“Turn-Key”: The Myths and Realities of Being a Franchise

Owner

Cheryl Wadeson

Agenda

• Background• Franchise concept• Process and funding• Myths and Realities• Lessons Learned

Cheryl Wadeson

Independent Business vs. FranchiseIndependent Business Owner

Franchise Owner

Brand Awareness Unknown Established brand

Control/Autonomy Total freedom Play by their rules

Cost Can start up on a shoestring budget,Control over investment decisions and timing

Upfront franchise fee, ongoing Royalty and Advertising fees, Franchisor dictates remodels

How to run your business Build it from scratch They give you the playbook, training and coaching

Operational Resources Go it aloneTotal freedom

Tried and tested business – with an established system and support (training, real estate, advertising, product development, supplier network)

Source: ”Independent Business or Franchise? How to Decide”, Curtis Kroeker, Inc., June 2013

Franchise + Fee

Start Up + Investment

Royalty Fee

$27K $100K - $200K 6%

$45K $1M - $3M 2% - 5%

$15K $250K 8%

$40K $215K 6%

$5K $250K 3%

Source: www.entrepreneur.com 2013 Franchise 500

What Does it Take to Become a Franchisee?

Why Cold Stone?

Franchise Track Record

Strength of the Product or Service

Market Area

and Trends

Franchise Terms and Support

Paying for a Franchise

• #1 - You are selling yourself • Getting an SBA loan:– You need good credit– 15-25% cash for a down payment – May require collateral– 10 – 25 year repayment terms– Patriot Express loans

Myth: Franchise Owners are Rich!

23%

22%

15%

9%

9%

4%4%

14%

Sales

COGS

Salaries

Rent

Royalties/Ad

Other

Utilities

Taxes/Fees

Profit

Successes and Lessons Learned

Working Capital

Human Relations

Know Yourself