ownership?
• Three options for going into
business
• Small business in the U.S.
• Franchise Industry overview
• Simplifying the search.
5. Imagine for a
minute…
You are the owner
of a successful
business…
How would your life
be better?
Why Own Your Own
Business?
6. Why Own Your Own
Business?
What is it for
you?
Control
Financial
Security
No More
Layoffs
Money
Fulfillment Flexibility Independence
SUCCESS
8. Some of the
Answers
Risk:
A job is safer than a business
I’ll wait until the economy is better
Money:
A business costs a lot of money to start and run
Knowledge:
I don’t know where to start or find what I’m looking
for
Skills:
Running a business takes specific talents and
skills
9. Perception of Risk:
Job
Risk Increases
Is working for someone safe?
Short term yes, but …
• Can you be sure your job is safe?
• Can performance determine
security?
• Will you meet your long-term
financial goals of security and
retirement?
10. Business
Ownership
Risk Decreases
At first, owning your own
business can be scary,
but ...
• No one can take it away. You
can’t be downsized, transferred
or fired.
• You can grow the business at
the pace you want.
• The longer you own your
business the safer it becomes
11. Perception of Risk:
Economy
• Lost home equity
• Lost substantial portions investments portfolio
• Lost jobs and not sure where or if they will find
another
• Many industries are being: transformed,
restructured, and perhaps replaced
What Can You Count on for
Retirement Safety?
12. Lower Your Risks
Many businesses thrive in all
economic conditions
Concerned about starting a business
during poor economic times?
Lower the risk by looking for businesses
with specific market characteristics.
13. What About The Economy?
Growing markets driven by demographics
• Ex: Senior Care, Residential Repairs & Cleaning, etc.
Essential services
• Ex: Hair Care, Automotive, Damage Restoration, etc.
Business that help other small businesses thrive
• Business Coaching, Expense Analysis, Sales Training, etc.
Many businesses thrive in all economic
conditions
14. 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 their offices maintained
• Employers outsource and use personnel companies rather
than
committing to new hires
Many businesses thrive in all economic conditions
18. Advantages
Disadvantages
Start Your Own Business
Advantages
• Total control
• Make all decisions
• Room for creativity
• No predetermined rules
• Large upside
• Build a business from your
passion
Disadvantages
• Must create systems
• Limited financial options
• Slow to ramp up
• High failure rate
19. Buying an Existing Business
Advantages
• Cash flow
• Good will
• Actual financial results
• Attractive to lenders
• Market established
• Customer base
• Employees in place
• Systems may be in place
• Owner financing
Disadvantages
• Cash flow
• Bad will
• May be overpriced
• Hidden seller motives
• Employee defection
• Higher debt service
• Poor training and support
20. Buying a Franchise
Advantages
• Name recognition/ licensed trademark
• Proven business system to start and operate
• Training and support (initially and ongoing)
• Marketing expertise / Purchasing power
• Lower failure rate
• Lower cost / Financing options
• Location choices
• Ability to conduct unbiased research
• Disclosure
• Franchise family
21. Disadvantages
• Fewer industry options
• Structured operating system in some franchises
• Territory restrictions
• Can only sell their products
• Ongoing royalty payments
• Little initial cash flow from
start-ups
Buying a Franchise
23. Franchise is…
A license to use:
• Name and trademarks
• Products
• Business Systems
In exchange for:
• Initial franchise fee
• Ongoing royalties
24. Government Disclosure:
FDD
• Franchisor Info
– Time in business
– Business experience
– Bankruptcies
– Litigation
• Costs
– Total Investment
• Franchise fee
• Other fees
(Adv, Equipment, Supplies, Insurance, etc.)
• Working capital
– Royalties
• Franchise Contract
25. • Obligations for Franchisor
& Franchisees
• Territory
• Listing and Contact
Info For:
• Current franchisees
• Past franchisees
• Earnings Claims
• Financial Statements
• Manager Policy
• Renewal, Termination & Transfer Policies
Government Disclosure: FDD
35. Franchising Fact
#3:
FACT:
• 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
37. Franchising Fact
#4:
FAC
T:
Average Initial Investment
Range
Percentage
Under $50,000 13%
$50,001 to $100,000 17%
$100,001 to $250,000 28%
$250,001 to $500,000 23%
Over $500,000 18%
Source December 2010 FranData
38. Financing Facts:
How Much Do I Need?
Typically, 25-30% of the total
investment will be your
money.
Financing is relatively easy to
get for 70-75% of the total
investment including working
capital.
39. Financing Facts:
Sources:
• Personal savings
• Friends, relatives or partner
• Home equity line of credit
• Financial Institutions
• Seller financing – resale
• 401K, IRA, etc.
44. Franchising Fact
#6:
FACT:
•Franchisors want a person that can use their
system.
•They want someone who will focus on being an
owner
– business and management skills
– people and communication skills
•Proven Process
– Franchisor trains on how to use their system
45. Why Own a
Franchise?
• 900,000 franchised businesses provide
21 million jobs
• Over $2.3 Trillion Dollar Business
• Provide $660.9 Billion of annual payrolls
• There are over 3,100 franchise concepts
in over 90 different categories.
46. Why Pay
Royalties?
• Good franchisors lose money in the
short term on almost every
franchisee
–Small royalty payments
–Support costs are high
• They make money in the long term
–Bigger royalty payments
–Support costs are low
47. Why Pay
Royalties?
You’re making a trade-off:
You’re exchanging some profits in
the long term for risk reduction in
the short term
48. Franchises Are Not
All the Same
• Many Units vs. Fewer Units
• Older, well established vs. Newer
• Structured vs. Flexible Systems
• Expensive vs. Inexpensive
There is no automatic correlation between
the cost of the franchise and the potential
return.
49. Why Franchising
Works
Proven, systematic approach to starting
and staying in business
– Experience
– Simplicity
– Initial Training & Ongoing Support
– Name Recognition
– Sales, Marketing & Operational Systems
– Culture of Teamwork
50. Why Franchising
Works
You’re in business for yourself, but not
by yourself…. franchises are a hybrid
between corporate executive and an
entrepreneur.
51. Be Aware 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 you are interested in is a
great fit for you
52. Why Own a
Franchise?
If you pick a franchise that is
a great fit for you, it is:
– Vehicle that can get you to your
destination while meeting your
lifestyle and financial goals
– Way to reduce risk
53. How Do You Find a
Business That is a Great Fit?
Separate the
function of the
business,
from the
function of the
business owner!
55. What Do You Want
From the Business?
• Challenge, recognition,
prestige
• Build equity for retirement
• Time for family and interests
• Independence and control
• Financial security
57. Your Business
Model
Types of
Customers
Service or
Product
New or Established
Industry
Room for Growth
Other Items?
Employee
s
Budge
t
Business
Environment
Full or Part-time
Hours
Number of Units
Business
Preferences
60. STEP 3:
Meet with your
consultant and get the
full understanding of
your PFA results
61. STEP 4:
Together, we will
develop your
unique Business
Model and
establish the
criteria for your
ideal business
62. STEP 5:
At this point, your
consultant will
recommend the
businesses that fit your
model and put you in
touch with the franchise
companies
63. STEP 6:
Now the work
begins!!
You will be busy
learning about each
business – talking
with company
representatives and
ultimately current
franchise owners
64. STEP 7:
Your consultant will be talking
with you once a week to review
your research.
We do not sell
franchises. Our job is to
help you gather the facts and
decide if the businesses you
are considering are the right
ones. We can always change
direction and companies if your
model evolved.
66. Thank You!
Connect with Me:
www.LinkedIn.com/in/lmorrisbelforwww.LinkedIn.com/in/lmorrisbelfor
dd
Linda Belford
(810) 423.3956
lbelford@frannet.com | www.frannet.com
Editor's Notes
Welcome and Thank You
Encourage questions
Names and expectations from seminar
- Food & Retail – location drives the business
- B2B/C - brains drive the business
- No demand in last 6-7 years for food & retail (less opportunity for growth & success))
Focus on under $100K investments, service and B to B businesses.
Give personal examples of clients who got financing.
Demonstrate how to leverage 401K
good franchise companies are looking for franchisees who have good general business skills—management skills, people skills, communication skills, possibly sales/marketing skills or operations skills (depending on the business)—they are not looking for people who are necessarily experts in the particular industry because they won’t follow the system!
