Franchise ownership can provide an opportunity for business ownership without recreating the wheel. This document discusses franchising, the benefits it provides such as brand recognition and established systems, as well as important considerations for prospective franchisees such as conducting thorough due diligence. It also outlines the general process for becoming a franchisee, from identifying goals and financial qualifications to signing a franchise agreement and opening a business. Key advantages of franchising include using a proven business model and receiving ongoing support, but franchisees must also pay royalties and work within the franchisor's guidelines.
2. Franchise Quest…Franchise Search Consultants
Larry S. Powell, President
Franchise Quest, a franchise search consulting firm that recruits
candidates for a wide variety of franchise / business opportunities
from small to large and startups to nationally recognized.
Over 36 years experience encompassing both the corporate and
franchise worlds.
Prior to Franchise Quest, the original owner and operator of
Handyman Connection, a home improvement franchise in San
Antonio, TX from 2001 to 2008.
Formerly, the Vice President, Human Resources for The
Psychological Corporation / Harcourt Assessment.
A graduate of The University of Texas at Austin with a BBA degree
in Management.
3. Franchise Quest…Franchise Search Consultants
Larry S. Powell, President
In addition to his 25 years in corporate America, Mr. Powell’s
experience has taken him through the “life-cycle” of business /
franchise ownership:
Involvement with a franchise consultant
Determining business and lifestyle goals, objectives and needs
Reviewing various franchises
Performing due diligence
Selecting and buying a franchise
Successfully owning and operating a franchise for 6+ years, and
growing the business to about $1M annual revenue
Exiting the business through a franchise re-sale
4. Franchise Quest…Franchise Search Consultants
Larry S. Powell, President
Why am I here today?
Outplacement Assistance….another “alternative”
Your Options…
Be Unemployed
Go to School, or other activity
Find Other Employment…another job
Explore Self-Employment
Start an Independent Business
Business Opportunity…low-cost-of-entry business
Franchise
5. What is Franchising?
Franchising is a method of distributing goods or
services to consumers. The franchise system owns
the right to the trademark of the business. The
franchisee purchases the right to use the trademark
and operating system.
Most people associate the word “franchise” with
fast food restaurants. But, there are many more
types of franchise businesses, including everything
from advertising to laundry/dry cleaning, maid
services to printing/copy services, real estate to
weight control and many more.
6. What is Franchising?
•Franchising is a network of interdependent business relationships
that allows a number of people to share:
• A brand identification
• A successful method of doing business
• A proven marketing and distribution system
In short, franchising is a strategic alliance between groups of people
who have specific relationships and responsibilities with a common
goal to dominate markets, i.e., to get and keep more customers than
their competitors.
7. Legal Factors to be
Considered a Franchise
Franchising is defined by state and federal laws as a
commercial relationship in which three factors are present:
1. a licensed trademark
2. a prescribed marketing plan
3. the payment of a franchise fee for the right to
participate in the program.
When these three factors exist, the relationship is regulated
as a franchise by state and federal laws.
A “Business Opportunity” is similar to a franchise without
the restrictions and royalties. This can be an advantage
with SOME industries. Brand recognition would not be a
factor.
8. What Is A Franchise?
Business in a Box, that:
-Includes complete set of instructions…
-- Franchisor has worked out the kinks…
-- Proven Turnkey Business Model
-- Operational Methodology & Systems
-- Initial Training & On-going Support
-- Location Selection
-- Set-up & Build-out
-- Hiring & Training Assistance
9. What Is A Franchise?
--Marketing Strategy & Implementation
--Mentoring & Collaboration
-- Group Purchasing Power
--Entity Identification
-- Rights To Use The Brand, Trademarks & Trade Names
10. Franchise Types
• Single Unit Franchise
• Multiple Units
• Area Developer
• Master Franchise
• Business Opportunity… “Biz-Op”
11. Categories of Franchises
Accounting/Tax Services Fitness Packaging/Ship/Mail
Advertising/Direct Mail Florist Shops Painting Services
Auto & Truck Rentals Food/Restaurants Paralegal Services
Automotive Products/Services Payroll Services
Golf Products/Services
Batteries-Retail & Comm. Pest Control Services
Beverages: Special Greeting Cards Pet Sales/Supplies
Business Brokers Hair Salons & Services Photography
Business/Mgmt Consultants Health Aids & Services Printing/Copying
Campgrounds Home Furnishings Real Estate Services
Check Cashing/Financial Services Home Inspection Recreational Services
Children’s Services Hotels and Motels Rental Equipment & Supplies
Clothing and Shoes Insurance Retail Stores
Computer/Electronics/Internet Janitorial Services Security Systems
Construction Materials Senior Care
Jewelry Sign Products & Services
Consumer Buying Services
Convenience Stores Laundry & Dry Cleaning Tanning Centers
Cosmetics Lawn/Garden/Agriculture Telecommunications
Dating Services Maid & Personal Services Transportation Services
Drug Stores Maintenance Travel Agents
Educational Products/Services Marine Services Vitamin & Mineral Stores
Employment Services Optical Aids & Services Weight Control
12. Well Known
Franchises
McDonald’s Gold’s Gym
Subway Great Clip’s
Curves H& R Block
Alphagraphics Handyman Connection
ServPro Jenny Craig
Cleaning Authority Kwik Copy
Baskin Robbins MAACO
Budget Blinds
Molly Maid
Maui Wowi
Money Mailer
CareMinders Home Care
Courtyard by Marriott Express Personnel Services
Lenny’s Sub Shops Papa John’s Pizza
FocalPoint Coaching Radio Shack
Dunkin’ Donuts Sport Clips
Fantastic Sams Taco Bell
Fuddruckers Wild Bird Centers of America
13. Established versus
Emerging Franchises
Mature Franchises:
Name Recognition
More regional and national advertising
More costly to get in
Territories may be smaller and limited in some markets
More refined training and support
Newer Franchises:
Cutting Edge Concepts
Cost-of-entry may be lower
More flexibility
Territories may be larger and available in more markets
Opportunity for emerging companies
14. What is a Franchisee?
“Frantrepreneur”
(fran*tre*pre*neur) n.
One possessing the desire to be a business
owner -- without the desire to recreate the
wheel -- by following a proven system for the
benefit of personal and professional goals.
15. Are You A Potential
Franchisee?
What Do Franchisors
Look For
In a Prospect?
16. Are You A Potential
Franchisee?
Financial Qualifications…Liquid Capital & Net Worth
Business & Financial Acumen
Managerial Skills
Customer Service Orientation
Enthusiastic
Entrepreneurial Spirit
Work Hard / Smart
Teamwork Oriented…franchises are collaborative working
environments. Follow a system.
Decisive…make sound decisions within a reasonable time frame
17. Wanted…Military
Veterans
Franchisors understand Vets have demonstrated:
Discipline
Teamwork
Ability to follow a system
Leadership skills
Military & Franchises are similar structures, built on
system methodology & execution
Many Franchisors participate in VetFran Program
18. The Frantrepreneur
Mentality
“I’m in
“I have the opportunity to
business for learn from the success and
myself, but not failure of others.”
by myself”.
“I want a ‘bottled’ process for success
that I can use in developing my own
“Why would I work
successful business.”
for someone else
when I can work for
myself and reap the "Why would I spend years and the investment
rewards of my required to establish a successful brand when I
efforts?" could buy a franchise which provides immediate
access to a successful business system and a brand
name which others already have made
successful?"
19. Franchise Options
TYPE:
• Office OWNERSHIP:
•Traditional retail • Hands-on
• Mobile products/services • Passive
• Light Industrial • Part-time/full-time
•Work from home
SCOPE:
PRODUCT/SERVICE:
• 75 categories - an endless • Single Unit Franchise
array of possibilities • Multiple Units
• Something to match anyone’s • Master Franchise
background, skills and • Area Developer
interests
20. Franchise Statistics
Franchise businesses account for about 50% of all retail sales in
the United States.
1 out of every 12 business is a franchised business.
A new franchised business is opened every 8 minutes of every
business day.
Franchise businesses employ more than 14 million Americans.
There are an estimated 3,000 franchise companies operating in
the U.S. doing business through more than 500,000 retail
outlets.
More than 75 industries use franchising to distribute goods and
services to consumers.
A 1999 study by The United States Chamber of Commerce
found that 86% of franchises opened within the last five years
were still under the same ownership and 97% of them were still
open for business.
21. Franchise Statistics
(continued)
A U.S. department of commerce study conducted from 1971 to
1997 showed that during that time less than 5% franchise
businesses were closed each year. Compare that to a U.S.
Small Business Administration study conducted from 1978 to
1998, which found that 62% of non-franchised businesses
closed within the first 6 years of their existence due to failure,
bankruptcy, etc.
Total sales by franchised businesses are projected to exceed
$2.3 trillion, this year.
In 2000, the median gross annual income, before taxes, of
franchisees was in the $75,000 to $124,000 range, with over
30% of franchisees earning over $150,000 per year.
22. Franchise Success Rate
Franchises have a 90%
+ success rate. Most
people can’t even
predict that they can
keep their jobs with a
90% certainty.
23. Advantages of
Buying a Franchise
Offers the greatest success potential, with the least amount of RISK!
Franchisors have a vested interest in your success.
The marketplace has already been checked out by the franchisor and
determined the system to be successful.
The franchisor utilizes collective buying power and passes on the
discounts to you.
Local and national advertising for the franchise operation as a whole is
supplied by the franchisor.
Supervision, training programs and consulting are readily available from
the franchisor.
Managerial, operational and accounting systems are in place to
facilitate your success.
Ongoing research and product development is provided by the
franchisor.
24. Disadvantages of Buying
a Franchise
You have to pay the franchisor royalties.
The contract with the franchisor must be renewed after a certain
period of time.
There is a lack of flexibility because business methods are
dictated by the franchisor.
The franchisor's problems are also your problems.
You may be forced to buy products supplied by the franchisor
rather than the most cost effective product available.
You don’t get to make all of the decisions in how to run your
business.
In some ways, owning a franchise is like a cross between
independent business ownership and employment.
25. Questions To Ask
Yourself
What are my reasons for wanting a business of my own?
Do I have the necessary attributes to be self-employed?
Do I have the total support of my spouse / family for buying a
business?
When I find the “right” franchise / business opportunity, am I the
type of individual who will be ready, willing and able to “pull the
trigger” and move forward with a new life?
26. Questions To Ask
Yourself
How much capital do you have to invest?
How much liquid assets do you have?
Are you interested in using 401K / IRA to fund the business?
Do you require a specific level of annual income?
Are you interested in pursuing a particular field?
Are you interested in retail sales, food service, or performing a
service?
Do you want a part-time or fulltime opportunity?
How many days / hours are you willing to work?
27. Questions To Ask
Yourself
Do you want to operate the business yourself or hire a
manager?
Do you want to have employees?
Do you want to have inventories?
Do you want to have Accounts Receivables?
Will franchise ownership be your primary source of income or
will it supplement your current income?
Would you be happy operating the business for the next 5-20
years?
Would you like to own several outlets or only one?
28. Due Diligence…
Validation
Questions…….ask….ask….ask!!! You are the one that
validates!
The goal is to know what to expect the day you open the doors!
Every franchisor is different with how they help you through the
process. You are that must conduct the due diligence to
determine if the franchise / business concept validates.
29. Due Diligence…
Validation
When Exploring Business Ownership…Do Your Homework …
The best source of information is the existing franchisees /
business owners.
– Listen carefully and read between the lines in terms of not just what they are
saying, but also how they are saying it.
Personally, select a reasonable number of existing owners to
call. Do not settle for calling only the ones recommended by the
franchise rep.
Don’t make it easy for the franchisor to steer you. If you are
looking for variety in the characteristics of the existing
franchisees, ask the franchisor or your coach for assistance.
assistance
30. Due Diligence…
Validation
Visit with some franchisees who are struggling. No system has
all their franchisees in perfect alignment all the time, so there
will undoubtedly be a few who are struggling or upset about
something.
Remember, one of the primary reasons for making validation
calls is to gather additional facts and information you can use in
your evaluation, but it is also to develop a sense of the culture
and attitudes of the system.
Prior to buying any franchise or business opportunity, a
thorough due diligence should be conducted, including
consultation with a CPA / Accountant and a Franchise Attorney.
31. Funding
Consult with the Franchisor regarding available funding options
Benetrends…401(k) / IRA
SBA Loans
– Patriot Express Pilot Loan Initiative: http://www.sba.gov/content/express-programs
– Other SBA Loan Programs:
http://www.sba.gov/category/navigation-structure/loans-grants/small-business-loans
32. Process to Becoming
A Franchisee
1. Identify Goals; Objectives; & Lifestyle Needs.
2. Review Current Financial Position And Future Goals.
3. Complete Confidential Questionnaire.
4. Teleconference To Discuss Questionnaire.
5. Search for Franchises / Business Opportunities.
6. Discuss Options That Align With Goals.
7. Initial Teleconference With Franchise Rep.
8. Receive Franchise Packet & FDD
9. Additional Teleconferences / Webinars With
Franchise Rep(s).
33. Process to Becoming
A Franchisee
10. Validation Process…Talk / Visit Franchisees.
11.Consult with Attorney & Accountant.
12.Visit Franchise Headquarters…Discovery Day.
13.Obtain Funding.
14.Sign Franchise Agreement
15.Obtain Real Estate, if necessary.
16.Franchise Initial Training
17.Complete Build-out, if necessary
18.Local Training
19.Open For Business
20.On-Going Support
34. Should You Use
a Consultant?
A Franchise Consultant...
will take the time to educate you on the franchise industry
will help you define your goals & objectives, so that you don’t
waste your energies and time on franchises that are not right for
you or that you are not qualified for
can provide you valuable insight on franchises that you won’t find
on your own
will help you present your qualifications to a Franchiser
is paid by the Franchisers, but he / she recognizes that this only
happens if he / she provides you excellent service and presents
to you the right opportunities
will take an unbiased approach to helping you achieve your goa ls
35. Franchise Quest … Franchise Search Consultants
Larry S. Powell, President
Recruit & Match Candidates for Top-Quality Franchises;
Business Opportunities [Biz Ops]; Low-cost-of-entry home-
based businesses.
1. Our goal is NOT to convince you that business ownership is the
right thing for you.
2. COACH….don’t sell.
3. Assist with the various decision-making processes that may
lead to business ownership:
36. Franchise Quest…Franchise Search Consultants
Larry S. Powell, President
Help candidate understand pros & cons of business ownership
Edu. Background; Work Exp; Personal Attributes; Interests;
Preferred Bus. Model; Lifestyle Needs; Financial Resources
Help candidate determine and list those career & personal
lifestyle objectives, goals, & needs which he / she wants
business to help him / her attain
Introduce to appropriate options by identifying franchise /
business opportunities that align with those goals
Franchise
Business Opportunity [Biz Op]
Low-cost-of-entry home-based business
37. Remember…
A dream is just a dream.
A goal is a dream
with a plan and a deadline!