b us i n e s s s e r v i c e s fr a n c hi s i n g fe at u r e
expert advice: Gary Bauer | President | JAN-PRO Cleaning & Disinfecting
What Franchisees Need to Consider When Looking at a Franchise Franchising is a great business model but that does not “ mean all franchises are created equal. Finding the right brand, goes beyond financial opportunity and often encompasses culture and resources.
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Unit level economics Unit level economics describes a specific business model’s revenues and costs in relation to an individual unit. It’s critical that a prospective franchisee has realistic expectations when it comes to developing a license territory. Franchisees should review the item 19 of the Franchise Disclosure Document (FDD). The franchisor cannot make earnings representations that are not included in item 19 of the FDD. Existing Franchisees are a great source of information and a list of existing franchisees. Item 20 of the FDD will be helpful in finding contact information of existing franchisees.
The cost of the total investment not just the cost of the license The FDD for a franchise opportunity will clearly list the range of cost to license and open a location. Item 5 will outline initial costs while Item 6 will include royalties and other fees. Ongoing operating capital, real estate, insurance, and funds for salaries are just a few additional details that will come up and many are covered in Item 7 of the FDD. The best way to gain a better understanding of these costs is to connect with members of the franchise development team or reach out to existing franchisees. 32 Franchising MAGAZINE USA
