franchising –is it a strategy that fits you? · franchising is a business strategy franchising is...
TRANSCRIPT
Franchising – Is It a Strategy That Fits You?
70%of All People Have Thought Seriously about Owning Their Own Business.
Is it The Right Dream For You?
Common Reasons for Business Ownership
Control your own financial freedom
Build an asset for future sale
Create more control and freedom for your time
Fair reward - make money for yourself instead of the company
Emotional fulfillment of building your own dream
Common Reasons for Business Ownership (continued)
Satisfaction and happiness in day-to-day activities
Build an asset to pass on to family members
Create an opportunity to work with family
Remove threat of job loss
Replace lost income stream
Other?
Franchising – What’s It All About?
Franchising is not a business or industry itself
Franchising is a business strategy
Franchising is a strategy of the Franchisor designed to penetrate and dominate a marketplace
Efficient distribution systemHamburger meat, muffler parts, coffee groundsKnowledge, training, software, databases
Leverage growth through resources of stakeholders
Knowledge, experience, effort, purchasing power, financial
Similar goals & unified thinking among participants
Strategic-Partnership
Elements of a Franchise
Brand - the Franchise name associated with the products or services delivered in a memorable and satisfying experience
Operating 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 manner
Support System – helps the Franchisee get better and better at delivering the service in a memorable experience – helps a Franchisee improve their performance
Franchisee – the individual motivations or reasons for being a part of a vibrant system
Value of Systems in a Franchise Reduced Risk – Proof of success is in place Operating System – Success Formula has been established for you You don’t have to re-create the wheel – or many wheels Other Franchisees with their ‘feet on the street’ – emulate the best
Advice & support from the Franchisor – position of experience
Collaboration – Share best and worst practices with similar people
Systems continually adjusted, changed, & improved
Training systems
Sales & marketing strategies and systems
Manuals & other documentation
Letters, contracts, agreements, documents – all in place
Development costs – shared resources
Purchasing power
Many others…
Entry to a Franchise System Franchise Fee
The Franchise Fee is the cost of putting the Franchisee into the business of the Franchisor, not as a partner, but as a participant.Entry fee to the point of the completion of the initial training programsAccess to all of the Franchisor’s systems
Royalty FeeThe Franchisor’s share of the customer’s money generated by each Franchisee using the Franchisor’s systemsThe oil that makes the engine run
Advertising & Marketing FeeUsed to build Brand presence to benefit all membersAdvertising campaigns, marketing campaigns, co-op programs, Search Engine Optimization, Creative Artwork, collateral development costs, etc
Evaluation – Making an Informed Decision
System of discovery – two-way exchange of information Step-by-step qualification system should be in place
Open & honest exchange of information
30 – 120 days to complete the due diligence process
Should never feel pressure to move too quickly yet the information you need must be accessible – usually on a schedule set out by the Franchisor
Includes open access to all Franchisees in the system
The goal is to feel comfortable to make an informed decision about becoming Strategic-Partners
Franchisor Disclosure – Get All of the Pertinent Information
Exchange information on a fair and equitable basis
Formal Disclosure Documents
No decisions – documents for 14 days
Cooling off period – final documents for 7 days
Full disclosure of all Franchisees
Earnings Claims – most don’t, some do
Financial performance data will be obtained from Franchisees
Important Consideration – Exit Strategy
How 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
Face Your Fears – Realize the Dream
Common and expected fears – we all have them
Fear of change, failure, unknown – perfectly natural
Naysayers are everywhere – the ‘fire hose brigade’
Listen to advisors but trust yourself too
Face it – feel it – blast past it – the only path to the dream
It will never be the perfect time where all the stars line up
Opportunity
Finances
Family
Market Conditions
Demographics
Advisors
Franchise Consultant Value
Delivery of Currencies of Value
Money – help avoid wasting your resources pursuing less than optimal matches for you
Time – spend my time to help you sort through thousands of Franchise options
Security in decision making – help you eliminate systems that don’t fit for you and your characteristics
Knowledge – apply my specialized Franchise knowledge and experience for your benefit
Franchise Broker/Consultant Value – continued
Provide education about Franchising
Interview/Profile/Discuss/Follow up
Identify characteristics most important to you
Help identify best options for you
Match your qualifications to appropriate systems
Help with selection of systems to learn about
Introduction to appropriate personnel at those Franchisors
Act as a buffer between you and Franchisor
Help with information exchange process
Changed Results Will Only Happen if You Change Activities!
Is It Your Time?