McCombs Career Webinar/media/Files/MSB... · • Mature concept • Recession proof/needs based • Easy operations • Strong unit economics • Big territory with high growth potential
• Residual income stream/needs based/recession proof
• Results – 1st unit exceeded break even Day 1
Presenter
Presentation Notes
Motivations – why is the timing right now to seek a franchise opportunity? What do I want to be remembered for? What type of legacy do I want to leave? Characteristics – thoughts on hours and days you want to work, employees, sales/marketing, returns and investment levels, etc Business Model – Hands on, Semi Absentee, Absentee Business Size – Single unit (or territory) where 90% of franchise licenses are direct franchisees; Multi-unit (franchisee buys the right to own and operate multiple locations); Master Franchise where the franchisor sells the franchise sales right to a franchisee (e.g. the Master Franchise) for a geographic territory. The Master Franchise in turn assumes responsibility for selling franchises.
Success Story # 2 • B to B
• CEO/Empire Builder mentality
• Pioneer concept = more geographical potential
• Multiple business targets to generate revenue
• Low employee (or Technician) count
• High margin with quick breakeven
• Low 6 digit investment
• Part time (or full time)
• Residual income stream/needs based
• Results – Numerous large multi-unit accounts landed!
Presenter
Presentation Notes
Motivations – why is the timing right now to seek a franchise opportunity? What do I want to be remembered for? What type of legacy do I want to leave? Characteristics – thoughts on hours and days you want to work, employees, sales/marketing, returns and investment levels, etc Business Model – Hands on, Semi Absentee, Absentee Business Size – Single unit (or territory) where 90% of franchise licenses are direct franchisees; Multi-unit (franchisee buys the right to own and operate multiple locations); Master Franchise where the franchisor sells the franchise sales right to a franchisee (e.g. the Master Franchise) for a geographic territory. The Master Franchise in turn assumes responsibility for selling franchises.
Success Story # 3 • B to C
• Laid off 57 year old mid-level corporate employee
• Mature concept = dominant player in industry
• Hands-on and full time
• Home based with 1 employee/technician
• Strong net margin with excellent validation
• Single territory investment of $90k with $35k financed
• Transactional and needs based
• Results – Breakeven in Month 2
Presenter
Presentation Notes
Motivations – why is the timing right now to seek a franchise opportunity? What do I want to be remembered for? What type of legacy do I want to leave? Characteristics – thoughts on hours and days you want to work, employees, sales/marketing, returns and investment levels, etc Business Model – Hands on, Semi Absentee, Absentee Business Size – Single unit (or territory) where 90% of franchise licenses are direct franchisees; Multi-unit (franchisee buys the right to own and operate multiple locations); Master Franchise where the franchisor sells the franchise sales right to a franchisee (e.g. the Master Franchise) for a geographic territory. The Master Franchise in turn assumes responsibility for selling franchises.
Success Story # 4
• “Simple” Retail
• Family business/diversification play
• Pioneer concept = only national player
• Semi-absent and Manager run model
• Low employee count/Contractor
• Net profit (Item 19) exceeds capital investment (Item 7)
• Single unit starts in low to mid $100k range
• Recurring revenue; meaningful contribution to local community
• Results – On track to break even within 6 months
Presenter
Presentation Notes
Motivations – why is the timing right now to seek a franchise opportunity? What do I want to be remembered for? What type of legacy do I want to leave? Characteristics – thoughts on hours and days you want to work, employees, sales/marketing, returns and investment levels, etc Business Model – Hands on, Semi Absentee, Absentee Business Size – Single unit (or territory) where 90% of franchise licenses are direct franchisees; Multi-unit (franchisee buys the right to own and operate multiple locations); Master Franchise where the franchisor sells the franchise sales right to a franchisee (e.g. the Master Franchise) for a geographic territory. The Master Franchise in turn assumes responsibility for selling franchises.
Success Story # 5
• “Sophisticated” Retail
• Husband (near retirement) and wife team
• Mature concept
• Recession proof/needs based
• Easy operations
• Strong unit economics
• Big territory with high growth potential
• Potential for quick positive cash flow while exiting job
• Results – just executed their agreements and in training!
Presenter
Presentation Notes
Motivations – why is the timing right now to seek a franchise opportunity? What do I want to be remembered for? What type of legacy do I want to leave? Characteristics – thoughts on hours and days you want to work, employees, sales/marketing, returns and investment levels, etc Business Model – Hands on, Semi Absentee, Absentee Business Size – Single unit (or territory) where 90% of franchise licenses are direct franchisees; Multi-unit (franchisee buys the right to own and operate multiple locations); Master Franchise where the franchisor sells the franchise sales right to a franchisee (e.g. the Master Franchise) for a geographic territory. The Master Franchise in turn assumes responsibility for selling franchises.
Franchising - 2 statistics
• 10/90 vs 90/10 • IFA study from the late 90’s
• The Millionaire Next Door • Stanley and Danko
Presenter
Presentation Notes
The Millionaire Next Door – Only 18% of households in America are headed by a self-employed business owner but these self employed owners are 4 times more likely to be millionaires than those who work for others!
Franchising
• Method of distributing product or service
• Franchisor owns right to name/trademark
• Franchisee purchases the right to use the
trademark and system • A MODEL FOR DOING BUSINESS!
• NOT ALL FRANCHISORS ARE CREATED EQUALLY!
Presenter
Presentation Notes
Franchised businesses generate $1.5 trillion in economic activity* Franchised businesses account for over 11 % of US payrolls ($507 billion)* Franchised businesses provide 14 % of private sector employment (18 million jobs)*
• “Unlimited” income potential
• Proven system = fewer mistakes
• Business partnership
• Tax benefit
• Wealth generation
• Operating system/training and support
• Asset creation
• Relative “ease” of resale
Advantages of Franchising
Presenter
Presentation Notes
According to “The Millionaire Next Door” by Stanley and Danko, 18% of households in America are headed by a self-employed business owner. But these self employed people are 4 times more likely to be millionaires than those who work for others. Business partnership – both franchisors and franchisees do all they can to strengthen the collective. This every growing pool of knowledge & trust is the system and what you become a part of in franchising. Support - Pre-opening assistance, Initial training, Site selection, Manuals / Newsletters, Network of peer advisors, Research & development, Marketing materials, Systems and Applications Other Advantages – R&D, Buying Power, Cooperative Advertising The # 1 reason given for franchisees who fail is they did NOT follow the system
Perceived Disadvantage of Franchising
• HIGH investment
• LOW Margin
• SLOW breakeven
Presenter
Presentation Notes
Disadvantage – You must follow the rules! (Mobil Oil – buying unbranded fuel in the middle of the night; TGIF – pirating the brand internationally). Preconceived notions about limited opportunities in industries available in franchising (tell King’s Sola story – “I did not know that was a franchise”)! Ask the group - What are each of these? Gasoline – Exxon Mobil Hotel – LaQuinta or Marriott Food – McDonald’s or JBX Design flip chart to show investment, margin and BE contrast. Pass out candy bars for correct answers.
• 1978 – FTC issues guidelines requiring every franchisor publish and share with prospects
• Education tool • 14 day review prior to executing a Franchise
Agreement • Provide enough info so the candidate can make
Language is consistent and uniform. Item 3 (Litigation), Item 12 (Territory), Item 17 (Renewal, Termination, Transfer and Dispute Resolution), Item 22 (Contracts)
Go it alone – Entrepreneurship
Partner with success –
Work for someone – Job
3 Employment Choices
Franchising
Presenter
Presentation Notes
JOB – Times have changed. Once past 55, employability decreases dramatically, which means reduced salary, retirement or other routes to help you achieve your goals which can lead to… ENTREPRENEURSHIP – Such as Consulting which can be lucrative but also requires more marketing and sales efforts than people anticipate and resale value of “your business” is non existent. FRANCHISING – You are investing in your future and in yourself by buying into a proven system and model. Huge benefits exist in wealth creation and tax ramifications. Having a clear vision like Martin Luther King had in “I have a dream” speech or John F Kennedy who saw an American walking on the moon by the end of the decade. “I can’t take this anymore – get me out of this”! OR “I want to control my own destiny” OR “I am sick and tired of working 80 hours a week for peanuts at the expense of my family” OR “If I see another airplane or dark hotel room I’m gonna…”
6 Alternatives to find a franchise
• Passion
• Scarcity
• Security
• Track Record
• Lemming
• The Right Way…
The Right Way - Education!
• I want a franchise that fits my skills,
lifestyle & financial goals and dreams
• so….
• I should educate myself on if my target
franchise concept is a fantastic fit for
what it is that I am seeking!
Presenter
Presentation Notes
Peter, a long time resident of Washington state, grew up in the restaurant business. He worked his way up from being the toilet cleaner to the Manager of a local pizza chain. He loved the hustle and bustle environment found in the restaurant business and thoroughly enjoyed the challenges and rewards of managing employees and running food cost. He had seen the profit potential of a well run pizza restaurant, knew how to develop employees thru teaching them a system and enjoyed the balanced lifestyle he had developed in being a multi-unit manager, as “he could run a restaurant in his sleep” and loved teaching people this talent. Peter and his family decided to move to Southern California, and the timing was right to look at franchising the right food concept that would be a great potential fit for the market. Extensive research went into local competitors (both direct and indirect), real estate availability, how their target concept was different and would it potentially generate the financial returns they desired, sales and marketing strategies, hours of operations (in his case non 24/7), training systems and support, etc, etc. After 120 days of detailed research, Peter made the decision to pursue an Area Development Agreement with the target concept, and buy the rights to develop 10 restaurants within a confined geographical area that would maximize cable zone penetration and advertising spend. As of today, Peter is doing exceptionally well and is well on his way to exceeding the goals he set out. He is successful because he took the time and invested the energy in making sure that his target franchise maximized his skills, matched his lifestyle, and had the potential to meet or exceed his financial goals. Rule # 1 – the business must fit you. It should match your skills and characteristics that you seek. This is our key to success!
4 Keys to Choosing the Perfect Franchise
• Motivations • Why now?
• Characteristics • Retail vs Service, employees, hours/days, sales, investment
• Business Model • Hands on/full time or Hands off/semi absent (or absent)
• Business Size • Single unit, multi unit, Area Developer/Master License
Presenter
Presentation Notes
Motivations – why is the timing right now to seek a franchise opportunity? What do I want to be remembered for? What type of legacy do I want to leave? Characteristics – thoughts on hours and days you want to work, employees, sales/marketing, returns and investment levels, etc Business Model – Hands on and Full time vs , Semi Absentee and Part time , or even Absentee Business Size – Single unit (or territory) where 90% of franchise licenses are direct franchisees; Multi-unit (franchisee buys the right to own and operate multiple locations); Master Franchise where the franchisor sells the franchise sales right to a franchisee (e.g. the Master Franchise) for a geographic territory. The Master Franchise in turn assumes responsibility for selling franchises.
4 Quadrants of Franchising
Simple Retail Sophisticated Retail
Service (B to C) (Business to Consumer)
Service (B to B) (Business to Business)
Presenter
Presentation Notes
There are over 3,000 franchisors out there in 100 industries Retail – Brick n’ mortar where customers are driven into 4 walls, Higher investment / RE, Easier to finance, Manager run / 7 days a week, Multi-unit potential Service – home based, lower investment, less inventory and overhead, fewer operating hours, multiple territory potential Retail – Food, Fitness, Automotive, Health and Wellness, Hair care, Medical Service – Education, Home Improvement, Non-Medical Care, Cleaning, Drug Testing, Home inspection
• Identify the right candidate
• Confidential Questionnaire
• Consultation/Model
• Company Intros/Validating with Franchisees
The FranChoice Process
FREE SERVICE!
Presenter
Presentation Notes
Why Fran Choice – Free service with no hidden costs, help by narrowing the search, saves time and effort, often offer “never thought of” opportunities, introduce pre-screened companies Company Intros – is it geographically available in the target area? Franchise Investigation Procedure document - Initial package/FDD, Visit/call existing franchisees, Review systems & documentation, Discovery Day
• Low capital investment!
• Stunning unit economics with rapid
breakeven!
• New (pioneer) and established (mature)!
FranChoice Franchisors
ASSISTANCE with FINANCING!
Presenter
Presentation Notes
Financing - Cash/stock, SBA loan, Equipment loan, 401K roll-over, Home equity line of credit, Partnerships/investors, Friends and family financing, Loans (equipment, signature or business), Private equity/venture capitalist
