Introduction to Franchise Opportunities Resource

Franchise Series 1- Franchising Introduction

Franchising is essential to the business market as it helps to bolster growth and development of brands in most industries. While the concept comes from ancient China, this is something that has evolved tremendously over the years. It grew tremendously as something business professionals could maintain, starting in the Middle Ages and exploded in America during the 1800s.

What is Franchising?

Franchising and branding are part of the same team. Franchising has been successful because it’s a business that promises the same products and services that you receive in one city or one block, somewhere else. People love consistency which why franchising works. If you have something that works, then it’s best not to fix it, as the saying goes.

The Roles of the Franchisor and the Franchisee

As you dive into franchising for the first time, you’ll get to experience a franchisor-franchisee relationship. You’ll find that all forms of the relationship are different and even if you’re the common digit in the equation, your franchisor can change the way you feel about franchising or your business in general by a drastic amount. There are three main kinds of relationships when it comes to the franchisor and franchisee which will be further discussed in the chapter, but can be summarized into these categories:

• Franchisor as partner
• Franchisor as parent
• Franchisor as dictator

Franchise Series 2 – Understanding the Franchise

One of the biggest reasons why franchising is such a big business is because it can be found in almost every industry out there, including the food, retail, pet and many other industries. There are many options within these franchise that can make them lucrative. However, there are a few things you will want to keep in mind when it comes to finding a franchise.

Not all Franchises are the Same

While the concept of franchising is universal, the way that it is laid out is not. While one franchisor may offer one set of services, another within the same industry may offer something a little different. This is why it is essential to really take the time to understand what the franchise offers you before you sign the franchise agreement.

It is also important to know what you are looking for. You want to get into a trendy industry as this will help you to have better success, though this is not the only thing to consider. You want to find an industry that you are passionate about and enjoy as this will make your time more enjoyable and can help you to be more successful.

The Different Franchise Relationships

Most people think that the franchisee/franchisor relationship is the same across the board. The truth is that the relationship will be different depending on the brand. Even within the same franchise brand though there are different relationships that you can have with your franchisor. These relationships include:

• Single Unit Franchisee- This is the most common method for getting into franchise ownership. With this, you will own one location. If you are planning to buy multiple units in the future this can present certain issues, such as slowing growth and development and the location you want may be gone.
• Multi Unit Franchisee- This is where you know going into the deal that you will own a certain number of stores. When signing the franchise agreement the number of stores, their location and the time frame for opening each one will be stipulated. There are two different agreements that are needed for this, the franchise agreement as well as the development agreement that sets forth the guidelines for the individual locations.
• Master Franchise- This franchise relationship is designed so that while you have one or more locations, part of your job will be finding new franchisees. Keep in mind that there are many different ways that the sub-franchisee agreement can be worked. In some instances you will become the franchisor for these units or you may just be the intermediary between the franchisees and the franchisor.
• Area Representative- In this instance, you do not necessarily have to buy a franchise. Essentially you will be the salesperson to the area trying to recruit new franchisees. Often times you will get a percentage of the franchise fee or other payment for bringing on new franchisees for the region.

Retrofranchising and Refranchising

While it may seem that retrofranchising and refranchising are the same thing, the truth is that these are two very different concepts that you should understand. Essentially, refranchising refers to locations that were once franchise locations and are now owned by the franchisor. On the other hand, retrofranchising refers to locations that have always been owned by the company and not franchised that are now open to franchising.

Chapter 3 – The Franchisee’s Checklist

The perks of franchising is that anyone can learn to do it. The bad thing about franchising is that you do have to have a certain personality to succeed. If you don’t have business ambitions, if you don’t have the desire to grow, learn, and succeed, you will not find franchising enjoyable. Moreover, you have to be willing to be organized or to learn organization. As a franchisee, you will deal with the administrative side just as much as you’ll deal with your business front. While you don’t have to be a pro at organization when you walk in, you do have to come in with the flexibility it takes to learn.

Advantages and Disadvantages of Franchise Ownership

When you’re considering franchising, you should be well aware of the massive list of advantages and disadvantages that come with it. Having a solid understanding of what a good franchise will come with (in good and bad terms) will help you figure out if a franchisor is right for you or if they are nothing more than a wasted investment.

When it comes to advantages, these are just some of the things you should look for:

• Branding a well-known franchise will bring you more business from startup.
• Franchisors have an operating system proven to work time and time again.
• Franchisor provide all-inclusive training so you know everything you need to know to succeed.
• Operating manuals, marketing, and training information are all provided for you and your team.
• Reduces the price of products through franchisor partnership.
• Professionally designed point-of-sales system and equipment.

Disadvantages that may come up (and you shouldn’t be wary of, but should keep in mind):

• There is always going to be a pretty large startup cost. This can range depending on brand/franchise/industry.
• There is a level of independence lost as you must follow your franchisor’s design, system, and sales models.
• You may become over-dependent because of the rules that you must follow. You may end up relying on your franchisor more.
• You will be representing a brand, as many others will, so it can be an advantage or a disadvantage when your neighboring franchises provide excellent or terrible service to customers and set the mood for how they feel about you.
• There is a level of inflexibility associated with franchises where you can’t do whatever you want product-wise. If you want to change anything, it has to be run through your franchisor, tested, approved, and then spread throughout the franchise if it is approved for national sales.

Be Realistic About Franchising

When you enter the franchising world, you need to know what to expect, but not be overly positive or overly negative. You will have limitations, you will have freedom. Many franchisees set themselves up for disappointment thinking that they can make that initial investment and see an immediate profit. Purchasing and running a franchise isn’t like putting coins in the slot at the casino, pulling the lever, and then having money spit back at you. While the investment can be risky, you will only be in danger if you don’t do your research or put the work in. For anyone willing to work. When you’re a franchisee, you will be expected to fill the roles of:

• Teacher
• Mentor
• Monitor
• Student
• Model Employee

Before you jump into the pool of franchising, you should ask yourself:

• Am I willing and able to learn new skills?
• Am I happy following orders?
• Are corporate benefits important to me?
• Am I feeling healthy?
• Do I like people?
• What do my finances look like?
• Do I have the support I need?

Chapter 4 – The Big Decision: Picking the Right Franchise

The great thing about franchising is that it’s open to anyone who wants to do it. There are keys to success when it comes to franchising, but none of them are things you can’t learn. When you’re taking the step into franchise ownership, it’s time to make the big decision: what industry do you want to get into? Picking the right franchise is a much bigger decision than you might think at first glance. You might think it’s a little superficial, but this is a long time investment. You need to know that it’s something you not only like, but that you’ll love coming to work every day for however long you plan to be in contact with the franchisor.

Another important part of picking the right franchise is to make sure your franchisor knows what they’re doing and that they are set up to not only support you, but to help you succeed. Any good franchisor will have a system in place that is meant to help you succeed because your success means their success.

Reliable Sources for Information on Available Franchises

You can’t always just trust what a franchisor says and you can’t trust salespersons especially when it comes to selling franchises. While not all of them are full of it, you might find them spewing promises they can’t keep because they have no investment in the company past getting their paycheck once you sign the franchise agreement and fork over the initial fee. With that said, you should be looking in reliable sources at the franchises you’re interested in and investigate whether the claims the franchisor or salesperson makes are true by talking to current franchisees.

A good few places to check for available franchises are:

• Print Directories
• Trade Shows and Expositions
• The Internet

Asking Potential Franchisors the Right Questions

Before you meet with any franchisors you might want to get into business with, you should be investigating these a number of questions on your own and filling them in with whatever answers you can find. While all the answers may not be available on the internet or in magazines, you might be able to find some form of answers for some of them. Then when you meet with your potential franchisors, you should ask the following when you’re interviewing as well as when you go over the legal documents they give you. These questions are:

• What is the total cost of the franchise?
• How long has the business been operating?
• What is the rate of failure in franchisees?
• Is the business seasonal?
• What support is provided to the franchisee?
• What skills should a competent franchisee possess in order to achieve success?
• Does this business meet industry standards?
• Can I speak with existing franchisees?
• How are conflicts resolved?
• How long is training and what exactly is done in training?

Franchisor-Provided Assistance

One of the most important things you can look at when choosing a franchisor is the kind of assistance that they offer for opening your franchise. You don’t want to hand over the initial franchise fee and then to be left to your own devices, particularly if you’re new to franchising. Your franchisor should be able and willing to help you scout locations, train, and learn as much about the industry as you possibly can. When you receive the FDD, you should find in it information on training and support. If you find that the franchise and it’s support system are not up to the standards that you expected, talk to your franchisor and your attorney and think about checking out another franchise that may offer far more of what you need and want.

Chapter 5 – Looking at the Cost of the Franchise

The cost of the franchise is one of the most important aspects of the franchise purchase to consider. You want to make sure that you can afford the franchise you are buying. There is a lot more that goes into this than the franchise fee. Here are some of the factors you will want to consider when it comes to figuring out the real cost of the franchise you want to buy.

Start With Yourself

To start with you want to know what your real financial situation is. You want to make sure you will have the capital you need to get your business off the ground and sustain it during the capital draining period. Also, once you know what your actual financial situation is you will know how much you will need in terms of loans and other financial help. If you are having trouble figuring out where you are financially, talk with your financial advisor to get a better understanding.

The Cost of Startup

The franchisee fee is a one time payment that you make with the franchise agreement. This is designed to cover the cost of your training, expenses for finding the new franchisees and much more. While this may seem like a lot, this is really only the tip of the iceberg in terms of the initial costs for startup. Some of the other fees you can expect to pay include:

• lease or purchase cost of the property
• equipment rental or purchase
• fees for the contractors
• decor and signage
• taxes, permits and similar costs
• freight costs and inventory
• insurance

Keep in mind that depending on the industry and the franchise you choose there may be more costs. All this information will be displayed in the FDD that you will receive before signing the franchise agreement. You will also want to have capital to cover your costs for the first few months while you get the business established.

Labor Costs

Labor costs are not something you will be able to get around with your franchise. This will vary depending on the franchise and the size of the store that you have. Smaller franchise stores may only have a few employees while a larger store will need to have more employees. Make sure that you are planning your labor costs strategically. In many cases your franchisor can help give you a good understanding of how to work your scheduling. Also included in the labor costs should be your professional fees, such as an accountant, lawyer and consultant.

The Business Plan – Key to Your Funding

If you need funding from investors, loans or other sources, chances are you will need to provide a business plan. This will need to be well thought out and comprehensive. Make sure that you include all relevant aspects of the business plan to ensure that you are able to capture these potential sources of funding for your franchise.

Other Aspects to Consider with Financing Your Franchise

There are several aspects to keep in mind with your franchise. For one, you should know the way that you will come up with the capital you need. While your initial thought may be to finance everything, the truth is that this can be dangerous. Going into serious debt can have a severe impact on your financial future. Going into debt at all should be taken very seriously. Make sure you will be able to pay back the loans so you do not find yourself in hot water financially. In many cases, you should be able to talk with your franchisor as well as a financial advisor who has experience in this arena to ensure that you are making the right move financially. You may even find a few ways that you can cut costs with the franchise purchase.

Chapter 6 – The Legal Side of Franchising

Knowing your legal rights, expectations, and obligations is an important part of being a franchisee. You won’t be able to do much of anything you don’t understand all the legal documents that come with your franchise. It’s important to hire an attorney early on when you’re first reading the FDD and franchise agreement so you’re sure you understand all of the papers in their entirety. As a franchisee, you’re going to have much more responsibility on your shoulders than you may be used to. An entire business is going to be relying on you for your guidance and knowledge so when it comes to the legal documents, it’s important to know and understand everything so no toes are stepped on—accidentally or otherwise.

The FDD at a Glance

When you receive the FDD from your franchisor, you can expect to find:

• Information on the franchise
• Company’s key staff and their qualifications
• Franchisor’s financial history, including any bankruptcies or litigations
• The initial and ongoing fees
• Purchases required of franchisee such as supplies and equipment
• Legal responsibilities as franchisee
• Responsibilities of the Franchisor to you
• Audited financial statements
• Information on system-wide growth
• Company-owned locations, how many are open, how many have closed
• A directory of franchisees in the system

When it comes to the FDD and signing the franchise agreement, don’t worry, the law has your interest in mind. When you’re given the FDD to read over, there is a mandatory 14-day period before the franchisor can legally have you sign the franchise agreement. This helps prevent the franchisor from pressuring franchisees as they read over the FDD. Franchisees should know that this 14-day period is not, however, a quiet period. Prospects are more than welcome to call the franchisor and ask questions about the FDD, the franchise, or anything else that may pop into their head regarding business. Following that 14-day period which the franchisee uses to read the FDD, there is another 7-day waiting period if the franchisor makes any changes to the franchise agreement.

Inside the FDD

Once you crack open the FDD, you will find the cover and 23 additional items. FDDs normally follow this order:

• Cover
• Item 1: Franchisor, its predecessor, and its affiliates
• Item 2: Business Experience
• Item 3: Litigation
• Item 4: Bankruptcies
• Item 5: Initial Franchise Fee
• Item 6: Other fees
• Item 7: Initial Investment
• Item 8: Restrictions on Sources of Products and Services
• Item 9: Franchisee’s Obligations
• Item 10: Financing Available
• Item 11: Franchisor’s Obligations
• Item 12: Territory
• Item 13: Trademarks
• Item 14: Patents, Copyrights, and Proprietary Information
• Item 15: Obligations of Operation for the Franchise Business
• Item 16: Restrictions on What the Franchise May Sell
• Item 17: Renewals, Terminations, Transfers, and Dispute Resolutions
• Item 18: Public Figures
• Item 19: Financial Performance Representation
• Item 20: List of Franchise Outlets
• Item 21: Financial Statements
• Item 22: contracts
• Item 23: Receipt

Meeting Your Franchisor Part Way

While you’re curious about your franchisor, they will be just as curious about you. Think about all the people and businesses your franchisor is handling and understand that they have their own sets of reservations and worries when it comes onto signing new people. Franchisors want to sign on franchisees who will grow in and with their business. Good franchisors want to avoid scams just as much as you do. If you find yourself with a franchisor who is unwilling to answer your questions regarding the FDD, you may want to take a step back and consult your lawyer about going any further.

Before you make the final step with regarding franchising, talk the decision over with your attorney to be sure you understand everything that is implied in the contract.

Chapter 7 – Getting Your Franchise Started

As you get into franchising, it’s important to understand immediately that franchising only works when all of its units cooperate on the same level. Franchising is all about consistency between units. If there is no consistency, then the likelihood of your franchise having a consistent customer base is very low. With that said, the consistency starts with the location of the franchise. If you’re picking a location for the first time, your franchisor is likely a few steps ahead of you on the available market in whichever area you’re looking.

Surveying the Locale

For the most part, as you plan to apply for a franchise, you should already be looking for somewhere to place your location. While there might be restrictions regarding territorial rights with other franchisees, you should still have your eye on the lookout for good places to investigate come placement of your franchise. An early start in looking means a quicker placement and your franchisor will appreciate seeing the effort you’ve already put in. There are a couple places you can look at when you’re placing your franchise such as:

• Malls
• Neighborhood Centers
• Community Centers
• Lifestyle Centers
• Power Centers
• Other Centers
• Shopping Lots
• Off-Street Sites
• At-Home Sites

You’ll want to consider what type of business you’re opening and what sort of space would be most helpful to draw in the most traffic. The venue will have a huge impact on the traffic you get and the way your brand is spread. If you’ve ever heard the saying, “Location, location, location,” that’s because location is key and placing a franchise in the wrong location can kill an otherwise amazing business.

Considering Dual Branding

You can always ask your franchisor if they have any partner franchises that you may be able to team up with. This can help build your customer base as well as minimize costs of running. If you’re starting your first franchise, it can be really helpful to safe a little extra, but realize that if you dual brand with another franchisor, you will have to give up making all the decisions and work as a team with another person.

What Constitutes a Site as “Good”?

Depending on the kind of franchise you’re looking to open, different sites will offer different benefits. If your business benefits from people who know the product coming to see you specifically for whatever you’re offering, then it may not matter if you’re in a freestanding area. If however, your business makes more sales through being convenient or window shopping, then a shopping center of some kind where your product is put in front of individuals to impulse by would be best.

Understanding the Layout

When you’re scouting out locations, it’s important to keep in mind the layout of the franchise. If you’re purchasing a gutted building to redesign, look at how easy it might be to modify. You might think you’re saving time and money by purchasing a building that’s already up and standing, but depending on much work it needs done, it could be more costly. If you’ll be renting space, you’ll want to get to know how the renter feels about your industry, let them know what you plan to do with the building as some may have vendettas against your franchise due to previous encounters with it or others like it. Having a professional contractor check out the location before you sign the lease will also be important. They can give you an estimate on building prices and can check out circuits and water pipes already running through to let you know whether those are extra costs you’ll need to cover.

So much goes into picking the right location, you don’t want to skim the details.

Chapter 8 – Hiring, Training, and Other Staffing Decisions

Whether you’ve been a manager or not, you now wield the power to hire, train, and make other important staffing decisions as a franchisee. Gone are the days where you were working with someone you couldn’t stand because your boss hired the wrong person and/or didn’t train them correctly. As a franchisee, you’re in control of not only who you hire, but how trained they are and what they’re trained in. That also makes you directly responsible for any breach in the system or rules that were not followed. Some people just want a job, any job, and once they have it they assume they’re indispensable or they can show their good side to their boss and the rest of the time, flake off. This could mean trouble for your business during times you’re not around or turned the other way.

Finding the Right Candidate

With a sea of applicants, you’ll need to hone your skills for hiring. There are a few things to help make it easier that you should plan for such as:

• Having a general idea of how many employees you’ll need.
• Writing a clear job description for each job.
• Spreading the word of the positions via word-of-mouth.
• Beginning a referral network.
• Recruiting through your website.
• Reaching out to the community.
• Checking the classifieds.
• Taking advantage of employment agencies.
• Hosting an open house.

Hiring will also bring on new difficulties or obstacles that you might not have thought about before. These obstacles include the Equal Opportunity Act. Many people don’t think about discrimination when hiring, but just as many can do it knowingly or unknowingly. Make sure to verse yourself in what the act says when it comes to age, disability, and other protected classes. Sometimes these rules can change from state to state. Also look at the Equal Pay Act. If you’re hiring based on skill, you should really have no problem following any of these laws, just remember to be fair and to evaluate yourself on your fairness every once in a while because it’s easy to slip up when we aren’t watching ourselves or regularly evaluating the choices we make on anything.

The Interview Process

There is preparation before, during, and after the interviews that you should do. Before the interviews, you’ll need to prepare paperwork such as:

• The application
• A quick reference for your brand
• A list of questions
• Rules of employment
• Days and hours available

During the interview, you must remember that you’re not only setting the tone for that interview, but for whatever future relationship you will have and the tone of the company. You want to approach the interview with the same attitude that you would every day of work. Be stern, but be friendly in a way that will induce your interviewees to be themselves as much as possible. Everyone is nervous when they go in for an interview. The best franchisees and managers are those who will try to help their interviewees relax.

Your list of questions should already be determined at this point, but feel free to think on the fly if you find yourself wanting to ask questions you don’t have listed. Your questions, however, should include:

• Job-specific questions
• Open-ended questions
• Availability questions

You should also be able to determine your interviews demeanor and how they’d fit with the franchise. Following the interview assuming you hired them, don’t forget to follow the four simple steps of training:

1.    Prepare them
2.    Present information
3.    Let the employee practice
4.    Follow up with the employee

Chapter 9 – Fellowship Between Franchisors and Franchisees

Becoming a franchisee has many benefits as opposed to starting your own business from scratch. Some of these benefits include a system proven to work, an established customer base and reputation, and products that have been perfected to the point of mass-producing or selling in wide-form. However, franchising’s best known benefit includes the ability to be your own boss while also having a community behind you. As a franchisee, you’re able to hire who you want and secure a job as long as you want your franchise (and follow the system accordingly). You’re also given a community between franchises. You’ve got your franchisor as well as your fellow franchisees at your side for help. In order to take full advantage of these benefits though, you have to follow the rules of franchising.

Playing by the Rules

While franchisors can be somewhat flexible and should always be professional and respectful, there is a level of responsibility that you must also fulfill in order to receive your franchisor’s benefits. Something like meeting the franchise system standards is important for the average franchisee to not only receive their franchisor’s assistance, but to maintain a good relationship with their franchisor. When a franchisor sees a franchisee doing what they’re supposed to, it gives the franchisee more trust. In fact, franchisors love to find franchisees who not only make promises, but follow through with them. They love to find responsible franchisees that can grow with them.

Supporting and Watching the System

With your franchisor’s trust and confidence, you’re able to bask in their benefits such as a field support team that’s there to offer assistance when you have questions or problems. This field support is usually paid for through your royalties or other fees and what most field support does in larger companies and comes to your store to help you improve where you need it, when you need it. They offer an objective eye that can help improve sales and store morale if accepted graciously. Field support can come in many fashions as hired officials and regional management, fellow franchisees, and even mystery shoppers. Your franchisor will be learning just as much as you about running a more efficient business. When you’re given feedback as a franchisee, the best thing you can do is listen to it with an open mind and prepare to make any changes you need to for the better of your business and your company. Know that franchisors only have the best in mind when they have suggestions to make because your success means their success.

Attempting to Change the System

All franchisors should have some form of system in place, you can always bring your own ideas to the table if your franchisor has left the door open for suggestions. Know that anything you may want to change will have to be offered to the franchisor first for approval and that any ideas your franchisor does use, you’re offering them full rights to for no benefit other than you get to use your idea in your store.

Building a Relationship with Your Franchisor

In order to reap the best benefits from your franchise, you need to build a good relationship with your franchisor. That’s not to say they will play favorites, but you will have more trust and you may even become a test facility for any new products or services that your franchisor has to offer. Building a good relationship with your franchisor starts with being a team player and continues with being flexible throughout the relationship.

Chapter 10 – Building Your Customer Base

Building the customer base for your franchise is important when you’re forming your first (and future franchises). Building a customer base starts far before you open your doors for business. In fact, your marketing campaign should start shortly after you sign the franchise agreement with your franchisor. Most franchisors should already have some kind of marketing plan in place that they use with most, if not all, of their franchisees. This should make local marketing easier. There are two important words to know when it comes to building your customer base and those words are marketing and advertising.

Creating an Effective Marketing Plan

Luckily as a franchisee, you shouldn’t have to do this 100% on your own. Though all franchisors will have a varying degree of involvement when it comes to the marketing plan for their franchisees. There’s no set rule on how much they might or must help. However the assistance that they will provide should have been listed to some extent in the FDD and should be gone over during the training and prep phase as your franchise is built (if you’re going from scratch). Whether you’ve got the help of your franchisor or not, it’s still important for you as a franchisee to know what makes an effective marketing campaign. Some suggestions include:

• Doing your homework
• Creating an offer that features your most demanded products
• Creating a promotional message
• Delivering your message to your audience appropriately
• Keeping your name in front of customers
• Selecting media that you can afford to use adequately and frequently
• Talking only to people who can buy your product
• Remaining positive in all interactions
• Pooling your resources
• Checking out local media discounts
• Creating cross-selling opportunities by making allies in complementary businesses in your area.
• Considering business-to-business partnerships
• Monitoring your results
• Becoming a spokesperson for your product or service

Evaluating National and Local Advertising Strategies

Depending on the resources you have at hand, there are different ‘net’ sizes for advertising campaigns. Advertising locally can be an effort made by not only you, but other franchises in your city, county, or state depending on what is available. If your franchise happens to be one that is nationally known, it’s likely that there is already a national advertising campaign in effect. If there isn’t one in place, talk to your franchisor about setting one up or if there is any kind of national advertising strategy that they have. You can also ask if they have any planned strategies for local advertising strategies as many prepare some package that can get their franchisees started in the very least. If your franchisor doesn’t have a plan, there are options such as working with other franchisees to form your own campaigns, just be sure you follow company protocol and run it by your franchisor first.

Customers Come First

Marketing campaigns and advertisements are all for your customers benefits. They tell your customers what you’re doing and what they can expect when they walk through the doors. It’s important to know that with your commercials, you’re creating expectations for service and atmosphere as much as product. A high-energy, positive commercial will prepare your customers for a good experience while one of opposite attributes will prepare them with low expectation. Knowing your customer and what they will respond to is key to creating the most appropriate marketing campaign. Above all else, people are drawn to honesty and integrity. IF you show who you really are and provide your customers with a real image of who you are and what you do, your marketing campaign can surpass others on the market quicker than you can imagine.

Chapter 11 – Acquiring Other Franchises

It’s easy to get the franchising bug once you’ve successfully opened one location and you’re making a steady income. It’s exciting to build the number of locations you won .It’s also invigorating when you think about the payback you’ll receive for it. However before you make any big moves, it’s important to realize what all you can get or lose when you open multiple locations.

Is Multiple Franchise Ownership Worthwhile?

Just like anything, multiple franchise ownership comes with its good and its bad. The good seems pretty up front when you think of a larger income because of multiple locations. You’ll think of cheaper supply orders because you’ll be ordering bigger bulk and most vendors offer a discount based on order size. You’ll be able to offer employees more hours so you’ll not only draw in better employees with better skills, but you’ll keep them much easier. You’ll also find that your business network is expanding, your reputation is growing, and you’re gaining more pull and respect from your franchisor. Franchisors love to see their franchisees succeed because it says they’re doing something right. Their own reputation grows as their franchises succeed so any good franchisor will be happy that you can and want to expand with them.

When it comes to the bad you have to think of the investment you’re making. It’s important to evaluate the market and whether the franchise you’re in is going to be one that sticks around as popular as it is or if it’s going to find itself in trouble in the near future. Just like gambling, the more you put in, the bigger the outcome, however you also are putting a lot on the table to lose. The good thing about franchising is that it can be a sure thing if it is approached correctly. With proper research, investment, and time put into it, you won’t have to face the loses that many people face in gambling. None the less, all franchisees should be aware of both.

Are You Prepared for Multi-Unit Ownership?

Before you move into another location, you must be 100% stable in your current location. It’s important to be realistic about whether your current franchise will be able to operate just fine if you are not there. You must hire someone who can manage it for you if you need more experience overseeing other things as you will be extremely busy opening your new franchise. When you’re thinking about opening multiple franchises, you need to remember what it was like opening your first one and how time consuming it was. You will be putting the same, if not more time into your new one while simultaneously operating another business.

You’ll also need to ask yourself if:

• You’re organized
• You can see the big picture
• You can delegate responsibility
• If the timing is right
• And other questions.

Crunching the Numbers

The bottom line for opening multiple franchises are the numbers on your spreadsheets. You already know what it takes to open a franchise because you’ve done it before. However instead of only sustaining one store for a few months, you’ll have to sustain two or more. This is why it is imperative that your current franchise is not only stable, but bringing a steady income. You must have the finances saved and worked out prior to planning your next big move. Some great ways to check on your finances before expanding your franchising hold are through:

• A Spreadsheet
• Return on Investments
• Budget Evaluation
• Profit and Loss Statement
• Cash Flow Evaluation

All of these things must be looked at before you even think about purchasing options for your next franchise.

Chapter 12 – Acquiring and Running Multiple Brands

When you purchase a franchise, you’re never stuck with just that one brand. In fact, most successful franchisees (and franchisors) own more than one brand and more often than you’d think, they complement each other. There are many benefits to owning more than one brand, but there is also more work to put into it. Consider that you’ve mastered your single franchise at this point and you want to venture out for more than one reason. You’ve already considered purchasing more units from your current franchisor, but you’ve decided for one reason or another that you’d like to explore your other options and there’s nothing wrong with that.

Why Should You Branch Out?

There are so many reason to branch away from your current franchisor when you’re looking into purchasing more units or running multiple businesses. Some of them are great business moves and some of them are moves that you would just want to do for yourself. Here are some of the business-related reasons you may want to branch away from your current franchisor with your second franchise:

• A Shrinking Market
• No Room for Expansion
• Diversification
• Save Money
• Cross Marketing Momentum
• Prime Locations Are Made Available
• Dominate More Industries for Larger Income

A few personal reasons for expending in a different brand may be:

• Entering a New Area of Interest
• Switching Franchisors
• Wanting a Backup Plan for Your Current Industry
• The Excitement of It All

As much as you should love your franchisor, sometimes it just doesn’t happen. Sometimes their personality doesn’t mix with yours. Sometimes the brand is bought by someone else during your time as a franchisee and you don’t like the new franchisor, and sometimes you just want a little more variety in your life. All of these are legitimate reasons to seek another brand and many franchisors will be a-okay with you seeking another brand as long as you talk to them first and it doesn’t mean you’ll be competition for your current franchise.

Mixing Industries

Another perk of entering into a new brand is that you afford yourself the ability to mix your brands, depending on the rules set by both your franchisors. If you happen to grab a new brand that compliments your current one, sometimes you can build them in the same place. Most of the time, you can refer people to two or more locations that offer two more different services and products. By stepping into multiple brands, you’re able to provide more variety to customers and dominate more markets.

Pooling Your Resources

When you expand the range of your franchise, you’re able to pool your resources and create a cheaper, more efficient system. Vendors and suppliers will often give a discount to individuals depending on how much product they purchase. If you create a strong relationship with your vendors, as you expand your franchises and order more, it’s likely that you will receive the benefit from ordering more at once. You also expand your networking capabilities by going into a new industry. You can create connections for either (or all) of your brands. You also recreate prestige and reputation for yourself as you grow the number of franchises you own, be it the same or different industries and brands.

When you’re pooling your resources, there are a few ways to make it easier such as:

• Getting a Partner
• Researching Before You Commit
• Reorganizing Your Real Estate
• Working Out Details
• Preparing Your Staff
• Figuring Out Your Décor

Remember that while you’re independent as a franchisee, you’re never alone. You’ve got a network between your business associates, franchisor, and fellow franchisees to make expanding easier than ever.

Chapter 13 – Ending the Franchise Relationship

There are many reasons why you may want to get out of your franchise agreement. Whether it is because you are retiring, you want to do something different with your life, want to move or simply hate the business, it is important to know how this will work. This is why it is important to understand how this will work.

Renewing Your Franchise Contract

In many cases, you may find that when you get to the end of the contract that you want to renew the contract. This is important as the way the franchise works may have changed since you initially signed the agreement. You will still be required to pay a franchise fee as this is what will give you the ability to use the brand and business method of the company, though this should not be as much as you paid initially. Make sure you look at the contract as the stipulations may be different from the last time you signed.

In some cases, you may want to pass the business on to your children. You should know that this is not as easy as it seems. Rather you will need to go through the process of estate planning to transition the business to your child. More than this, your child will also need to be approved by your franchisor in most instances before they can take over the business.

Selling the Business

If you want nothing to do with the business and you feel like you have failed, you should never just walk away from it. Rather you should sell the business. This will help you to recoup some of the expenses that you have put your hard earned money and effort into over the years.

Tips for Getting the Best ROI on Your Franchise Sale

The return on investment is essential for the sale of your franchise. No one wants to work for years in their business to walk away and take a loss. This is why it is helpful to know some tips that can help you to get a better return on the sale of your franchise.

• Work on cosmetic repairs on the franchise to make it looks its best when potential buyers come to see it.
• Take the time to find out if making improvements will be worth it for your business. Talk with your franchisor about this.
• make sure that you have your financial information up to date and ready to share with potential buyers as well as any papers on the franchise
• Have a professional valuation of your business done to understand what it is actually worth.
• In most cases, the franchisor has the right to buy the franchise at the price of the first offer, so talk with them beforehand to understand their intentions with your franchise.
• Being involved in the franchise community can help give you leads for buyers.
• Always have a business broker. They are experienced and know what they are doing and can help you to sell your franchise fast and for what you want.

Look at the Franchisor’s Rules

When you sign the franchise agreement, there are many aspects here, including the rules when it comes time for the sale of the business. Make sure you look over this before you start the sales process. Some people find it helpful to have a lawyer look this over and give them an in depth description of what they will need to do. In many cases, the new franchisee will need to be approved by the franchisor. You will also have to pay a transfer fee for your franchise to cover the legal costs on the franchisor’s end.

Chapter 14 – Franchisee Becomes Franchisor

Every franchisor started out as a franchisee or a small business owner at some point. You don’t have to be intimidated when you look at the market and see all the major competition in other, already established franchises. When you think about how they call came from humble beginnings, it can make the idea of joining the market at least a little less intimidating. However before you can turn your business into a franchise, you have to honestly evaluate what your small business has to offer and if you really think it will be successful on a grand scale.

The Feasibility of Turning a Small Business into a Franchise

There are a handful of things that are necessary in order to consider opening your small business into a franchise. Many of these things have to do with the cost of starting up your business and the ongoing cost of running it. Is it easy to duplicate financially? While you don’t want your business to be easy to start or copy for competition, you want your business to be easy for interested franchisees to purchase, afford, and start up. The harder your business is to organize from the beginning and the more expensive it is to run (especially when it’s small or just starting out), the less likely you are to have interested franchisees, or at the very least, success once you sell your franchise.

Another thing you’ll need is an easy to teach, duplicable system for operations. A smooth-running system that’s easy to learn and doesn’t cost much is beyond important for establishing new franchises. Consistency is just as important to customers as it is for franchisees and business owners. As you open more franchises, you’ll realize that you desire a certain level of consistency because it gives you a scale in which to judge whether individuals are following a protocol which made you successful. Creating and following a formula that has been proven to succeed is what franchising is all about.

There are a few no-no’s when it comes to opening a franchise. If your business are any of the following, you may want to hold off on franchising for the time being:

• It’s just a concept.
• The operating history is extremely limited.
• There’s no history of sustained profit.
• There is no current return of investment on it.

Consider the Customer Demand

When you’re looking at entering new markets in the town or state over, it’s important to think about the customer demand for your product. What might be popular and highly desired in your neighborhood might not be the case a neighborhood (or more) over. If you’re planning to franchise, you need to research the market that you’re planning to enter on a smaller and the larger scale. You need to determine if your franchise has enough of a following or demand that you’re confident it will incur more as you build bigger. Be honest with yourself. If your demand isn’t as high as you want it, work on marketing to up your sales before you expand. If there is little to no demand for your product or service, building another location is unlikely to help unless your product is in high demand in that neighborhood.

When you’re planning to franchise, before you sell any new locations, it’s important to build an expansion strategy, even before you’ve expanded for the first time. This means researching where you want to expand, the effectiveness of the expansions, and when you want to place those locations. A well thought-out expansion plan is one way to expedite success as each location builds off of each other, growing your franchise like a snowball rolling downhill.

Chapter 15 – Building Your Franchising Empire

Anyone can sell a franchise. There’s really no art to it. You’ll find franchisors who sell through honesty and some who sell through deception. However to be a good franchisor, to create a business that others will not only want to join, but that also bring prestige with its name, you need to know the art behind building a reputable franchise empire.

All the franchises we know today all started as a corner shop back in the day. With the right management, motivation, passion, and people, they were turned into the huge missions they are today that are shared with our current generations. Your business can have the same lasting power. In order to that, you have to pinpoint a few keys to the perfect franchise.

Image of the Ideal Franchise

You can’t build an empire on a franchise you don’t have a clear vision of. You can’t teach someone a system that you don’t know yourself. Before you can take your franchise and turn it into a massive, nation-wide success, you have to pinpoint what the ideal version of your franchise would look like and master how to capture it again and again. What makes franchises successful is their consistency that consumers can rely on. When you’re creating a brand, your goal should always be to create a following. If you’re new to franchising, one of the best ways you can figure out what that takes is to think of any brand you’re loyal to and what they do that makes you loyal to them. Why do you want to follow these other brands?

Planning Your Marketing Strategy

After you’ve decided what the ideal image for your franchise is, it’s time to market that image. You must come up with a marketing plan that boasts the best you have to offer and penetrates the market. It won’t matter how good your franchise or what the quality of your services and products are if no one knows you’re there. When you’re a brand new franchise, it can be hard to break into the marketing system. There are a couple of things that every franchisor must know before they can start forming their marketing strategy. Some of these things include:

• Goals and Objectives
• Obligations to Franchisees
• Resources Available
• Locations Available
• Current Locations

Reaching Out to Your Potential Franchisees

To build your empire, a marketing strategy isn’t enough. Selling your franchise isn’t enough. You have to find the franchisees who will fit your franchisee requirements. Do you have a certain demographic that you think will respond better to your brand? You have to know what the minimal investment amount is and who can afford it in order to attract them. Would your franchise do better in some states than others? Are you looking for more people locally in order to create franchises in mass in your area to break through the market? You must have a target for your franchisees, including location before you can begin looking for them.

When you’re ready to reach out for franchisees, there are multiple ways you can do it with the tools franchisors have today. Most people in the United States have access to the internet which has made marketing as a franchisor so much easier. However a franchisor must be just as wary of all the information they find on the internet as they would anywhere else. Since everyone has access to the internet, it increase the opportunity for non-prospects to get in contact with you.

When it comes to finding franchisees for your franchise, it takes research, diligence, and an eye for detail more than anything else.

Chapter 16 – Going International with Your Franchise

At this point, your franchise is up, running, and doing well. You’re ready to expand not just nationally, but to put your foot into foreign soil and check out the foreign markets. That’s a huge step and a huge bragging right. In fact, most franchisors get over-excited when it comes to opening franchises overseas because of the prestige it brings to them. If you’re getting ready to expand and you’re thinking of expanding overseas, slow down and take a breather, because there are some things you need to know first.

Rules of the Road

Franchising, business, the marketplace, it’s all a war zone and in order to succeed, you have to set yourself up with the right equipment. Without the right equipment, you set your sails for disaster. If you’re traveling overseas, you really don’t want that to open. You might think, “I’ve opened dozens of franchises in the United States. I’m ready to expand even more.” It’s great to be ambitious, but you must know how the rules differ when you’re thinking of opening a franchise in another country. There are different requirements for what to disclose when you’re giving prospectors information on your franchise. There are different laws regarding products. There are different marketing trends and a culture that affects sales differently. You’ll also need to know what you can import and what you can’t—including income.

Housekeeping Basics

When you’re taking your business overseas, it’s important to know all of your at home-assets are in order before you take anything overseas. Opening a franchise in a new country means changing documents in various ways. The numbers you’ve accumulated from sales in your US locations will mean little to nothing in another country. On top of that, you may have to translate the language your documents are in into a new language. You’ll want to have all of your operation manuals in perfect order to make changing them over easier. Training programs will need to be perfected, yet flexible for foreign translations and methods that must change based on cultural differences and import limitations. Housekeeping also includes record-keeping and administrative filing procedures in order. This will be especially important not just for your new franchisee, but so you can keep a more complicated system in order for a larger franchise.

Breaking Into the New Market

Interpreting the new market will become one of your biggest obstacles. You’ll have to learn what makes the new market tick, what’s popular, and what people respond to. You’ll find that foreign markets respond in a completely different fashion than your usual markets. You might even find it unexpected.

Establishing a Network

When you first break into the foreign market, you may feel like you’re starting back at square one because you’ll have to make business relationships all over again. It will be beyond essential to network when you’ve decided on the country you want to franchise in. This will help you establish allies to compliment your franchise, suppliers and vendors for supplies that may even come with a discount, or other franchises like yours to learn from.

The Big Reality Check for International Franchising

Your eyes will be opened in a way you’ve never expected when you take your franchise overseas. Whether you’ve traveled before or not, franchising in a new country will be a cultural eye-opener. There’s a lot you need to know between the available market, financial responsibilities, new clients, and how to best reach a new market, but it’s nothing you can’t learn again.

Chapter 17 – 10 Keys to Success as a Franchisee

You’ll find guides all over the internet that tell you anyone can be a franchisor. While that’s true to a fault, you have to read the fine print. Anyone can purchase a franchise because anyone can sell a franchise. Does that mean that they will find success? Does that mean that they will find financial stability? When you see a guide tell you anyone can be a franchisee, you will also find that there are no guarantees you can be a successful franchisee by purchasing that franchise. If you do, you might want to be wary of it.

Not every person has the personality for franchise. Sometimes, even with the right personality, if combined with the wrong industry, it can spell trouble for the prospector. That’s why you should know the ten keys to succeeding in a franchise. They’re not all things you’re born with—in fact, all of the keys are learnable. As long as you approach them with an open mind, you’ll find that you can succeed too, but there is a bit of work involved.

One of the keys to success is making sure you’re financially stable. Many prospect franchisees rush into franchising thinking they can get rich quickly or make back the money spent initially immediately, but that’s not always the case. In fact, that’s rarely the case. It’s important for prospective franchisees to understand that franchising is an investment that while it doesn’t usually come back to them immediately, it will always come back when paired with a great franchisor.

Following the system a franchisor has designed is also integral to a franchisees success. The franchisor has gotten to the place they’re at because of the system they created. If you plan to become a franchisee, it’s important that you feel comfortable following someone else’s guidelines. Franchising comes with a lot of freedom. You are the owner of your own store, you run your own business, but you have to do all of that by playing by someone else’s rules.

Should sound easy enough so far. Another key to success is something everyone has and that’s a support system made up of family, friends, or both. Even if you’re totally stoked about something, it’s easy to become discouraged, distracted, exhausted, or overwhelmed if you’re doing it on your own. Your support system needs to do nothing more than believe in you. While that might sound simple enough, there are more than enough prospects who mention opening a franchise to their family and their financial investments are not supported. If you start off your franchising career in this manner, you’re starting it with a handicap that causes many individuals to fail.

Some of the other things talked about in this section are being an enthusiastic manager, recruiting awesome staff, training employees, and giving customers great service.

The funny thing about the keys to succeed in is that they’re all things you can control. When you go into franchising, you’re taking control of your present and your future. This control is what makes franchising such a great opportunity and exactly why they anyone can do it. You just have to line the right ducks up. You have to train yourself. You have to put your resources in order.

When you pick up franchising as your career choice, you put all of your success in your own hands. All the keys rely on you to put the work into them to make them work. If you do that, you’ll have little problem succeeding in franchise.

Chapter 18 – The ‘Should I Buy a Franchise’ Quiz

With all the information on starting a franchise collected, you should have a good idea of what you’re doing as you step into the franchise world. Before you step into any large commitment, you should always do a self-evaluation. Asking yourself the right questions can be key to figuring out not only what you want in life, but where you’re going and if you’re on the right track to achieve what you’re trying to get.

Some of the questions that you’ll face in this final section ask about the franchisor and how well you know them. You’ll be reminded of the importance of knowing who you’re conducting your partnership with and what the implications are. You’ll be reminded of what you may miss during the razzle-dazzle excitement of the business deal at hand. You’ll also be reminded of how you learn about franchisors, what they’re like, and whether you know them as well as you think. If you haven’t investigated all the faucets for the franchisors you’ve chosen to pursue, it will give you guidance.

When you’re franchising, it’s important to know yourself. You need to know what you can handle and the extent to which you can push yourself. You need to be honest with yourself on how independent you are and to what extent are you independent. Many people don’t realize that you can be independently dependent. Many people find that they want to work at their own pace, but don’t want the responsibility that comes with creating new ideas or the innovative responsibilities that most franchisors have to deal with.

It’s easy to get caught up in the excitement of where we’re going and forget to be honest with ourselves and the reality of our situation. Your dream might be to open or purchase a franchise, but you have to think about if you can afford it. There are more costs you have to ask yourself about when you’re considering opening a franchise. The financial side isn’t the only supportive side you’ll need to evaluate either. You’ll need to ask yourself about the support you have or if you’re opening a franchise as a one-man army and if you can really handle that.

If that’s not enough, you’ll find that there’s a legal side to franchising that may have never occurred to you, regardless of how obvious it seems. It’s easy to get caught up in the idea of running a business, doing something you love, and being your own boss, where one can forget about the legal obligations that come with running a franchise.

By walking yourself through this small self-evaluation, you help prepare yourself better for the adventure of franchising that you have coming whether it’s now or in another year. Be completely honest with yourself as you answer the questions because you’re the only one that is going to lose if you walk in unprepared. You will either set yourself up for major loss when your franchise doesn’t have the support that it needed or you will be rejected from all the franchises that you’d like to join.

Remember: Not every franchise is a good one. Salesmen will still try and sell poor franchises as if they are something amazing. You need to be prepared to do your research on good franchises, the support that they offer, and how to spot a scam. If you find any franchisor or sales person trying to make a deal with you when you’re not sure about the franchise, it’s best to be cautious.