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Find And Fund A Franchise Tes
- 1. FRANCHISES – WHY? WHAT? HOW? • Growing need to diversify whole portfolio – More control over career destiny in uncertain times – Offset reduced income and benefits – Increase retirement savings – Build wealth & equity • Franchises as one of many options • Franchise landscape • What we do • How we do it
- 5. 80+ INDUSTRY SECTORS A H Accounting/Tax Services R Advertising/Direct Mail Hair Salons Real Estate & Services Automotive Products & Services Health Care & Personal Care Services Recreation – Equipment & Supplies Home Furnishings Recreation – Exercise & Sports B Home Inspection Beverages – Coffee / Juices Retail Stores – Women Home Restoration / Mitigation Beauty Care & Services Business Services Hotels/Motels Business/Management Consulting S J Security Systems & Services C Janitorial & Commercial Cleaning Services Cell Phone Provider (Kiosk) Senior Care/Adult Care Jewelry Skin Care Spas Check Cashing/Financials Services Children’s Services (Education, Nannies) Sports & Services Clothing & Shoes K Solar Installation Convenience Stores Kids Computer/Electronics/Internet Services L Construction – Materials, Services and Remodeling T Cosmetics Lawn Services Tanning Centers Leasing- Equipment Telecommunication Services D Tools & Hardware Disaster / Cleanup Services M Transportation Services Dry Cleaning Maid & Residential Cleaning Services Travel Agents & Services Distribution and Vending – DVD, Ice Cream, Beverages Management & Training Tutoring Services Drug Testing Massage Center Divorce Resolution Services E P W Educational Products & Services Package Preparation/Shipping/Mail Services Weight Control Elderly Care Services Painting Services Employment Services Payroll Services Environmental Services Pet Services Equipment – Commercial Cleaning Photography F Photo/Video/Document to Digital Financial Services Pre-employment Screening Services Fitness Pressure Washing & Restoration Florist Shops Food - Baked Goods/Donuts/Pastries Printing/Copying Services Food – Candy/Popcorn/Snacks Publications Food – Coffee / Smoothie Bar Food – Deli/Sandwiches/Subs/Wraps Food – Ice Cream / Yogurt Food – Pizza Food – Restaurants Food – Specialty Franchise Consulting
- 6. FRANCHISE DIFFERENTIATORS Proven, tested business models Already successful, faster ramp up time Shared Branding, marketing, PR Systemized business operations, Training Transfer of knowledge and best practices: between franchisor and franchisees from franchisee to franchisee Team approach to running a business
- 8. WHY INDEPENDENTS FAIL 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 you run out of the time & energy needed to do the most important work of an owner, namely marketing, promoting and managing the business. (E-Myth, Michael Gerber)
- 9. 5 MODELS – WHICH IS RIGHT FOR YOU? Passive Income – work from home part time DVD Rentals, Vending Machines Absentee Owner – Home office, part time Business Services Semi Absentee Owner – Home office, 5-25 hours/wk B2B business services, small retail Owner & Owner Operated – Small office, retail, warehouse B2B products, services B2C retail build out, mall, strip mall Master Franchisor – Regional or Area Developer Recruit & mentor – Build Equity quickly Sizes Single Unit, Multi Unit (3 pack) Area Developer (5-10 units) Master Developer or Regional Developer (10-30 units)
- 10. HOW MUCH WILL IT REALLY COST? Franchise Fee – in the range of $25k - $50k One time payment to join the franchise, renewal fees Some will finance part of the fee; Veteran discounts Primarily to cover recruitment costs Royalties - 4-8% of Gross Income Paid monthly, some paid weekly or bi weekly Invested in R&D to improve products, services, systems Marketing & co-op advertising sometimes separate 1-2% Working Capital – 3-12 months liquid $25-150k Lease, equipment, retail store build out etc $50-$500k
- 11. HOW WILL I PAY FOR IT?! Franchise Fee Checking, Savings, Home Equity Royalties Operating income Working Capital Stock, Bonds, Mutual Funds Family, Friends, Angels Home Equity loan or line, other equity 401k/IRA Rollover into new business without penalty or tax Lease, equipment, retail store build out Third party financing typically - Franchisor sometime SBA Loan, Secured or unsecured loans depending on credit score
- 12. HOW MUCH CAN I MAKE? It all depends… How much you invest in time and effort How successful you are at following the system How many locations you open How long you are in business Your overall financial & tax situation Other considerations Tax implications Depreciation, equipment, buildings Building equity over time Exit strategies available
- 21. QUESTIONS? Stephen D’Andrea Self Employment Coach Phone: + 650-949-2077 Email: sdandrea@esourcecoach.com Website: www.EsourceCoach.com/sdandrea
Editor's Notes
- Hi my name is Stephen D’Andrea with The Entrepreneurs Source. This morning I want to introduce you to Franchising, show you WHY it has been growing in popularity since 2008, give you a feel for WHAT the size and scope of the field is, and tell you HOW we help people explore those options. My primary goal will be to position franchisebusiness ownership as one of several options for your friends and colleagues to consider in parallel with a traditional job search, career transition or investment. I will seek to show some of the advantages of franchises over do it yourself startups, stock/bond and real estate investing, and how a franchise concept can be one more vehicle or method to help achieve your Income, Lifestyle, Wealth and Equity goals. Next time I will present Absentee & Semi-absentee businesses.
- Most people can no longer count on a secure job and a comfortable retirement, except maybe clients of some of the businesses in this room. (smile) The key takeaway here is to consider business ownership as part of a life portfolio, in addition to your career, stock, bond, retirement, real estate “positions.” 90% of new jobs being created are by people who are becoming self-employed. The paradigm shift from full time to contract or temporary positions is becoming the new normal, and the Staffing industry is booming as a result.The “NCE” is characterized by short and long term trends including:Company downsizing & offshoring – Automation & Tech eliminating jobs permanentlyCorporate bankruptcies -Massive pension deficits – reduced & eliminated benefitsColossal consumer debt - Longer work for less money -Social Sec potential insolvencyThe lifetime of a typical W-2: 8 to 12 job changes and at least 3 changes in professionsRoughly two out of every 10 retirement dollars is cashed out when workers switch jobs. Over 16 million Americans are still unemployed with another 11 million working part-time or multiple jobsIndividuals over 50 are out of work for an average of 57 weeks50% of workers over 55 have been out of work 2 years or longer Average worker over 50 that is rehired is taking a 20-40% pay cutOnly 63% of available work force is currently employed Source: EBRI
- TES is all about educating people on their options. We: Educate you about the possibilities that exist Help you crystallize and articulate your goals Guide you through an exploration process Help you to evaluate opportunities as vehicle to reach your goals Help you achieve a “point of clarity” about right choice for YOUWe are not in the business of telling you that franchising is the best choice, only that it IS a choice, one that most people have never thought of, and it might be worth considering - if and only if - it meets yours goals and needs. And it might not be right now, but later, or not for you, but a friend, family member or colleague…Ok, lets open door number 5….
- These numbers are actually a little old, the most recent figures are 900,000 businesses. Last month the majority of new jobs, nearly 90%, were franchise jobs, and franchise businesses continue to grow faster thanthe national average. One of our personal motivators in this business is to help people start businesses which lead to new job creation in local communities. The vast majority of jobs are local products and services which are hard to outsource or for which there are few cheap alternatives.
- It is fairly widely understood that most new restaurants fail within the first two years. What is not as well known a similar pattern applies to most small businesses which are not franchises and are seldom professionally run, as you can see in this slide. Small non franchised businessestypically suffer from one or more of the five fundamental flaws: Undercapitalized, 70% of small biz fail in first year due to cash flow problems; Lack of Bus Plan and Strategic Plan Human Capital mismanagement; Inferior Sales & Marketing;Leadership, effective communication resulting in teamwork and healthy environment.
- We partner with and build on the classic study of small businesses titled “The E-Myth” and The E-Myth Revisited, Why Most Small Businesses Don’t Work and What to Do About It” by Michael Gerber. He identified three very different roles that an owner has to play, entrepreneur, manager, technician, and the need to learn to get help, recognize own strengths, weaknesses and limitations and know when to hire. We offer ongoing business coaching programs based on and building on the E-Myth approach.
- What is my ROI in yr 1,2,3? Turns out to be a complicated question. Franchises are highly regulated, which is a good thing. Franchises and consultants, myself included, are prohibited by law from making any earnings claims or projections. They are required to provide a written Franchise Disclosure Doc to anyone who is seriously investigating their business. These run 200-250 pages long… The section that spells out annual sales, gross and net profit is called an Item 19. Not all Item 19s are created equal, some are more clear than others, some state the average sales for a select few top performers. A franchisor may state that the average net profit is $250,000 per unit, when it turns out that the top 10 units are doing that but the rest are doing $150K and the bottom 10 are doing $100K. A coach or consultant can help read the tea leaves. A rule of thumb in franchising is the bell curve – 20% top, 60% average and 20% struggling. I provide above as rough figures, actual results may vary.
- TES is a 30 yr old company which is itself a franchise with 230 franchisee coaches providing education and coaching about franchise placement Our services are free to our clients and we receive referral fees like executive recruiters if and when a franchisor offers and a client acceptsWe have over 250 franchise businesses in our current inventory, we know most of them well but some of them are new up and comers. We can’t guarantee that they are all perfect, but in general they are better than many others.One of the advantages of working with us is that our network knows a lot of details about each franchise that we work with, and as soon as there is a problem we all hear about it, word gets out. Some of the more unusual ones are a toy store and a flavored popcorn kiosk, but the popular, steady businesses are temporary staffing, restoration, painting, tutoring, elder care and so on.
- What NOT to do….
- Income, how much you want to be making in 3-5 years. Lifestyle, do you want to keep working full time, spend more time with family and relatives, work part time, have more flexibility. Wealth, do you want to add income streams and accelerate your wealth creation. Equity, hopefully you have some in your home, if you are still an owner and not a renter. Have you thought about building equity in one or more businesses, using tax advantages of business ownership, and exit strategies such as passing on the business to family or partners, or selling it to franchisor or another franchisee…
- Step 1 & 2 take 1-2 hours, Step 3 takes another 2 hours and Step 4 takes 4-12 weeksdepending on the number of options explored and the amount of work needed toresearch and get all questions answered to your satisfaction.Recap what we do:Educate you about the possibilities that exist out thereHelp you crystallize and articulate your goalsGuide you through an exploration processHelp you to evaluate opportunities as vehicle to reach your goalsHelp you achieve “point of clarity” about right choice for YOU
- We follow a fact based process “inside out” process to help you look inward and find your strengths & weaknesses, your family needs, assess your complete financial situation and risk tolerance, and then think ahead 3 to 5 years. Where do you want to be personally, professionally, financially? How will you get there, what are some different scenarios that will meet your goals? Most people start with an “outside in” process, trying to learn about as many options as possible based on surface appeal, the familiar, the comfortable. They do this through feverishly scouring websites, ads, seminars, trade shows, and talking with business brokers, franchise brokers and friends.
- We can introduce you to independent, third party coaches, attorneys, CPAs, certified financial planners, tax advisors, insurance agents and so on. Again we are a coach that works with you to develop and integrate your team going forward.
- All we ask of you is to keep an open mind and invest your time to fully explore your options, and find out if there might be a franchise for you after all. And apologies for the double negative, we never edited the extra never out of this embedded graphic file.