What is a Franchise?A franchise is the agreement or license between two legally independent parties which gives:
1. a person or group of people (franchisee) the right to market a product or service using the trademark or trade name of another business (franchisor)
2. the franchisee the right to market a product or service using the operating methods of the franchisor
3. the franchisee the obligation to pay the franchisor fees for these rights
4. the franchisor the obligation to provide rights and support to the franchisee
Advantages of Buying a Franchise
Proven system
High probability of success (after 5 years 95% vs 47%)
Support and network
Speed to market
Staffing advantages
Association with a well established brand, reputation and product or service
Advantages of Buying a Franchise
Assistance with site selection, lease negotiation, site development, and builders
Management support including training
Established standard procedures, operating manuals and stock control systems
Assistance in securing finance
Established financial systems and business metrics
1 ▪ Is Business Ownership for Me?
How much cash do I really have?
What is my tolerance for risk?
What is my expected ROI and when?
Am I passionate about my product or service?
Am I willing to take on numerous responsibilities?
Do you have the experience and skills to manage and lead?
3 ▪ What Industry Do I Want to Be In?
• Automotive• Business Services• Children’s Business• Education• Financial Services• Food/Full-Service Restraints• Food/Quick-Service
Restaurants• Food/Retail Sales
• Home Improvements• Hotel & Motels• Maintenance• Personal Care• Pets• Recreation• Retail• Services• Technology
4 ▪ What Franchise Do I Want to Own?
Industry trends
Marketing
Franchise organization
Royalties – base, advertising, software, etc
Training and support
Brand recognition
Cash flow quadrant
Cash requirement
5 ▪ How Do I Raise Capital? Capital required
Start-up, franchise fee, operating, lease, salaries
Cash required
Lenders typically require 30% to 60% cash
Options for raising cash
Sell shares
Use personal savings (shareholder loan)
Find partners
Refinance assets
Be creative
6 ▪ How Do I Select a Location?
Perform demand and area rate survey
Complete due diligence
Talk to other franchisees
Determine size of grid or radius
Identify if your franchise agreement is site specific
Understand leasing – net, cam, TI, leasehold cost
Assess location visibility and profitable
Be patient
7 ▪ What is My FA/DD?
FA – Franchise Agreement
DD – Disclosure Document (PE, NB, ON, MB, AB)
Hire a franchise lawyer specialist
Understand not much will change
Determine number of lawsuits between franchisees and the franchisor
Identify the number of units are open and success rate
8 ▪ Marketing - What Should I Look for?
Social media strategy
On-line reviews
Mobile friendly web sites
Search Engine Optimization (SEO)
Easy to find online
Web site quality
Where do consumers look for their product?
9 ▪ What Technology Might I Receive?
Management controls
Inventory
Communication
Business management
Training
Process
Security and access control
10 ▪ Do I Belong in Entrepreneurville?
Passion
Burning desire to win
High risk tolerance
Great leadership skills
Cash flow quadrant
Self-belief
Greatest reward ever!