Is Franchising A Fit For You


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Is Franchising A Fit For You

  1. 1. Franchising – Is It a Strategy That Fits You?70%of All People Have Thought Seriously about Owning Their Own Business. Is it The Right Dream For You?
  2. 2. Common Reasons for Business Ownership  Control your own financial freedom  Build an asset for future sale  Create more control and freedom for your time  Fair reward - make money for yourself instead of the company  Emotional fulfillment of building your own dream
  3. 3. Common Reasons forBusiness Ownership (continued)  Satisfaction and happiness in day-to-day activities  Build an asset to pass on to family members  Create an opportunity to work with family  Remove threat of job loss  Replace lost income stream  Other?
  4. 4. Franchising – What’s It All About? Franchising is not a business or industry itself Franchising is a business strategy Franchising is a strategy of the Franchisor designed to penetrate and dominate a marketplace Efficient distribution system Hamburger meat, muffler parts, coffee grounds Knowledge, training, software, databases Leverage growth through resources of stakeholders Knowledge, experience, effort, purchasing power, financial Similar goals & unified thinking among participants Strategic-Partnership
  5. 5. Elements of a Franchise Brand - the Franchise name associated with the products or services delivered in a memorable and satisfying experience Operating System – institutionalizes an excellent service delivered in a memorable experience so it can be done over and over again from unit to unit in a consistent manner Support System – helps the Franchisee get better and better at delivering the service in a memorable experience – helps a Franchisee improve their performance Franchisee – the individual motivations or reasons for being a part of a vibrant system
  6. 6. Value of Systems in a Franchise Reduced Risk – Proof of success is in place Operating System – Success Formula has been established for you You don’t have to re-create the wheel – or many wheels Other Franchisees with their ‘feet on the street’ – emulate the best Advice & support from the Franchisor – position of experience Collaboration – Share best and worst practices with similar people Systems continually adjusted, changed, & improved Training systems Sales & marketing strategies and systems Manuals & other documentation Letters, contracts, agreements, documents – all in place Development costs – shared resources Purchasing power Many others…
  7. 7. Entry to a Franchise System Franchise Fee The Franchise Fee is the cost of putting the Franchisee into the business of the Franchisor, not as a partner, but as a participant. Entry fee to the point of the completion of the initial training programs Access to all of the Franchisor’s systems Royalty Fee The Franchisor’s share of the customer’s money generated by each Franchisee using the Franchisor’s systems The oil that makes the engine run Advertising & Marketing Fee Used to build Brand presence to benefit all members Advertising campaigns, marketing campaigns, co-op programs, Search Engine Optimization, Creative Artwork, collateral development costs, etc
  8. 8. Evaluation – Making an Informed Decision System of discovery – two-way exchange of information Step-by-step qualification system should be in place Open & honest exchange of information 30 – 120 days to complete the due diligence process Should never feel pressure to move too quickly yet the information you need must be accessible – usually on a schedule set out by the Franchisor Includes open access to all Franchisees in the system The goal is to feel comfortable to make an informed decision about becoming Strategic-Partners
  9. 9. Franchisor Disclosure – Get All of the Pertinent Information Exchange information on a fair and equitable basis Formal Disclosure Documents No decisions – documents for 14 days Cooling off period – final documents for 7 days Full disclosure of all Franchisees Earnings Claims – most don’t, some do Financial performance data will be obtained from Franchisees
  10. 10. Important Consideration – Exit Strategy How will the business be valued at time of exit? Do the customers/clients carry an ongoing future cash flow value? How will the value be affected by changing demographic conditions? How will the value be affected by changing competitive environment? Franchisor should be willing to discuss
  11. 11. Facing the Fears – Realizing the Dream Common and expected fears – we all have them Fear of change, failure, unknown – perfectly natural Naysayers are everywhere – the ‘fire hose brigade’ Listen to advisors but trust yourself too Face it – feel it – blast past it – the only path to the dream It will never be the perfect time where all the stars line up Opportunity Finances Family Market Conditions Demographics Advisors
  12. 12. Franchise Broker/Consultant Value Delivery of Currencies of Value Money – help avoid wasting your resources pursuing less than optimal matches for you Time – spend my time to help you sort through thousands of Franchise options Security in decision making – help you eliminate systems that don’t fit for you and your characteristics Knowledge – apply my specialized Franchise knowledge and experience for your benefit
  13. 13. Franchise Broker/Consultant Value – continued Provide education about Franchising Interview/Profile/Discuss/Follow up Identify characteristics most important to you Help identify best options for you Match your qualifications to appropriate systems Help with selection of systems to learn about Introduction to appropriate personnel at those Franchisors Act as a buffer between you and Franchisor Help with information exchange process
  14. 14. Changed Results Will OnlyHappen if You Change Activities! Is It Your Time?