This document provides an overview of franchising as a business strategy. It discusses common reasons for business ownership and how franchising can help address those reasons by reducing risk and leveraging existing systems. The key elements of a franchise like the brand, operating system, and support system are outlined. The document also reviews the franchise evaluation process, disclosure requirements, exit strategies, and how a franchise consultant can help guide prospective franchisees to the right opportunity.

1. Franchising – Is It a Strategy That Fits You?Presented ByBob BowersFranchise Systems Consultants Ltd.www.fransysonline.comfransys@xplornet.com70% of all people have thought seriously about owning their own business.Is it The Right Dream For You?

2. Common Reasons for Business OwnershipControl your own financial freedomBuild an asset for future saleCreate more control and freedom for your timeFair reward - make money for yourself instead of the companyEmotional fulfillment of building your own dream

3. Common Reasons for Business Ownership (continued)Satisfaction and happiness in day-to-day activities

4. Build an asset to pass on to family members

5. Create an opportunity to work with family

6. Remove threat of job loss

7. Replace lost income stream

8. Other?Franchising – What’s It All About?Franchising is not a business or industry itselfFranchising is a business strategyFranchising is a strategy of the Franchisor designed to penetrate and dominate a marketplaceEfficient distribution system Hamburger meat, muffler parts, coffee grounds Knowledge, training, software, databases

9. Leverage growth through resources of stakeholders knowledge, experience, effort, purchasing power, financialSimilar goals & unified thinking among participantsStrategic-Partnership

10. Elements of a FranchiseBrand - the Franchise name associated with the products or services delivered in a memorable and satisfying experienceOperating 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 mannerSupport System – helps the Franchisee get better and better at delivering the service in a memorable experience – helps a Franchisee improve their performanceFranchisee – the individual motivations or reasons for being a part of a vibrant system

11. Value of Systems in a FranchiseReduced Risk – Proof of success is in placeOperating System – Success Formula has been established for youYou don’t have to re-create the wheel – or many wheelsOther Franchisees with their ‘feet on the street’ – emulate the best advice and support from the Franchisor – position of experienceCollaboration – Share best and worst practices with similar people

12. Systems continually adjusted, changed, & improvedTraining systemsSales & marketing strategies and systemsManuals & other documentationLetters, contracts, agreements, documents – all in placeDevelopment costs – shared resourcesPurchasing powerMany others…

13. Entry to a Franchise SystemFranchise FeeThe Franchise Fee is the cost of putting the Franchisee into the business of the Franchisor, not as a partner, but as a participant.

14. Entry fee to the point of the completion of the initial training programs

15. Access to all of the Franchisor’s systemsRoyalty FeeThe Franchisor’s share of the customer’s money generated by each Franchisee using the Franchisor’s systems

16. The oil that makes the engine runAdvertising & Marketing FeeUsed to build Brand presence to benefit all members

17. Advertising campaigns, marketing campaigns, co-op programs, Search Engine Optimization, Creative Artwork, collateral development costs, etcEvaluation – Making an Informed DecisionSystem of discovery – two-way exchange of informationStep-by-step qualification system should be in placeOpen & honest exchange of information 30 – 120 days to complete the due diligence processShould never feel pressure to move too quickly yet the information you need must be accessible – usually on a schedule set out by the FranchisorIncludes open access to all Franchisees in the systemThe goal is to feel comfortable to make an informed decision about becoming Strategic-Partners

18. Franchisor Disclosure - Get All of the Pertinent InformationExchange information on a fair and equitable basisFormal Disclosure DocumentsNo decisions – documents for 14 daysCooling off period – final documents for 7 daysFull disclosure of all FranchiseesEarnings Claims – most don’t, some doFinancial performance data will be obtained from Franchisees

19. Important Consideration – Exit StrategyHow 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