Franchise Introductory Kit
Contact Information John Strifler
Franchise Sales Representative 3563 Empleo Street San Luis Obispo, CA 93401 (800) 366 6031 ext. 587 john.strifler@parable.com www.parablefranchise.com The information in this brochure is not an offer to sell, or a solicitation of an offer to buy a Parable franchise from Parable Franchising, LLC. An offer of a Parable franchise is made by means of a franchise disclosure document only.
Thank you for considering Parable franchise ownership! At Parable, our mission is: To resoundingly impact the Kingdom of God by leading and equipping a team of Christian Retail ministries to be successful, sought after havens of Christ’s love. Our stores are making a difference in their communities for Christ and I invite you to share in our vision by continuing to pursue your dream of Christian retail store ownership. With this franchise introductory kit you’ll learn about: • • • • •
Steps to franchise ownership Parable franchise program services overview Investment and personal financial qualification Store capitalization estimates for a typical new store Service fees
The kit contains a good deal of information and its goal is to give you an overall introduction to Parable franchise ownership. Owning your own business is quite an undertaking and there’s a lot to thoughtfully and prayerfully consider, so I’d like to get together by phone to give you more details and answer your questions. I’ll plan on following up with you in a few days after you have an opportunity to review this introductory kit. Thanks again for your interest in Parable Christian Stores. I‘ll look forward to talking with you soon!
In His grip,
John Strifler Franchise Sales Representative john.strifler@parable.com (800) 366-6031, ext. 587
Ten Steps to Parable Franchise Ownership From your initial phone interview to Grand Opening, here’s a look at the ten steps to being awarded a Parable franchise and the opening of your store.
Step 1: Phone interview and Franchise Application After you have had an opportunity to review this Franchise Introductory Kit we’ll arrange a time for a phone interview to answer your questions and discuss more details about Parable franchise ownership. Following the phone interview, the next step is to send you our Franchise Application form. Once you complete and submit the application form we will promptly review your application and contact you by phone to discuss any questions we may have and, hopefully, give you franchise application approval.
Step 2: Complete preliminary market study With your application approved, we’re ready to help you prepare a market study. Are there enough customers in the area to sustain your business? Is there other competition? What other national retailers are active in your market? Is your market growing? These are some of the questions we’ll begin to investigate at this stage. You will receive market profile forms that will help us understand the basic demographic and competitive factors of your market.
Step 3: On-site market evaluation The next step is to complete the market study. An experienced member of our staff will schedule a one day in-field visit in order to personally meet with you, discuss details of our franchise program, and complete an on-site target market evaluation and store location/shopping center search. This in-field visit will include reviewing firsthand much of the information gathered in Step #2 above, and generally involves visiting major new and existing shopping centers, prioritizing possible store locations, gathering landlord/leasing contact information and visiting and evaluating competitive Christian retail stores that currently may serve the target market area. During the field visit we will also give you a copy of our Franchise Disclosure Document (FDD) as required by the Federal Trade Commission and various state franchise regulatory governmental agencies.
Step 4: Lease negotiation assistance With the target market area identified and qualified, and a determination made about the availability of potential target market retail locations, the next step with which we can assist you is in lease negotiations. If you’d like our assistance in this important area, we typically make initial contact with leasing agents, check on space availability, and help to initiate general lease negotiations. If a qualifying location, with reasonable lease economics, is available within an acceptable time frame, we will help in the preparation of your non-binding Letter of Intent (LOI). We are not lawyers and do not practice law or give legal advice, so it is important for you to retain a lawyer before signing a lease. The non-binding LOI usually marks the beginning of formal lease negotiations and we work closely with you, your attorney, and the landlord’s leasing representative throughout this important process.
Step 5: Lease review We can assist you by evaluating the business points of your lease and providing you with our comments. You will want to have your attorney review the entire lease and insure that it conforms to applicable state law and protects your interests. Usually your attorney will then negotiate any changes to the lease with the landlord and have a final lease draft prepared, ready for execution.
Step 6: Prepare business plan and secure financing With the terms of the lease finalized, you will be able to complete your general business plan. This is especially important if you will be applying for bank financing. We can provide you with templates and forms suitable for most lenders.
Step 7: Visit Parable headquarters for “Discovery Day” With the target market qualified, your draft lease ready for execution, your business plan complete, and financing arranged we’ll invite you to visit us at our headquarters in beautiful San Luis Obispo CA for Discovery Day. Our business is unique – a business and a ministry – and at its core is built on relationships, common purpose, and a real sense of calling. We want to give you the opportunity to connect face-to-face with key Parable staff and executives. During your visit you will learn firsthand about our many services and programs designed to help you develop, open and operate a successful Parable franchise store. And most importantly, you’ll have a clearer picture of our mission to resoundingly impact the kingdom of God through Christian retail.
Step 8: Award of franchise You become an official member of our Parable franchise family when you and we both make the decision to sign the Franchise Agreement (see Service Fees Section). Following the execution of the Franchise Agreement you can execute your lease and start developing your store.
Step 9: Begin store development Store development begins promptly and, depending on space availability from your landlord, store opening usually takes place in approximately 14 weeks. During this development period all the elements that go into making a store come together: • store design/layout • leasehold improvement construction • business permits, insurance coverage • utility applications, fixtures, equipment • computer systems • inventory • signage • supplies • training • staff recruitment/hiring • grand opening • promotion planning • and much more There’s a lot to do, but our goal is to help you manage the process, so you won’t be overwhelmed. You’ll receive comprehensive training, detailed checklists, and weekly to-do-lists to help you accomplish all that needs to be completed and ready for store setup and opening.
Step 10: Store setup and opening We will send a qualified member or our store setup team to help you prepare for your store opening. We check to make sure all fixtures and equipment are installed and functioning properly, and help you with staff training. We will direct you and your staff with final merchandising and assist you in implementing your grand opening advertising campaign and events. Our goal is to help you have the entire store in first-class condition, ready for your customers, to maximize opening day success and minimize opening day jitters. Store opening is really just the beginning of your new career in Christian retail. As a Parable Christian Store franchise owner, you will benefit from our full complement of ongoing franchise support services geared to assist you in all critical areas of retail operations (see next page – Parable Franchise Program Services).
Parable Franchise Program Services Current franchise program service benefits include: Market Evaluation
Leasing Strategies
Store Development
Technology
Training
Buying
Management
Marketing
Community & Connecting
Market Study Demographic Trends Analysis Competitive Analysis Location Search Location Evaluation Landlord Letter of Intent (LOI) Lease Negotiation Lease Review Business Plan Templates Store Design/Layout Merchandising Plan Design/Build Construction Plans Fixture Design Equipment & Supplies Project Coordination Signage & Graphics Store Setup, Merchandising & Opening POS Inventory Control System Communications - Intranet Music Listening/Sampling System High Speed Internet Wireless System Management Training Seminar Hiring & Recruitment Guidelines Staff Training & Development Operations Retail Best Practices Initial Product Ordering & Merchandise Plan Major Vendor Direct Open Account Status Enhanced Vendor Discounts New Product Buying Service Core Inventory Program With Better Discounts Vendor Representation/Vendor Alliances Best Retail Practices In-Store & Phone Coaching Financial Control System Key Operating Ratios Analysis Comprehensive Data Analysis Annual Budgeting Open-To-Buy System Inventory Analysis Grand Opening Plan Seasonal Catalogs Email Blasts Product Insert/Flyers In-Store Promotional Banners & Signage Email Marketing Best Practices Customer Database Management In-Store Promotional Plan E-Commerce Website Custom Gift Card Program Custom Store Website MemberNET Intranet Access Annual Franchise Convention Meetings & Events at Industry Trade Shows
Investment and Personal Financial Qualification Franchise ownership has its rewards and its challenges – but it’s not a fit for everyone. While there are many factors that lead to business success, perhaps the most important is being financially prepared to undertake the investment. We want you to succeed and hope our Financial Guidelines help you determine if store ownership as a Parable franchise owner could be a good fit for your financial resources and needs. Our minimum financial qualification requirements involve three major areas: Personal Financial Net Worth, Liquid Assets, and Outside-the-Store-Income.
Initial Investment The estimated total investment for a new Parable franchise store is typically $298,000 - $433,000 depending on store size and other factors relating to the condition of the store location space. This range includes estimates for the hard costs of store development/opening plus estimates for working capital during the business launch phase. See New Store Capitalization Estimates section for details.
Personal Financial Net Worth We require a minimum personal financial net worth of $600,000. Our net worth requirement is based on several factors: shopping center landlord requirements for ensuring that enough assets back store lease obligations, collateral and equity requirements for bank financing, cash reserves to support store operations in the launch phase of your new business and vendor credit requirements within our industry.
Liquid Assets We require minimum liquid assets of approximately $70,000.
Outside-the-Store Income New store owner/operators need a dependable source of personal income from sources outside the store during the start up of the business and afterwards; how long, is a function of personal income needs and business skills. For most owner/managers the income source is generally a spouse working outside the store, investment portfolio, retirement plan, or an inheritance. We recommend a conservative approach to owner/ manager salary expectations.
New Store Capitalization Estimates Typical New Store Size: 3,000 sq. ft. * Development Item
Capitalization Estimate
Leasehold Improvements**
$48,000
Retail Display Items***
78,000
Equipment & Supplies
14,000
Computer Equipment & Software
15,000
Inventory at Cost
85,000
Franchise Fee
25,000
Grand Opening Advertising
15,000
Subtotal Development Items
$280,000
Less Landlord Tenant Allowance****
(15,000)
Estimated Total Initial Investment
$265,000
Working Capital*****
50,000 - 100,000
Total Capital Required Estimate
$315,000 - 365,000
Notes: * Store Size New store size can vary but typical new stores are approximately 3,000 sq ft. Factors influencing store size: market size, owner’s financial resources, rent/occupancy costs, competition, etc. ** Leasehold Improvements Leasehold improvements - this is construction work in the store space beyond that performed by the landlord. This figure can vary depending on the condition of the space, the extent of landlord’s work, the store size, and construction costs in the local market area. This estimate includes retail display items installation. *** Retail Display Items Includes wall, island, Bible, book fixtures and counters, slatwall wall coverings, gifts displays, music displays, display hardware, merchandising accessories, interior signage, and shipping/freight charge estimates. **** Tenant Allowance Landlord Tenant Allowance is an estimate. $5.00 per sq. ft. is a reasonable planning number, but the final amount will be determined as a result of the lease negotiation process and could be higher or lower. ***** Working Capital All new businesses need working capital to cover cash requirements for pre-opening expenses such as lease required deposits, legal expenses, insurance prepayments, utility deposits, and training travel expenses. After store opening working capital is essential for supplementing operational cash flow in order to ensure that you have adequate cash reserves through the critical launch phase of your business. The amount of working capital will vary depending on store operational costs and sales volume achieved. The $50,000 - $100,000 figure above is only a guideline. Your needs may be more or less than this depending on operational costs and store sales performance.
Service Fees Franchise Fee: $25,000 payable upon the execution of the Franchise Agreement Royalty Fee: $750 per month Brand Marketing Fund: .5% of sales paid monthly
Other Fees: Our Franchise Disclosure Document (FDD) contains detailed information on our total franchise business system, services, procedures, franchisee obligations and other nominal fees that may apply. Upon approval of your Franchise Application you will receive a copy of our current FDD during the market study field visit.
Thank you for considering Parable franchise ownership! I have been involved in Christian ministry in the local church for over 25 years and directly with Christian retailing for 10 years. There is a unique blend of business and ministry in this work. It is exciting to help fellow believers consider Parable franchise ownership as both a career alternative and a dynamic way to impact their communities for Christ and His Kingdom. I look forward to further helping you consider whether Parable franchise ownership would be a good fit for you and your community. Thanks again!
Blessings,
John Strifler Franchise Sales Representative john.strifler@parable.com 800.366.6031 ext. 587 805.543.2644 fax