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Franchising has become a popular path for many entrepreneur oriented executives to following when it is their time to take control of their own destiny. Learn more about franchising, how it works and how to find the right one for you.
Citation preview
Understanding Franchising
Part 1
Presented by:Marvin L. Storm
Types of Entrepreneurs
• Extreme Entrepreneurs• Innovator Entrepreneurs• Founder Entrepreneurs• FranPrenuer
Entrepreneurial Personality
• Lone Wolf vs. Team Player
• Entrepreneur vs. Franchisee
Understanding Franchising
• Licensing Concept vs. Buying
Types of Franchise Structures:
Direct Franchising
Regional Developer
Master Franchising
Understanding Franchising
Finding a Franchise
Types of Franchisees:
Unit Franchisee
Multi-Unit Franchisee
Area Developer Franchisee
Types of Franchises
Franchise Industries:
Art FranchisesAutomotive FranchiseChildren’s Franchises
Beauty Franchises
Business Services FranchisesCleaning and Maintenance FranchisesHealth Franchises
Computer and Internet Services Franchises
Construction Franchises
Educational FranchisesEntertainment Franchises
Financial Services Franchises
Fitness FranchisesFood Franchises
Franchise Consultants FranchisesTravel FranchisesHome Services Franchises
Medical FranchisesPet FranchisesRecreation FranchisesRetail Franchises
Senior Care FranchisesSmall Business FranchisesStaffing Franchises
Be Aware Of:
• Financial strength
• Experience level of management team
• Validation of franchisees
• Litigation
• Mature vs. emerging franchisors
Acquiring an Existing Franchise Location
• Same process as buying a business
• Additional criteria: Approval of Franchisor
Benefits of Franchising • Brand• Valuation at exit• Learning curve reduced• Technology• Marketing• Support• Systems are a significant
competitive advantage
Right For You?• No right or wrong answer
Right For You?• No right or wrong answer
• But an answer that needs to be answered.
Right For You?• No right or wrong answer• But an answer that needs to be
answered.
• Never become a franchisee unless you are a team player
Right For You?• No right or wrong answer• But an answer that needs to be
answered.• Never become a franchisee unless you
are a team player
• Never rely on a franchisor for your success – are only a business partner enabling your success – you still have to make your own success
A Brief History of Franchising
The Whole Story in an Abbreviated Form
• What is Franchising?- A French Word
- 1851 Albert Singer – the First US Franchisor
A Brief History of Franchising
• Two Type of Franchise Business Models?
• What is Franchising?
A Brief History of Franchising
A Brief History of Franchising
• Two Type of Franchise Business Models?
• What is Franchising?
-Trademark Franchising
A Brief History of Franchising
• Two Type of Franchise Business Models?
• What is Franchising?
- Trademark Franchising
- Business Format Franchising
A Brief History of Franchising
• Two Type of Franchise Business Models?
• What is Franchising?
- Trademark Franchising
- Business Format Franchising
- History of Franchise Regulations
A Brief History of Franchising
• Two Type of Franchise Business Models?
• What is Franchising?
- Trademark Franchising
- Business Format Franchising
- History of Franchise Regulations
The McDonald’s Story
The McDonald’s Story
Ray Kroc sells dozens of malt mixers to a hamburger joint in San Bernardino, CA
Kroc visits McDonalds to find out what is going on?
The McDonald’s Story
Kroc learns about 15₵ hamburgers, fries and malts?
The McDonald’s Story
Kroc acquires the licensing rights from the McDonald Brothers and returns to IL to launch a franchise company
1st Franchise Location in Des Plaines, IL
The McDonald’s Story
In the next 10 years Kroc’s focus is on quality, convenience and a consistent brand experience and growing the franchise system to over 200 franchise units in the mid-western states.
The advertising focused on good food, fast and at a good value
The McDonald’s Story
Kroc takes the company public in 1965 making millionaires out of many of the original franchisees and they say………the rest is history
The McDonald’s Story
A Brief History of Franchising
• Two Type of Franchise Business Models?
• What is Franchising?
- Trademark Franchising
- Business Format Franchising
- History of Franchise Regulations The McDonald’s Story
Fraud & Abuse in Franchising
• The recent financial malaise that began in 2007 will result in new regulations in the financial community and banking industry
Why Are There Regulations?
• Stock Crash of 1929 lead to the Securities Exchange Laws of 1933 and 1934.
• The abuses in franchising in the 1960’s & 1970’s lead to the adoption of franchise requirements by franchise companies
• The Enron collapse lead to Sarbanes Oxley disclosure requirements
A Brief History of Franchising
• Two Type of Franchise Business Models?
- Trademark Franchising
- Business Format Franchising
- History of Franchise Regulations The McDonald’s Story Fraud & Abuse in Franchising
UFOC in 1972-1978
• What is Franchising?
A Brief History of Franchising
• Two Type of Franchise Business Models?
- Trademark Franchising
- Business Format Franchising
- History of Franchise Regulations The McDonald’s Story Fraud & Abuse in Franchising
UFOC in 1972-1978
• What is Franchising?
FDD adopted in July 2009
Question?
A Brief History of Franchising
The Next Step in Our Discussion on the FDD is to review the actual Franchise Disclosure Document
A Brief History of Franchising