AnOverviewofFranchising
Is it an appropriate strategy for your business?
} 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
} The ability to expand using franchisees’ capital
} Franchisees are typically more motivated to succeed than salaried managers
} Franchising promotes increased quality at the unit level
} Franchising enables a company to grow faster than it otherwise could through corporate expansion
} Reduced risk and liability for the franchisor
} Fewer concerns over day-to-day operations
} Develop a business implementation plan
} Draft legal documents requiredbylaw
} Develop an Operations Manual
} Establish quality control mechanisms that franchisees will be required to follow
} Plan your marketing
} Develop a website dedicated to your franchising effort
} Develop marketing materials to help sell franchises
} Design a franchise sales strategy
} Advertise your franchise opportunity to generate leads
} Should be developed by experts
} Be sure the person doing the work has extensive franchise experience
} Must focus on implementation as well as the development of your franchise program
} Include organization charts, staffing analysis, primary and secondary research, detailed cash flow and sensitivity analysis
} Don’t rely on guesswork – thoroughplanningiscritical tothelong-termsuccessofanyfranchiseprogram
} Franchise legal documents should be drafted by a qualified franchise attorney
} Be sure the lawyer is a franchise expert, and has at least ten years of franchise experience
} Consultants with expertise in developing and managing franchise systems can assist you and your attorney in developing the business relationship (franchisor/franchisee) to be detailed in the legal documents
} Motivate and train your corporate staff to understand and support the franchise system
} Develop a comprehensive Operations Manual
} Prepare a detailed training program
} Consider on-line training tools
} Beware of Liability Concerns:
◦ Inaccurate or incomplete information provided in an Operations Manual can create liability.
◦ Franchisor liability can also be created if an Operations Manual inadvertently triggers “Agency Law”
} If you’re planning for aggressive expansion, create a formal written marketing plan outlining your strategies and budget
} Maximize quality control and brand awareness by expanding regionally first – before you consider national growth
} Don’t expand faster than your support capability
} Use a specialist in helping you plan for growth.
} Remember, one incremental franchise sale can mean hundreds of thousands of dollars gained or lost
} Your marketing materials create a critical first impression of your franchise opportunity
} Your website should be your first concern
} Develop a mini-brochure for the sake of economy
} A full-sized brochure or e-brochure is essential for credibility
} Work with professionals who understand the unique nature of marketing a franchised concept
} What you can and cannot say in your marketing is regulated by state agencies – be sure to have your attorney and the states review all materials
} Your franchise program will not succeed unless you select quality franchisees
} Develop a comprehensive and detailed strategy for evaluating and approving franchise candidates
} Prepare your staff for supporting your franchise sales effort
} Obtain ongoing coaching from experts with experience in franchise sales
} The franchise sales process cannot be taught in a day
} Voted #1 Franchise Consulting Firm in North America in an Independent Survey of 1,100+ Franchisors, Multiple Years in a Row
} More hands-on experience than any other firm
◦ Consultants with over 900 combined years of franchise experience
◦ 98 out of the top 200 franchise companies
◦ Offices in Chicago, Dallas, Los Angeles, Boca Raton, Miami-Fort Lauderdale, Atlanta, Dubai, UAE & Riyadh
} 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 provide assistance in several areas simultaneously
} Breadth across four functional areas
◦ Strategic planning
◦ Quality control
◦ Marketing
◦ Organizational development
} Franchise experience in 50+ countries
} Numerous awards and publications
} Develop business and implementation plans
} Coordinate development required legal documents*
} Create operations manuals and training tools
} Develop marketing plans, including digital marketing strategies
} Develop marketing tools (websites, brochures, videos)
} Develop sales strategies and methodologies
} Provide long-term implementation assistance Ourrelationshipisbasedontheuniqueneedsofeachclient
*Inconjunctionwithselectedindependentfranchiselegalrepresentation
} We accept a limited number of engagements
} We focus on long-term project involvement
} We specialize in implementation strategies and assistance
} We invest in people, notoverhead
◦ Senior Consultants average 25+yearsofexperience
◦ We bring real world expertise to your franchising efforts
◦ Our consultants do not learn at your expense
See consultant bios here.
} Consulting and legal costs vary depending on the scope of each project
} Our pricing is designed to meet the needs of each client with whom we work
} Do not go into franchising undercapitalized
◦ Expect to pay consulting and legal fees of $50,000 or more
◦ In addition to consulting fees, plan on spending about $10,000 per franchise sale on advertising
◦ Be wary of anyone who tells you that you can franchise without a significant commitment of resources
} Call us to discuss your concept
} If your business is qualified, we will schedule a no-cost consultation
} Your consultation will determine:
◦ Is franchising the right strategy for you?
◦ Is your business franchisable?
◦ What steps do you need to take?
◦ What specific costs should you expect?
} Visit our web site at ifranchisegroup.com
} Review our corporate brochure
} Request a free copy of our book titled How to Franchise Your Business
} Call us at (708) 957-2300 to talk about your concept and learn more about the services offered by iFranchise Group