HowToFranchiseYourBusiness
The Decision to Franchise
◦ How Franchising Works
◦ Alternatives
◦ Quality Control
◦ Legal Aspects of Franchising
Marketing Your Franchise
Selling Your Franchise
Creating a Successful Franchise Strategy
◦ Structural Decisions
◦ Financial
◦ Organizational Development
Questions and Discussion
Wearegoingtotrytocoveragreatdealofinformation,soweare askingthatyouholdyourquestionsuntiltheendofthesession unlesstheyareonaparticularslide.
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◦ Consultants with over 900 years of franchise experience
◦ 98 out of the top 200 franchise companies
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More “senior level” experience
◦ Hands-on experience at start-up and established franchisors
◦ Former CEOs, CFOs, EVPs of more than 50 different franchise companies
Adia (now Adecco), Armstrong Tile, Auntie Anne’s, Dunkin Donuts, LINE-X, Pearle Vision, McDonald’s, PIP Printing, Schlotzsky’s, Snap-on Tools, Snelling & Snelling, and other national brands
The ability to bring more resources
◦ Faster completion
◦ Ability to assist in several areas simultaneously
Breadth across four functional areas
◦ Strategic planning
◦ Quality control
◦ Marketing
◦ Organizational development
Franchise experience in 50+ countries
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Team with Hands-On Franchise Experience
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◦ Efforts have resulted in tens of thousands of franchise leads
◦ And many hundreds of franchise sales
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Considering franchising your business?
Franchising less than one year?
Franchising more than one year?
Wearehappytosendyouacopyofthis presentation,soyoucanlimityournotetakingif yousodesire. Also,happytosendacopyofa videoandabookifinterestedinexploring further.
FTC rule 436 cites three elements that legally define a franchise:
◦ The use of a common trademark
◦ The exercise of control or provision of assistance
◦ The collection of fees, royalties, mark-ups or other monies from the franchisees
If you have all three elements, you are a franchise, regardless of what you call it
Some state definitions vary, but are similar
Do not have to use the “f-word”
Franchisee typically pays
◦ Franchise fee average about $35,000 to $45,000
◦ Royalty range between 4% and10%
◦ Advertising range between 1% and 2%
◦ Franchisor will often sell product to the franchisee
Franchisor typically provides
◦ Use of trademark
◦ Initial training
◦ Operations manual and systems
◦ Ongoing supervision and support
◦ Marketing support
◦ Other support services like purchasing, R&D, etc.
Leverage Capital
Speed of Growth
Motivated management
Reduced risk
Few operational concerns
Higher quality
Organizational leverage
Must “share profits”
◦ Franchise unit will usually generate less profit than a profitable unit
◦ But far more profit than an unprofitable company-owned operation
Less Control
Good relations with franchisees take work
MYTH: Litigation
Survey by independent industry source indicated that only 27% of franchisors had any litigation
◦ This includes large companies like McDonald’s and others who are targeted for frivolous lawsuits and lawsuits unrelated to franchising
◦ McDonald’s, with 30,000+ contracts had (2008) only six pending lawsuits. Big Target. Litigation rate of 0.02%
◦ Recent example:
A group claiming that the way they make chicken is unhealthy
Group suing them for making their children obese
Group suing them for beef tallow in cooking oil
A Group suing them for collection of tax on bottled water
One suit by a JV partner
One pending franchisee lawsuit from a franchisee who owes $3 million in unpaid royalties
* Not responsible for acts of an independent contractor (franchisee) relative to third parties. Exceptions are when a) you create an agency, and/or b) if you are negligent.
What are your goals? BE SPECIFIC!
◦ Certain levels of profits
◦ Sell company for a specific amount
What is your risk tolerance?
◦ How much are you willing to invest and re-invest?
◦ What other resources do you have to bring to bear?
Conduct Cash Flow Analysis to See if You Can Reach Your Goals
◦ Example:
Goal = Sell company for $10 million at the end of five years
Two units in operation
Total Equity Investment in New Operation = $150,000
Total available capital = $200,000
Existing Free Cash Flow for Reinvestment = $100,000/year
Units Break Even in First Year
After that, Free Cash Flow from New Units = $50,000/year/each
This Example
◦ Would need to open 27 company units
◦ That would take about 12 years of reinvesting everything
◦ Total Investment = $4 million over that time frame
Cannot get there from here
Alternatives:
◦ Change Goal
◦ Change Time Frame
◦ Change Assumptions (structure, capital devoted, leverage, etc.)
◦ Raise equity to grow faster
If you are raising equity, factor in dilution
◦ If you will give up 50% of the company, you need to grow twice as big
◦ Run the numbers again
Terminal Value
$2,750,000 in free cash flow by Year Six = $19,250,000 valuation. Divide by two to account for 50% ownership = $9.6 million selling price.
AGAIN, ONLY IF NO INCREMENTAL OVERHEAD IS NEEDED TO SUPPORT
With an influx of a little over $3 million
◦ Can jump-start growth and leverage off of that growth
◦ Will need to get to about 50 – 54 units
◦ Total investment $7.5 - $8 million
◦ But you are using investor money
Problem: Realistic valuations
◦ Valuing the existing business – (4X – 7X EBITDA)
◦ Year One Business Value = $700,000
◦ Business Value after Equity = $3.7 million
◦ Sophisticated investor would want 81% ($3M/$3.7M)
◦ Would need to find an investor who would invest $3M for 50%
◦ Might try numbers again at $5 million and a 20% stake???
◦ At some point, just not realistic
Capital availability even with realistic valuations
◦ Limited in today’s marketplace
◦ Control an issue
System
Business Opportunity orLicense = Name
= Dealership Distributor Agency
SalesRep
Name System Fee Franchise Name Trademark License Product System Distributor/ Dealer JointVenture + Equity +
Name Fee Trademark License =
Advantages
• Less Regulation
- Still a Franchise in NY
Disadvantages
•Lower fees
•Do you have strong name?
•No control over brand
Often, this alternative is eliminated because the company does not have adequate brand strength, and, even if they did, they would risk losing their trademark if they did not exercise control. Moreover, it is important to note that the “control” element of the franchise definition is very easy to trigger.
System Fee Business Opportunity orLicense =
Advantages Disadvantages
•Less Regulation?
- More at the state level
•Lower fees
•Do you have strong name?
•No control
•Create competition
•Poor image
This can be a viable option for some, but the loss of the branding element is an issue that should be carefully considered. For example, what would happen to your licensed channel if a branded channel were to be introduced by your competitors? Will you have national accounts? Or a desire to create consumer brand loyalty?
Dealership or Distributorship = Name System
Advantages Disadvantages
•Less Regulation
•Easier to sell
•ABSOLUTELY NO FEES
•Support provided for “free”
•Must have product to sell
•No revenues from service
•Products can be “stepchild”
•Dealer defections to:
- better products - cheaper alternatives
Dedicated dealerships can have many of the same advantages as franchising. The biggest disadvantages are the need to pay for services out of the wholesale margins. CAUTION: Can create an inadvertent franchise after the fact, as happened with Mitsubishi v. To-Am.
Advantages Disadvantages Agency or SalesRep = Name System
•Less Regulation
•Easier to sell
•ABSOLUTELY NO FEES
•Support provided for “free”
•Must have product /service
•Turnover is high
•Increased training costs
A “top-down” flow of revenues will avoid franchise laws. Again, be aware of the creation of an inadvertent franchise.
Technology-based shared services
◦ Use an app to drive business
◦ Avoid franchising by top-down fee structure
◦ Uber, Lyft, Airbnb
Certification programs
◦ Certification Mark, not a Trademark
TM/SM = Source of Product or Service
CM = Characteristics of a Product or Service
◦ Cannot be used as a TM by the owner of the mark
◦ Must be willing to offer to all who qualify
◦ Cannot have exclusive territories
◦ Can easily stray into a franchise relationship
The decision should be goal driven
◦ Distance
◦ Speed
◦ Obstacles
◦ Risk tolerance
A Volvo or a Rocket Ship?
Don’t have to choose only one vehicle
Don’t decide to franchise (or whatever)
◦ Instead, decide:
Do I want to build a third-party distribution channel?
Do I want that channel to be branded?
If it is branded, do I want to control quality?
How do I want to be paid?
The law (or your lawyer) should never dictate your good business decisions
Credibility
Differentiation
“Sizzle”
Buyer appeal
Value Proposition
The franchisee should make a return on the time they invest
◦ No different than if they were to go out and get a job
◦ Salary should be “market rate”
The franchisee should make a return on their investment
◦ No different than if they invested in a stock
◦ Return should be commensurate with what they would make if they were to make an investment of similar risk
◦ Ability to sell back their investment at the end of the term
Franchisees expect that they will need to build their business
◦ Will expect these returns in three years or less
Annual Cash-on-Cash R.O.I. at the unit level – our criteria
◦ 15% for Owner Operators
◦ 20% for Area Developers (who will support additional overhead)
Occasional exceptions
Perfecting the business
◦ If you have perfected your business, SELL IT!
◦ If you are standing still, someone is gaining
◦ McDonald’s in 1955
Quick vs. Slick
◦ If you are going head to head with more established competition and your business model is not highly differentiated – be sure to refine first
◦ More unique, the sooner you should franchise
Risk: Someone with a camera and a notepad
First mover advantage
Who was the first . . . ?
12,200+
30,000+
Business plan/strategic direction
Legal documents and registrations
Operations manuals
Training program
Quality control mechanisms and systems
Effective marketing plan
Franchise collateral materials
Website and web-based marketing
Advertise
Design and implement a sales strategy
Staff an organization to implement the plan
Capital
If you don’t know where you are going, then any road will take you there.
The Adventures of Alice in Wonderland
You are entering a new business.
Goals drive your business. Start with support and cost structure.
What do you need to do to help your franchisees succeed?
Don’t rely on guesswork: The futureofyourbusinessisat stake.
Financial analysis is essential.
Reverse engineer your success.
Goal Sell for $20M in 5 Years
Average Selling 15 times EBIT
Year Five Earnings
$20M/15 or about $1.3M
Average Royalties
$30,000 per franchise
Average Net Royalties
$10,000 per franchise
Need to sell
$1.3M/$10,000 = 130 Franchises
There are certainly a large number of neophyte franchisors who take a “Ready-Fire-Aim” approach
◦ Often rely on guesswork
◦ Or analysis of what comparable franchisors are offering to make major decisions
“Copying” is not a strategy – it is a recipe for disaster!
◦ Uniqueness is important to success, whether achieved through the business model, marketing, support, structure, fees, or marketing.
◦ Copying assumes that business economics are the same, support is the same, and that a new franchisor will simply differentiate themselves based on great franchise marketing
◦ But established franchisors often have many advantages not shared by newer franchisors
◦ So, the copycat strategy that is taken by many new franchisors can be responsible for their failure
The impact of a 1% royalty mistake
◦ If a single franchisee generates $500,000 in revenue
◦ 1% = $5,000 off the bottom line
◦ But franchisees will never tell you that they are paying too little and often inertia will keep the royalty where it is at for years
Structure
◦ Structure dictates support requirements and responsibilities
◦ Will (should) impact fees, royalties, targeted franchisee
Targeted franchisee
◦ Will dictate support requirements as well
Territory – 10% mistake is huge
Franchisor whose franchisees generate $500,000 sells 10 territories
At a 6% royalty, that franchisor is losing $300,000 a year …forever
Plus enterprise value of $3 million lost
Total Loss from 10 territories with a 10% error: $9 million+
Other fees and margins on product sales
Many people think franchises have lower level of quality – just the opposite is true
The Quality Trade-Off ◦ More difficult to control
Higher Caliber
More highly motivated
Longer term
Studies show franchisees outperform Anecdotal evidence
Intelligence
Capitalization
◦ Biggest reason for failure
◦ Can cause franchisees to cut corners
Work Ethic
Personality
◦ Experience in leading a team
◦ Tendency toward being an entrepreneur
◦ Honesty and ethics
◦ Philosophy and cultural fit
◦ Nature (Confrontational or adaptive)
◦ Compatibility (you are “married” for the next 20 years)
“Job Specific” requirements
Role as a sales tool
Role as a training tool
Role as a reference tool
Role as in reducing liability
Extension of the legal documents
A good Operations Manual can help you avoid litigation
A bad Operations Manual can be a franchisor’s worst nightmare
Operations Manuals must provide you with adequate brand control but should not be too prescriptive – a fine line
Must avoid creating an inadvertent “agency” relationship
Must avoid potential areas of negligence or take great care when prescribing actions
Should cross-reference regulations and not cite them
Should be updated annually and reviewed by professionals and attorney
I told you not to panic! Everything will be just fine.
"Some
people seem to think there's no trouble just because it hasn’t happened yet. If you jump out the window at the 42nd floor and you’re still doing fine as you pass the 27th floor, that doesn’t mean you don’t have a serious problem."
–
Charles Munger, Vice Chairman, Berkshire Hathaway –
Discussions with Key Stakeholders
Review existing material, forms, & documentation
Develop preliminary outline
Determine gaps in current documentation
Assign responsibility for content creation
Identify Subject Matter Experts for gaps
Interview Subject Matter Experts
Onsite observation of units & documentation
Resolve Best Practices Conflicts
Draft material to cover all identified gaps
Edit all material into common style & “voice”
Revise first draft of Operations Manual based on client & legal input
Faster growth requires formal training programs
◦ For your staff
◦ For franchisees
Focus on training the trainer (your franchisee)
◦ Franchisee will train their staff
◦ Should have tools to do so
Video pushes QC to lowest level of organization
Online training decreases costs, increases quality, and can decrease liability
◦ Customized by employee
◦ Document what is reviewed and test scores
◦ Lowers on-site training time and costs for both the franchisor and the franchisee
The FTC rule
◦ Disclosure document with 23 items
◦ Disclosure fourteen days prior to sale
◦ Final Franchise Agreement seven days prior
◦ Financial Performance Representations
◦ Consistency with Franchise Disclosure Document
State regulations
◦ 14 registration states
◦ Regulate advertising
◦ Business opportunity states
◦ Determining applicability (even definitions vary – NY)
Laws vary from state to state
◦ Franchisor’s state of incorporation
◦ Franchisor’s domicile
◦ Franchisee’s residence
◦ Territory covered
◦ Where discussions take place
Track these variables closely
Check with your attorney when in doubt
States having franchise registration or business opportunity laws
Must be registered prior to soliciting franchise leads
Submission of advertising materials
◦ CA, MD, MN, NY, ND, RI, SD, WA
Submit all advertising to your attorney in any event
Relationship and state specific laws
◦ Termination
◦ Non-compete
◦ Escrow
◦ Other
Franchise Legislation Within the US 2024
Notes:
• Within Indiana, Michigan and Wisconsin, registration is effective immediately upon the application being filed.
• South Carolina provides an exemption if the franchisor has filed a State trademark registration.
States having no franchise or filing requirements
States having franchise registration requirements
States where franchisors must file to comply with business opportunity laws
• Florida, Nebraska, Kentucky, Utah and Texas require a simple exemption filing. Once that is filed, a franchisor can begin to offer franchises.
• Connecticut, Maine, South Carolina and North Carolina provide an exemption if the franchisor has obtained a Federal registration of its trademark
• Six States require registration of advertising prior to use. (CA, MD, MN, NY, ND, WA)
• New York, Oklahoma and Rhode Island require the FDD be provided to a prospective franchisee at the earlier of (i) the 1st personal meeting held to discuss the franchise or (ii) 10 business days before any agreements are signed or any monies paid (including fully refundable deposits).
• Michigan and Oregon require the FDD be provided to a prospective franchisee 10 business days before any agreements are signed or any monies paid (including fully refundable deposits).
• Many states also have State Relationship Laws that impact issues such as franchise termination or non-renewal. Your franchise legal counsel can advise you on relevant issues involving these states.
• Check with your franchise legal counsel for additional details and updates which are available. Legend:
Cannot provide Earnings Claims unless in Item 19
◦ No information on sales
◦ No information on earnings
◦ Limited information on expenses (costs as a percentage of total costs are ok)
◦ Start-up costs are included in Item 7 and must be disclosed
Advantages and disadvantages
◦ Must be appropriate
◦ Sell faster?
◦ More or less litigation?
50% choose not to do Earnings Claims
◦ For good reasons, bad reasons, or bad information
◦ Selling franchises in the face of no FPR
Rescission
◦ Return fees paid
◦ Make good on franchisee’s investment
Fines – both civil and criminal
◦ Up to $11,000 per violation for the FTC Rule
◦ State fines of up to $100,000
Attorney’s Fees
Damages
Litigation costs and distraction
Barred from selling franchises
Disclose violations for 10 years
Private rights of action at the state level
Government enforcement
Personal liability
In some states, constitutes Class 4 felony (jail time!)
Start locally, then regionally
◦ Cluster support
◦ More effective franchise advertising
◦ Consumer advertising economies
◦ Brand building
◦ Buying economies
Don’t expand faster than your support capability
◦ Quality control is key
◦ Nothing sells franchises as well as happy and successful franchisees
◦ Three hour drive time
Different franchises require us to target different types of franchisees –affecting the media and message used for effective marketing.
Identify your prospect as narrowly as possible
◦ Survey Competitors
Background
Hot Buttons
Media
◦ Survey Top Franchisees
Characteristics of top performers
Are we selecting the right lead generation strategies?
Is the advertising message appropriate for our targeted franchisee profile?
Are we targeting the right prospects and using the right media based on our development strategy?
Name Recognition
◦ 40% say joining a “known brand” is not vital
◦ 40% would prefer a known brand, but are open to newer concepts
70% or more will visit the corporate office…100% should visit yours
Only 10% are looking because of job loss in a normal economy
◦ In today’s world, however, that number may be 30% to 40% depending on the nature of your franchisee
80% will talk to your franchisees…100% should talk to your franchisees
Source of Franchise Leads by Media
Percentage of Total Leads Received: 2011-2023
The Franchise Sales Pipeline
Send Marketing Materials, Prequalify, Schedule Meetings
Meet With 3 – 10% of Leads
Convert 15% - 20% of Completed CIRFs to Sales
(Franchise Update reported 30.5% in 2023)
Close 65% - 75% of Discovery Days
(Franchise Update reported an average of 73.3% in 2023)
Average 45 – 90 Days
Lead to Meeting Time to close can range from 30-90 days or more following the initial face-toface meeting
Total time to close: often 12-20 weeks
Marketing Cost = $11,638 Average per sale*
Overall Expected Close Rate = 1.82%**
Close Rate for Qualified Leads = 15% (those that meet certain pre-qualifiers)
* Average cost per sale ranged from about $9,000 to over $12,000 in recent years. While not measured separately in the Franchise Update report, Cost Per Sale numbers can vary for emerging brands, in particular.
** Historically, close rates have hovered between 1.8% and 2%, but higher (around 3%) in recent years, but now appears to be leveling off to previous averages, since close rate dropped back to 1.82% this year; average Cost per Lead (CPL) was $155 in the prior year, $197 in 2021, and spiked to over $300 in 2020 due to the pandemic. The numbers above are based on the most recent Franchise Update survey. Average CPL: $253**
Source: Franchise Update.
Average Closing Costs (Media Dollars Per Sale Excluding Broker Fees)
Most franchise companies do not have an unlimited marketing budget
Circumstances will be very different
◦ Goals
◦ Budgetary restrictions
◦ Geographic focus
◦ Profile of your franchisee and your customer
◦ Quality of existing websites and materials
◦ In-house resources and their capabilities
◦ Competitors
Need to allocate resources based on an integrated lead generation strategy
A canned approach will not work
Your message is no longer centered on print media. Instead, integrate all media around your website.
It never hurts to get a second set of expert eyes on your online marketing presence!
◦ Website Performance
◦ SEO Keyword Rankings
◦ Social Media Presence
◦ LinkedIn Profile
◦ PPC Advertising Campaign
◦ Online Reputation
Prioritize your efforts based on results and budget
Franchise marketing is very different from consumer marketing
Franchise marketing is highly regulated
The Five Sales
◦ Go into business for yourself
◦ Buy a franchise
◦ Invest in your industry
◦ Invest in your specific franchise
◦ The timing is right
Be sure to have your attorney and registration states review all materials
Unique process unlike any sale
◦ Quit your job
◦ No more benefits, paid vacations, 401ks
◦ Put your trust in someone you have never before met
◦ To invest your life’s savings
◦ In a business in which you have no experience
◦ And to which they are making a “lifetime” commitment
And, oh, by the way, I can’t tell you how much you may make
A good concept
+The Right Message +Marketing Plan
+Adequate marketing budget +Good sales technique = leads = meetings = franchise sales
Some studies have indicated the average new franchisor will sell:
An average of 9, 11, and 13 franchises in their first three years
Median sales of 4, 5, and 6 sales in their first three years
The Franchise Success Cycle
First lesson of franchise sales: Nobody ever “sold” a franchise
Psychology of “the award”
◦ Two way street, you must qualify
◦ If you do qualify, you are special
◦ You must follow our rules
This psychology must permeate your thinking and your technique -- we are not salesmen, we are facilitating an award
“Buy” vs. “Invest” in a franchise
“Franchise Support Center” vs. Headquarters or “Director of Franchise Development” vs. “Franchise Salesman”
Value Proposition:
Proven systems
Established brand
Advertising economies
Operating economies
Shared knowledge
Support services provided
This assumes that most people looking to buy a franchise are logical in their approach….. ….which is often not the case.
Lead Received, Input and Qualified
Electronic or Print Brochure Sent to Candidate
(CQ)
Personal Interview
FDD
Scheduled – Concept Review Call Background, Criminal, and Reference Checks
FDD Review Call, Unit Economics Call Scheduled
Discovery Day Held at Franchisor’s HQ
Important concept to understand when measuring hiring decisions, advertising and marketing related expenditures –
Present Value of a Franchise (PVOF)
Should use this principle in decision-making
PVOF = Net Present Value of franchise fees, royalties, product/equipment sales, advertising fees, and other revenue, less any direct expenses, discounted to today’s dollars
The sale of a single franchisee paying 6% royalties on AUVs of $500,000 can result in $600,000 in revenues, plus advertising, product purchases, increased buying power, etc.
Be selective
Hire the best you can afford
Maintain personal involvement
Let brand maintenance and the potential for franchisee success be your guideposts
Train your sales staff
Measure everything
And, most of all, be sure a standard process is in place for handling each prospect
If the concept does not work, do not franchise
Use franchisee success as your capacitor of growth
With those caveats, franchise sales are a natural result of a well executed sales and marketing strategy
The number of franchises you sell will not be a result of “averages” but instead a result of marketing expenditures.
What If It Is Not Working -- Diagnosing Sales Problems
Low conversions could indicate Poor marketing materials Could
Indicate
Concept Problems
In short, close analysis of various media-specific, marketing, and sales statistics, can be indicative of where problems may exist, allowing for appropriate corrective action.
Low conversions could indicate poor sales skills or poor validation
High lead costs could indicate media selection problems Could indicate Sales problems -Urgency -Setting Agenda -Closing Skills Few leads could indicate lack of broker confidence
Marketing and Sales Audit Process
Sales Factor Potential Problems Symptoms Diagnosis
• High unit investment
• Financial performance
• Look and feel
• Franchise structure
• Value proposition
• Franchisee validation
• Bad/No P.R.
• Low unsolicited inquiries
• Losing sales to competitors
• Repeat objections not overcome
• Prospects go dark after validation
• Evaluate design/construction model
• Comparative financial analysis
• Evaluate unit economics/ops
• Contract comparison
• Marketing comparison
• Phone interviews of franchisees
• Franchisee satisfaction surveys (web)
• Evaluate real estate portfolio
• Survey “lost” sales
Franchise Lead Generation
• Media Selection
• Media Mix
• Message
• Ad Spend
• Target Audience
• Timing
• High lead costs
• Low close rates
• Message confusion
• Few qualified prospects
• Low quality lead sources predominate
• Historical vs. norms
• Media specific analysis
• Performance vs. competitors
• Message vs. competitors
• Franchisee or competitor surveys
• Target Audience
• Materials Used
• Message
• Inadequate differentiation
• Design Quality
• Production Quality
• Bad/No P.R.
• Low unsolicited inquiries
• Losing sales to competitors
• Repeat objections not overcome
• Lose sales to market leader
• Low application rate
• Review for best practices
• Message based on surveys
• Application rate vs. norms
• Lead handling
• Follow up
• Effective Process
• Sales Skills
• Salesperson Motivation
• Sales Tools
• Staffing v. Goals
• Low application rate
• Low discovery day rate
• Low close rate
• Long “time to close”
• Variances in salesperson close rates
• Un- or under-worked leads
• Few broker leads
• Historical vs. norms (close, speed, etc.)
• Salesperson vs. salesperson
• Historical vs. past performance
• Develop sales process map
• Mystery shop sales force
• Leads per salesman
• Sales per salesman
• Broker validation calls
Problem Resolution – Phase Two
Sales Factor Confirmed Problem Potential Solutions
• Unit investment
• Financial performance
• Look and feel
• Franchise structure
• Value proposition
• Franchisee validation
• Real estate model
Franchise
Lead Generation
• Media Selection
• Media Mix
• Message
• Ad Spend
• Target Audience
• Timing
• Target Audience
• Materials Used
• Message
• Inadequate differentiation
• Design Quality
• Production Quality
• Lead handling
• Follow up
• Effective Process
• Sales Skills
• Salesperson motivation
• Sales Tools
• Staffing v. Goals
• Value engineer design and construction process
• Suspend sales and work on business model, support, franchisee training
• Retain design firm, consumer marketing firm, or PR firm as appropriate
• Revise franchise business structure
• Provide incremental value or reposition concept
• Communications plan, FAC, address survey-specific concerns
• Improve real estate process
• Develop third-party financing programs
• Develop formal marketing plan based on survey results
• Alter marketing mix to focus on higher-quality lead sources
• Alter message based on survey results
• Increase advertising expenditure based on goals
• Optimize website and PPC campaigns
• Develop and measure benchmarks; rotate bottom 10% quarterly
• Rewrite, redesign, and reprint materials as appropriate
• Develop or revise standard sales correspondence
• Rewrite and redesign web pages as appropriate
• Add technology improvements (auto-responders, sales software, etc.)
• Develop additional promotional tools (video, etc.)
• Develop and map effective sales process
• Train sales staff and provide guidelines to non-sales staff
• Replace poor sales personnel
• Benchmark and measure performance
• Alter compensation
• Evaluate external resource opportunities (FSO, LQS, software solutions)
• Add sales professionals, support staff, or both
• Proactive broker programs
Franchise Program for Aggressive Growth
Approximate Development Activity Schedule
Benchmarking
Initial Planning Session
Strategic Planning & Gap Analysis
Financial Sensitivity Analysis
Disclosure Document
Franchise Agreement
State Registration Process
Operations Manual & Revisions
Training Program
Train-the-Trainer
Training Videos
SkyManual Online Operations Manual
Research / Profiling / Brief
Franchise Marketing Plan
E-Brochure
Mini-Brochure
Website Development
Franchise Sales Video Script
Franchise Sales Visual Aids
Franchise Sales Training & Manual
Franchise Implementation Strategy
Field Consulting Manual
Implementation Consulting
Legal
Coordination
Strategy
Legal Documents
Quality Control
Franchise Marketing
Sales & Implementation
The iFranchise Group does not provide legal services but instead works through outside legal counsel
Franchise Program for Moderate Growth Approximate
Development Activity Schedule
Benchmarking
Initial Planning Session
Strategic Planning & Gap Analysis
Financial Sensitivity Analysis
Disclosure Document
Franchise Agreement
State Registration Process
Operations Manual & Revisions
Research / Profiling / Brief
Franchise Marketing Plan
E-Brochure
Mini-Brochure
Website Development
Franchise Sales Training & Manual
Franchise Implementation Strategy
Implementation Consulting Strategy Legal Documents
Franchise Marketing
Sales & Implementation
Legal to sell in 36 non-registration states
With registration, legal to sell in all states
Franchise Program for Conservative Growth
Approximate Development Activity Schedule
Benchmarking
Initial Planning Session
Strategic Planning & Gap Analysis
Financial Sensitivity Analysis
Disclosure Document
Franchise Agreement
State Registration Process
Operations Manual & Revisions
We can modify our programs to meet the needs of any company getting into franchising. Our fees can range from $20,000 to $200,000+.
Consulting and legal costs vary based on franchise company’s situation:
◦ Desired speed of growth influences services needed
◦ Ability to do work internally
Do not go into franchising undercapitalized
◦ Legal fees: $15,000 to $35,000+
◦ Consulting and Development: $20,000 to $200,000
◦ Organizational expenses: $10,000 to $20,000
◦ Franchise Marketing: $8k - $12k per sale (six months)
◦ Personnel: varies widely
Can bootstrap growth
Can spend hundreds of thousands
Franchising is a means of duplicating success, not creating success
Thrives by creating win-win situations
You must be selective
Franchising is a new and different business
Is not the right solution for every business
Provides one of the most powerful business expansion models ever developed
