road map to success... · according to robert t. kiyosaki, author of the highly acclaimed book...
TRANSCRIPT
Road Map to SuccessLet FranNet be your guide for learning all the
facts about having your own business
WWW. F R A NN E T . COM
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Who is FRANNET?• Lookingtostartabusiness?• Lookingtoescapeofficepolitics?• Lookingtobeyourownboss?
Thinkingaboutopeningyourownbusiness?EverypersonwhocomestoFranNetsharesthatcommonthought.Whethertheyarepreviousbusinessownersorfirsttimeownerswhohavebeenoutplaced,downsized,retired,orarejustreadytobetheirownboss,theyareallsaying,
Howeveritdoesnottakelongfortheinitialexcitementtowaneandfeelconfusedandfearful.“WheredoIstart?”“WhatwouldIreallyliketodo?”“CanIaffordit?”“Whataremychancesforsuccess?”Astimepasses,thatlistofquestionsgrowslonger.Unfortunately,randomandunguidedresearchdoesnothelpandactuallycanaddtotheconfusion.
AtFranNet,ourgoalisNOTtoconvinceyouthatfranchiseownershipistherightthingforyou.Wehaveover20yearsexperiencehelpingpeoplethroughthevariousdecision-makingprocessesthatmayleadtofranchiseownership.Afranchiseisastrategyforgainingacompetitiveadvantageinthemarketplace.YourFranNetConsultantwilluseaprovenprocesswhichhasbeenusedbythousandsofpeoplejustlikeyou.
Whatyouarecontemplatingisalife-changingdecisionandshouldbetreatedassuch.However,youarealongwayfromfacingthatbigdecision.OurprocessmayhelpyoudecidethatbusinessownershipisNOTforyou.Ifso,thatisapositivestepandyouwillneveragainhavetowonder.Wewillworkwithyouuntilyoumakeafullyinformeddecision;whateverthatdecisionmaybe.
Ourprovenmethodsareoutlinedinthisbrochurebooklet.Pleasereviewitcarefullyandcallifyouhaveanyquestions.Welookforwardtohelpingyouthroughthisprocessandassistingyouinachievingyourcareergoals.
NomatterwhatYOUchose,wearehereforyou!
©Copyright2009,FranNet,LLC.AllRightsReserved.
What we do: 1. Helpyouunderstandtheprosandconsofowningyourownbusiness
2. Haveyoudetermineanddocumentthoselifestylegoalswhichyouwantabusinesstohelpyouattain
3. Recommendfranchiseopportunitiesthatmayletyouachievethosegoals
4. Guideyouthroughaprocessofdue-diligencethatwillletyoumakeaninformeddecision
“There must be something better!”
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Your Roadmap to Franchise SuccessSection 1 The Right Way
WhatDoesItTakeToSucceed?....................................................................2-3
AchievingYourDream.................................................................................4
Section 2 Road Work Ahead
CanYouDoIt?DoYouHavetheDrive?......................................................... 5
QualitiesofaGoodFranchiseSystem..........................................................6-7
TheBusinessModel,FindingtheRightFIT.................................................8
TheSpectrumofFranchising....................................................................... .9
Section 3 Green Light
SolidifyingYourFinancialPlan.................................................................... 10
Section 4 Fork in the Road
FranchiseSelectionDecisionPlan...............................................................11
Section 5 Moving Forward
BusinessPreferencesQuestionnaire............................................................12-13
4-StepResearchPlan..................................................................................14-15
QuestionstoAskFranchisors.......................................................................16
QuestionstoAskFranchisees...................................................................... 17
FranchiseRegulationsandtheFDD.............................................................18
BewareofRoadBlocks................................................................................19
ExpecttoGetNervous.................................................................................20
Section 6 Coming Together
WhyUseaFranNetConsultant?...................................................................21
1
CoNTENTs
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
What Does It Take to Succeed?DoIhavewhatittakestosucceedinbusiness?Ifyouhaveneverownedabusinessbefore,itsurelyisaquestionthatisonyourmind.Workingwiththousandsofprospectivebusinessowners,herearethethreefundamentalelementsofsuccessthatwehavedefined.Thewaytomaximizeyourchancesofsuccessistobeasclosetoatenaspossibleineachelement.
B U I L D I N G B LO C K S T O F R A N C H I S E S U C C E S S
10 x 10 x 10 DRIVE BUSINESS SYSTEM “FIT” DETERMINATION HowGoodisthe Willthebusiness HowStrongisyour franchisesystem maximizemystrengths, desiretoowna offeredbythe passionsand franchise? franchisor? experiences?
=
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ThE RiGhT WAY
3
If you can be a
10 inall three
elements you are bat
ting a 1000!
On the other han
d a low score in
anyelementmayyield
muchlower
results. Try plugg
ing a 2in any o
f
theboxesandyou
dothemath. 1000
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
3
ThE RiGhT WAY DESIRE FOR GREATER INDEPENDENCEWhileitmightsoundobvioustosayit,thedesiretoownabusinessisperhapsthemostimportantelement.Otherwordsthatcometomindthatdescribethiselementaredrive,thedesireforgreaterflexibility,controlofone’sfuture,financialsuccess,independence,etc.Businessownershipcanbeveryrewarding,butitwillnotbeeasy.Someonewhoissatisfiedworkingforsomeoneelsewillusuallyfindthechallengesofbusinessownershiptoogreattoevenattempt.
Ontheotherhand,therearemanystoriesofpeoplewhosucceedagainstalloddsbecausetheyhaveastrongdesiretohavetheirownbusiness.Soaskyourselfthisquestion:Onascaleofonetoten,withtenbeinghigh,howdoIratemydesireforgreaterindependence?Thehigheryournumber,thebetteryouroddsofsuccess.
BUSINESS SYSTEMAccordingtoRobertT.Kiyosaki,authorofthehighlyacclaimedbookseriesRichDadPoorDad,havingagreatbusinesssystemisanessentialkeytosuccess.Itisevenmoreimportantthanhavingagreatproduct!Abusinesssystemisthetotalpackageforrunningthebusiness:location,marketingproducts,salesprocess,managementandtraining.
Franchisesareallaboutabusinesssystem.Franchisestendtotakecommonproducts(hamburgers,oilchanges,etc.)andbuildaneffectivebusinesssystemaroundthem.Thesectionentitled“QualitiesofaGoodFranchiseSystem,”addresseshowfranchisorsdothisandhowyoucanevaluateaparticularfranchisebusinesstodeterminethequalityofitsbusinesssystem.Withtheverybestsystemsbeingaten,youwanttoseethatthefranchiseyouselecthasagreatbusinesssystem.
Identifyingagreatsystemisimportant,butawordofcautionisinorder.Prospectivefranchiseownersmaybetemptedtoputalltheiremphasisonthequalityofthesystem,withoutconsideringthethirdandequallyimportantelement.Wecallit“Fit.”
“FIT”Nomatterhowgoodthebusinesssystemis,thebusinessmustbeonethat“Fits”you.Itmustbeabusinessthatbuildsonyourstrengthsandtalents.Everyfranchisesystemhassuccessfuloperatorsandlessthansuccessfuloperators.Thedifferenceistheindividual.Abusinesssystemdoesnotrunitself.Identifyingabusinessthatfitsyourprofile,whatwecallyourbusinessmodel,isjustasimportantasthequalityofthesystem.
Sectionfive,“MovingForward,”addresseshowFranNethelpsyoudevelopyouruniquebusinessmodelanduseittofindthebusinessthatisrightforYOU!Asyouprobablyguessed,thegoalistofindthebusinessthatisasclosetoateninhowitfitsyou.
DESIRE IS THE ONE ELEMENT YOU MUST BRING TO THE TABLE.IF YOU DON’T HAVE IT, NO ONE CAN GIVE IT TO YOU!
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Achieving Your DreamFranchisingisagreatchoice,butitisonlyoneoptionforgettingintobusiness.Itisalwaysgoodtounderstandyouroptionsanddeterminewhatisbestforyou.Everychoicehasitsadvantagesanddisadvantages.Thethreebasicoptionsarethese:
1. Startabusinessfromscratch2. Buyanexistingbusiness3. Purchaseafranchise
Thefollowingtableshowsthevariableswitheachoption.
Options Start from Scratch Buy an existing business Purchase a Franchise
Availability Limitedonlybyyourimagination Limited Many
ProvenSystem No Maybe Yes
Correlationbetween investmentand None High None profitpotential
Supportafter None Limitedornone High purchase
RiskFactors Firsttimeeffort Hiddenmotivesor Highvariabilityofquality incorrectinformationfromseller amongfranchises AttractivetoLenders? No Maybe Yes
HowtoPredict Projectionsbased Projectionsbasedon Projectionsbasedon theResults onyourassumptions historicalresultsof resultsofcurrentowners aboutthemarket thebusiness
MakingChanges Uptoowner Uptoowner Someaspectslikely limitedbythefranchise agreement
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ThE RiGhT WAY
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Can You Do It? Do You Have The Drive?Itisprettyeasytowanttoownyourownbusiness,but“want”isonlyonecriteriontoconsiderbeforemakingthefinancialandemotionaldecisiontogoahead.TheFranNetprocessshouldhelpyoulookatallthosecriteria.Belowaresixquestionstoaskyourself:
1. DO I UNDERSTAND AND ACCEPT THE RESPONSIBILITIES OF OWNING MY OWN BUSINESS? Franchisorsdoprovideprovensystems,trainingandsupport.Howeverfranchiseesimplementtheseprovensystems
andmanagethebusiness.Thiswillmeanlonghoursandhardwork.Areyouawareofallthatentailsandareyouwillingtodoit?
2. WILL I ENJOY MY BUSINESS? Beforeyouevenlookatspecifictypesoffranchises,youneedtoexaminewhoyouareandwhatbringsyoupersonal
satisfaction.Makeadetailedlistofwhatyouwanttogetfromyourbusiness(seesectionon“TheBusinessModel”).Onceyouknowtheattributesabusinessprovidesforyou,youmaybereadytobeginlookingatspecificfranchises.
3. AM I WILLING TO FOLLOW THE FRANCHISOR’S SYSTEM? Youarepayingapricetobeapartofafranchise.Youareinvestingintoasystemofdoingbusinessandtheytrainyoutobe
proficient.Itbuysabrandnameandstandardstoinsureyourcustomerswillexperiencethesamehighqualitystandardsineveryunitofthatfranchise.Beveryfamiliarwithwhatthefranchisorprovidesandaskyourselfifyouarewillingtofollowtheirprocedures.Ifnot,donotmakeaninvestmentinasystemyouwillnotuse.
4. DO I HAVE THE PERSONAL ATTRIBUTES TO BE SUCCESSFUL? Talktosuccessfulfranchiseesinthebusinessyouareconsideringtodetermine“AmIlikethem?”Iftheyareoutgoing,
gregariouspeople,andyouarenot,itprobablywillnotbeagoodfit.Ifthebusinessrequireshighlyorganizedpeople,andyouarenot,keeplooking.Donotthinkyoucanchangeandlearnthesepersonalattributes.Youarewhoyouareandyoucanfindabusinessforpeoplelikeyou.
5. CAN I AFFORD THE FRANCHISE? WithallthedisclosureregulationsrequiredintheFranchiseDisclosureDocument,youshouldhaveagoodideaofthe
start-upcostsofyourbusiness.Discussionswithsuccessfulfranchiseescangiveyoumoreinformationaboutthemoneynecessarytorunyourbusinessandcoveryourlivingcostsuntilthebusinessturnsaprofit.Beconservative.Businessessometimesfailandnotbecausetheyareunsuccessful,butbecausetheownerranoutofmoneybeforeitbecameprofitable.
6. DO I HAVE FAMILY SUPPORT? Youaremakingafamilydecision.Abusinessofyourownwillaffectyourfamilyaswell.Familymembersmustknowand
acceptthedemandsthatbusinessownershipwillentail.Havetheminvolvedineverystep.
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The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Qualities of a Good Franchise System
12% 50%It’s been estimated that less than 12% of the businesses in North America are franchised, but they account for over 50% of all North American retail sales— more than four times their share of the dollars.
Thesearetheamazingresultsthatfranchisesobtain,butawordofcautionisinorderaboutstatistics.Thesestatisticsareaveragesamongthefranchiseindustry.However,noonebuystheaveragefranchise.Somefranchisesarenoteffectiveinhelpingtheirowners.YouwanttodetermineifthefranchiseYOUchoosegetsyouleverageinthemarketplace.Sohowcanyoutell?WhatarethequalitiesthatSUCCESSFULfranchiseshavethatyieldtheseresults?
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The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
• EXPERIENCE Successfulfranchisecompaniesbringsubstantialindustryexperiencetothetable.Theyshouldbeexpertsintheirbusiness.
Mostcompaniesdon’trequireindustryexperiencebecausetheyknowtheindustry.Theyneedyourbusinessskills,nottechnicalexpertise.Forthisreason,franchisingcanbeaneffectivewayforyoutotransitiontoanewindustry.
• TRAINING Inordertotransfertheirexpertisetoyou,franchisorsmustbecomeexperttrainers.Trainingfornewownersmayrangefrom
twotoeightweeksormore.Acombinationoftrainingwillusuallybeconductedatheadquartersandinyourmarket.
• ONGOINGSUPPORT Thissupportcomesinmanyformssuchasongoingtraining,newproductdevelopment,andnewtechnology.Whateverthe
form,goodfranchisecompaniesarealwaysevolvingtheirsystemtokeepaheadofthecompetition.
• NAMERECOGNITION Theimportanceofnamerecognitiondependsontheindustry,butinconsumerorientedbusinessesitisoftenwhatseparates
thefranchisesfromindependents.However,thereisaparadoxinnamerecognition.Bythetimeweareawareofthenameinourmarket,itisprobablynotavailable.Youwillwanttoseethatthefranchisehasatrackrecordofestablishingthebrandinanewmarket.
• PROVENSALESANDMARKETINGSYSTEMS Youshouldexpecttimetestedsystemsthatfittheparticularindustry.Goodfranchisorshaveeffectiveadvertising
materialsandknowwhatmediaiseffective.Ifdirectsalesarerequired,trainingonnetworkingandsalestechniquesshouldbeprovided.
• DEMOGRAPHICSANDSITESELECTION Goodfranchisorsknowthedemographicsrequiredtosupporttheirbusiness.Ifitisabusinesswherelocationisimportant,
youshouldexpectthefranchisortoprovideassistanceinfindingthebestlocation.
• SPEEDANDEFFICIENCY Fromyourdecisiontoopeningday,effectivefranchisorsshouldexpeditethestartupprocess.
• SIMPLICITY Franchisorstendtokeeptheirbusinessmodelsimple,focusingontheactivitiesthatwillmakeyouthemostmoney.
• CULTUREOFTEAMWORK Effectivefranchisorsrealizethatnobodyhasalltheanswers.Theycollaboratewithexperiencedfranchiseestoconstantly
improvethebusiness.Annualconventions,mentoringgroups,andadvisorycouncilsarejustsomeofthewaysfranchisorssupporttheseefforts.
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The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
The Business ModelFinding the right “FIT” for youPeopleusemanycriteriaforselectingabusiness.Unfortunately,manyofthemarewrongorirrelevant.Thefactthatafriendhasenjoyedsuccessinaparticularbusinessisnotanindicatorofyoursuccess.Neitheristhefactthatafranchiseiscurrentlyhot.Yourultimatesuccess,financiallyandemotionally,isgoingtodependlargelyonhowthatbusinessprovideswhatyouneed.
TheBusinessModel,createdbyyouwiththehelpofyourFranNetConsultant,willbeyourguidetofindingthatrightbusiness.Itwilltakesometimeandsomethought,buttheresultingdocumentwillenableyourConsultanttorecommendspecificfranchiseopportunitiesthathavethebestchanceofprovidingthosethingswhichyouhavedeterminedtobecritical.
Therearetwopartstoaneffective,meaningfulBusinessModel:
Remember,theBusinessModelshouldbeTHEguideforyourFranNetConsultanttouseinselectingtherecommendedfranchisesforyoutoinvestigateandforyoutouseindeterminingifaparticularfranchisereallyprovideswhatyouwant.Doagreatjobinbuildingthemodelandthen,
DON’T SETTLE! THIS IS A HUGE DECISION. MAKE YOUR BUSINESS MODEL THOROUGH AND ACCURATE THEN USE IT!
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1. BUSINESS GOALS Thisisanitemizationofwhatyouwanttogainorchangeinyourpersonal,professionalandfinancialcircumstancesby
beingindependentinyourownbusiness.Theseare“mustfix”itemsandaretheprimarymotivatorsbehindyourdesiretobecomeindependent.Frequentlymentioneditemsincludesuchthingsassenseofcontrol,morepersonaltime,personalsatisfaction,etc.Overall,thisisyourlistandrequiresanddeservesalotofthought.
2. BUSINESS PREFERENCES Theseitemsdescribeyourroleinthebusiness;howitshouldlook,howitshouldoperate,itsstructure,itspotentialfor
growth,etc.Theseitemsshouldmatchupwellwiththeskillsyoubringtothebusiness,yourpersonality,yourinterests,etc.Someitemsinthislistmightbethehoursanddaysthebusinessisopen,howmanyemployeesyouwouldwant,whoyouwouldlikeyourcustomertobe(generalpublic,otherbusinesses,etc.),whetheritisaretailoraservicebusiness,etc.
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
The Spectrum of Franchising
Franchisesexistinover80industries.Whileweoftenthinkofrestaurants,theyareonlypartofwhatisavailable.Infact,weseefranchisingbeingappliedsuccessfullytomoreandmoreindustries.
Thereismuchinformationavailablelistingfranchisesandcategorizingthembasedonthefunctionofthebusiness.Youmayhaveseenbooks,magazinesorwebsitesthatdothis.However,ourclientstellusthatlookingatthestructureofthebusinessandtheowner’sfunctioninthebusinessismorehelpfultothem.Doesitreallymatterwhattheproductis,ifthebusinesswillgiveyoutheresultsyouwantandthesortofoperationthatfitsyou?
TheSpectrumofFranchisingcategorizesbusinessesbyhowtheyworkforyouandwhatyourrolewouldbeinthatparticularbusiness.Atoneextremeareinboundretailbusinesses.Theytendtoberelativelyhigherinvestments,sitesensitive,withsalesdrivenbyadvertisingratherthandirectsales.Growthoccursbyaddingadditionallocations.
Attheotherextremeareservicebusinesses.Theyarerelativelylowinvestments,notlocationdependent,andaredrivenbydirectsales.Growthinaservicebusinesscomesbyaddingmoresalesandservicepeople!
YourFranNetConsultantcanreviewthismodelinmoredetail.Whatsortofbusinessstructureismostappealingtoyou?
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INBOUNDRETAIL
•HighCost•HighVisibility•NoorLowSelling•SiteDependent
EXAMPLESFastFoodHairSalon
DryCleaners
OUTBOUNDRETAIL
•MediumtoHighCost•SomeVisibility•SomeSelling•NotasSiteDependent
EXAMPLESLearningCentersSignBusiness
BusinessServicesFitnessCenter
– BRIDGE –
Whereitallcomestogether!•LowSelling•LowCost
EXAMPLESResidentialCleaning
ServicesHandymanServices
AREADEVELOPMENT
•VariedCost•SomeSelling•Multi-FacetedOwner Involvement•Occurwhenfranchise isnew
EXAMPLESMayoccurinanystyle
offranchise
OUTBOUNDSERVICE/SALES
•LowCost•LowVisibility•HighSelling•“HandsOn”•HomeorOffice
EXAMPLESInHomeDécorServiceCommercialBuilding
MaintenanceManagementConsulting
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Solidifying Your Financial PlanObviously,youneedtobeveryconcernedaboutyourfinancialabilitytonotonlypurchaseafranchisebutalsotocontinuetooperateituntilitbeginstomakeaprofit.Fortunately,carefulduediligencewillenableyoutodeterminethefinancialrequirementsofyourbusinessbeforeyoumakeyourdecision.ThoserequirementsfallintofivebasiccategoriesandwillbedescribedindetailintheFranchiseDisclosureDocument(seepage18).
Everybusinesswillhavecertainstart-upcosts.Inadditiontothenormalcapitalrequirementstolaunchabusiness,afranchisewillassessaninitialfeethattypicallycoverstherightstousethenameandtrademarksofthecompany,therightstodistributethecompany’sproductsand/orservices,accesstothefranchisor’sestablishedbusinesssystems,initialtraining,assistancewithsiteselectionandaprotectedterritory.Anongoingfee,orroyalty,paysforcontinuedsupportprovidedbythefranchisor,aswellascontinueduseofthetrademarksandbusinesssystemsandenhancements.
Operatingcapital(sometimesincludedwithstart-upcost)isanotherimportantfactor.Itisthemoneyyouwillneedtooperateyourbusinessuntilitbecomesself-sufficient.
What does it cost?Asyoureviewthesecosts,itisimportanttorememberthatthereisnoautomaticcorrelationbetweenwhatitcoststobuyafranchiseandhowmuchmoneyyouwillmake.Thecostofthebusinesshaslittletodowithhowmuchyoucanmake.
Typically,youwillneed30-50percentofthetotalinvestmentincash.Assumingyourcreditisacceptable,financingofthebalanceisusuallynotdifficult.YourFranNetConsultantwillhelpyouidentifyfinancingoptions.
*Source:FranchiseTimesMagazineSurvey,“FranchisingisAllRight,ThankYou”
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TOTAL START-UPINVESTMENT
Under$50k$50to$100k$100to$250k$250to$500kOver$500k
PERCENT*
28.6%23.9%32.7%9.2%5.6%
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Franchise Selection Decision PlanHow do you eat an elephant? One bite at a time?Keepyourdecisionmakingsimple—takeitonesmallbiteatatime!ThefollowingchecklistprovidesathumbnailsketchoftheFranNetFour-StepResearchPlan,alongwithestimatedcosts.Foramoredetailedlookatfranchiseresearch,pleaseseetheFour-Stepplanonpage15.
FILL IN DATE ACTION ESTIMATED COST COMMITMENT
MeetwithFranNetConsultanttocreate $0 NONE BusinessModelandselectfranchisestoevaluate
Reviewofmaterialsreceivedfromfranchisorsand initialphoneinterviewwithfranchisor* $0 NONE
Validationprocess:andvisitstofranchisees.Takenotes! $10-$500 NONE
Visithomeofficeoffranchisor $10-$800 NONE
Basicreviewwithattorneyand/oraccountant(larger scopemayrequiremoretimeandmoney) $300-$1,200 NONE
Decision to invest in franchise Specified Investment 100%
Remembertoreviewyourbusinessmodeleverystepoftheway.Itisyourcompassandwillguideyouindeterminingifyouwanttoproceedwiththeresearch.YourFranNetConsultantwillcoachyouthroughthisprocessandcanrecommendotherprofessionalstoassistasneeded.Thisprocesstypicallytakes30to45days.
*Foralistofquestionsforboththefranchisorandfranchisee,seepages16and17
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The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Business Preferences QuestionnaireThinkingaboutyourpersonalbusinesspreferenceswillhelpyoutoidentifyhowvariousbusinesseswillfityourownmanagementstyle.Whilebusinessgoalstendtobeuniversal,businesspreferencestendtobeverypersonal.What’simportanttoyouinowningabusiness?Begindesigningyourperfectbusinessbyansweringthequestionsbelow.Feelfreetoaddwhateverelseyouwishincludingyourthoughtsabouteachquestion.Check(3)allresponsesthatapply.
1. VENUE (Wheredoyouliketodothebusiness?) q Inanoffice q Atastore q Yourownhome q Outcallingoncustomers q Don’tcare/Notimportant
2. EMPLOYEES q Iprefermanyemployees q Ipreferfewemployees q Iprefertoworkonmyown
3. INCOME q ThereisasetamountofmoneythatIwanttoprovideforsecureandcomfortableliving (Thatnumberis$________peryear) q Iamdriventohighlevelsofsuccessandmoreisalwaysbetter
4. RELATIONSHIP WITH FRANCHISOR (Whatisyourchoice?) q Afranchisewithstrongsupportbutmanyrestrictions q Afranchisewithveryadequatesupportbutmorefreedomandflexibility q Afranchisewithgoodtrainingbutfreedomthereafter
5. MANAGEMENT STYLE q IwantabusinessinwhichIwillbeheavilyinvolvedineveryaspect q Iprefertodevelopemployees,delegatedutiesandbuildanorganization
6. HOURS q Iampreparedtoworkwhateverhoursareneededtolaunchthebusiness q Iamwillingtoworknightsorweekends q Iwanttokeepmyregularjobandworkparttimeonthefranchise q Iprefertraditionalbusinesshours
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The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
7. ENVIRONMENT q Iliketobeinatraditional“suitandtie”businessenvironment q Iprefersomethingmorecasual q Ilikeacombinationofenvironments
8. RISK/OPPORTUNITY q Iwanttogowithahuge,establishedfranchise q IwouldliketojoinanestablishedfranchisebutIdon’tmindbeingthefirstinmyarea q IwouldliketojoinanestablishedfranchiseandIwouldwanttowaituntilsomeunitsareopeninmyarea q Imightenjoybeingamongthefirstfranchiseesinayoungbutverypromisingnewfranchise
9. NUMBER OF UNITS q Iwouldpreferasingleunit q Iprefertoownmultipleunits
10. NO INTERESTAretheircertaincategoriesofbusinessthat,nomatterhowprofitabletheymaybe,justdonotmakesenseforyou?Pleaselist:________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
11. OTHER PREFERENCES Please list:________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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Suit & Tie or Jeans?
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
The 4 Step Research PlanAftermeetingwithyourFranNetConsultanttodefineyourBusinessModel,youwillbeintroducedtospecificfranchisesthatbestmatchyourcriteriaandcanhelpyoureachyourgoals.Beforeyouinvestanymoney,FranNetrecommendsthatyouuseour4-StepResearchPlan.Thesestepsaredesignedtokeepyourdecision-makingassimpleaspossible,bytakingonesmallstepatatime,yetallowingyoutothoroughlyevaluateafranchise!Providedyouareresearchingnomorethanthreefranchiseconceptssimultaneously,youshouldbeabletocompleteallstepsinaboutfourweeks.Remember,thereisabsolutelyNOobligationonyourpartatanytimeduringtheinvestigationotherthanpromptandcandidcommunicationwiththefranchisorandyourFranNetConsultant.
Step 1 TALK TO THE FRANCHISOR• WhenyourFranNetConsultantmakesareferral,thefranchisorwillcontactyoutypicallywithin48hours.• It’sinyourbestinteresttocreateagoodimpression.Youwantthefranchisortoviewyouasaqualifiedandserious
potentialowner.• Reviewthematerialsprovidedbythefranchisorandpreparequestions.IftheFranchiseDisclosureDocument(FDD)isnot
providedwiththeinitialinformationpackage,askforitduringyournextcall.TheFDDisalegaldocumentrequiredbytheFederalTradeCommission.Thisdocumentprovidesallrequireddisclosuresincludingalistofallfranchisees.
• ReadtheFDDfromcovertocoverandcompilealistofdetailedquestionsforthefranchisortoanswerduringyournextcall.
Step 2 CALL AND VISIT SOME FRANCHISEES• Carefullytargetyourlistoffranchiseestointerview.Askthefranchisorwhichownerslistedhavesimilarbackgroundstoyou.
Askwhothemostsuccessfulownersareandwhichonesmaybestruggling.Onceyourlistcontainsagoodcross-sectionofthefranchisecommunity,beginyourphoneinterviewsusingthefollowingpagetoguideyourquestions.
• Callatleasteighttotenfranchiseesandtakecarefulnotes.Youmayneedtoreviseyourlistofquestionsasyougo.Ifyoureceivethesameanswerfromthefirstfourtosixfranchisees,dropthatquestionandperhapsaddnewones.
• Arrangetovisittwoorthreefranchiseesattheirplaceofbusiness.• Onceyouhavecompletedyourcallsandvisits,askyourselfsomekeyquestions,suchas:
• CanIseemyselfdoingthisbusiness?• WillIenjoyitandbegoodatit?• AmImorelikethesuccessfulownersinthesystemoramImoreliketheoneswhoarestruggling?
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The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Now it’s time to hit the brakes or floor it! Basedonwhatyou’velearnedfromthepeopleinsidethebusiness,doesthisfranchisefityourmodel?Canyouseeyourselfdoingwhatthesuccessfulfranchiseeshavedone?Willthisbusinesshelpyouachieveyourgoalsandvision?
IfyoucananswerYEStoallofthesequestions,it’stimetoproceedtoStep3.Ifnot,closethefileandcontinueresearchingtheotheropportunities.
Step 3 VISIT TO THE FRANCHISOR• ManyfranchisecompaniesrefertothisvisitasaDiscoveryDay.Itisanopportunityforyoutomeetface-to-facewiththekey
players;topmanagementandallthedepartments,e.g.training,marketing,operations,accounting.Onthisvisityoushoulddecidewhetheryoufitwiththeircorporateculture,getyourfinalquestionsanswered,andbeabletoanswerakeyquestionyourself,“ArethesethetypeofpeoplethatIwantasmypartners?”
Step 4 CONSULT WITH PROFESSIONAL ADVISORS• Useanyandallexpertsthatyoudeemappropriate.Hireafranchiseattorneytoreviewtheagreementtomakesureyou
understandalltheprovisions.Youmayalsowanttohireaqualifiedaccountanttoassessthefinancialstrengthofthefranchisorandassistyouwithyoureconomicanalysisoftheopportunity.Ifyouwillbefinancingaportionofyourinvestment,youshouldbeindiscussionwithoneormorelendersatthispoint.
Now it’s time to MAKE THE DECISIONYoucannowbeconfidentthatyouhavecarriedoutanintelligentanddiligentinvestigationandmakingyourdecisiononfactsasopposedtoinitialperceptions.
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The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
?’s to Ask Franchisors1. COMPETITIVE ADVANTAGE OF PRODUCT OR SERVICEAsktherepresentativewhatmakesthisbusinessmore
attractivetoyou,asanowner,andmoreattractivetoacustomer.• Howisyoursystembetterthancompetitors?•Whoarethecompetitors?•Howdoesyourbusinessmatchup?2. TIME TESTED, STANDARDIZED FRANCHISE SYSTEMAsktherepresentativetodescribeinbroadtermshow
thesystemworks,howlongtheyhavebeenatit,andwhatimprovementstheyhavemaderecently.Askthemtodescribethesystem.
• Howlonghaveyoubeenfranchising?•Howmanyfranchiseunitsarecurrentlyoperating?• Howmanyunitshaveyou
closedineachofthelastthreeyears?Why?•Howmanyunitshavebeentransferredorsoldineachofthelastthreeyears?Why?•Howmanyunitshaveyouopenedinthelastthreeyears?•Howmanyunitsdoyouplantoopeninthenextthreeyears?•Whatisthefunctionofthebusiness?•Whatisthefunctionoftheowner?•Whatistheinitialinvestment?
• Whatdowegetforthat?Pleasedescribeanyfeesyouhave.•Doyouhaveanearningsclaim?Ifso,whatisit?• Whatimprovementshaveyoumadeinyourbusinessrecently?3. STRONG FRANCHISOR SUPPORTAsktherepresentativetodescribethesupport:initialandon-goingtraining,
800-help-lines,fieldsupport,annualmeetings,localmeetings,purchasing,marketing,promotion,etc.• Describethesupportyouprovidefranchisees.•Whatistheinitialtraininglike?Howlongisit?•Whatsupportisavailableafterthebusinessisopen?•Whatkindofcontinuoussupportisthere?•WhatwillIhearfromthefranchiseesonthissubject?
4. FINANCIALSTRENGTHANDMANAGEMENTEXPERIENCEAsktherepresentativetocommentonbothofthese
areas.TheFranchisor’scommentswillhelpyoutounderstandtheFDDwhenyouhavethedocument.• Inlayman’slanguage,describethefinancialstrengthofthefranchise.•Abouthowmuchrevenuecomesfrominitial
franchisefees?•Howmuchfromroyalties?•Isthefranchisepubliclytraded?•Howhasthestockperformed?5. MUTUALITY OF INTEREST BETWEEN FRANCHISOR AND FRANCHISEESTelltherepresentativethatyouwill
beaskingfranchiseesaboutthis,butyouwouldliketohearfeedback,andalsowhatyoumightexpecttohearfromthefranchisees.Ofcourse,whatyouwantisasystemwherethetwointerestsarelockedtogether!
• Howwillthefranchiseesdescribetheirrelationshipwiththefranchisor?•Isitsupportive?Isitcombative?• Havetherebeenanylawsuitsorarbitration?•Whatwastheissue,andhowdiditend?
Pleaseprepareanyadditionalquestionsyouwishalongtheselines.Exploringtheseareaswillintroduceyoutotherepresentativeasaseriousandthoughtfulprospect—exactlythetypeanyfranchisorwantsinhisbusiness.Alsoitwillgiveyougoodinformationinthecriticalareasoffranchiseselectionwhichwillhelpyouduringyourresearchprocess.16
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REMEMBER TO TAKE GOOD NOTES!
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
?’s to Ask FranchiseesThesequestionsarejustsuggestions.Addwhateverotherquestionsyouwish.Donotexpectfranchiseestoreturncalls.Rememberyouareastrangeraskingforafavor,soaskwhenyoumaycallthem.Useawarm,conversationaltonebutfollowtheoutlineofthequestions.Writethenameofthefranchisee,his/hertelephonenumberandthedateofthecallonthetopofthissheet.Thankthefranchiseeforhelpingyou.
1. Howlonghaveyoubeeninbusiness?
2. Whatwereyoudoingpreviously?
3. Whatmadeyouchoosethisfranchise?
4. Howhasitbeengoingforyou?
5. Howwouldyourateyourrelationshipwiththefranchisor?
6. Howwouldyouratetheinitialtraining?
7. Howwouldyouratetheongoingsupport?
8. Howwouldyouratethemarketingprograms?
9. Areyouawareofanyfranchiseesthatareunhappyinthisbusiness?Doyouknowwhy?
10. Howdifficultisittofind,trainandretainemployees?Howdoyoucompensatethem?Benefits?Paidtimeoff?
11.Wouldyoumindsharingwithmewhatyouexpectyourannualrevenuetobefortheyear?Howdoesthatbreakdown
amongstthevariousproducts/services?
12. Canyoutellmeroughlywhat%ofthatwilldroptoyourbottomline?
13. Approximatelyhowmuchperyeardoyouspendfor:
• AdvertisingandMarketing-
• Uniforms-
• Insurance-
• Supplies-
• Rent/UtilitiesorOther-
14.Whatareyourcostofgoodssoldasa%ofsales?
15. HowmuchcouldIreasonablyexpecttogross/netinfirstyear,secondyear,andthirdyear?
16.Whatdoyoulikebestandleastaboutthisbusiness?
17. Ifyouhadittodooveragain,wouldyoubuythisfranchise?
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The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Franchise Regulations and the FDDFranchiseregulationsareinplaceforthebenefitofapersonconsideringbuyingafranchise.FranNetbelievesourclientsmustunderstandtheseregulations.
Federallawandstatelawin14states,requirethatafranchiseprospectreceiveacurrentcopyofthe75-150pagedocumentknownastheFranchiseDisclosureDocument(FDD)atthefirstmeetingwitharepresentativeofthefranchisecompany.Furthermore,acurrentcopyoftheFDDmustbeinthepossessionoftheprospectfor14calendardaysbeforetheprospectmaysignanycommitmentormakeanydeposits.Finally,thefranchisecontract,withallblanksfilledin,mustbeinthepossessionoftheprospectforfivebusinessdaysbeforehe/shemaysignit.
Belowyouwillfindthedefinitionofafranchise,courtesyoftheFederalTradeCommission,andthetableofcontentsoftheFDD.Ihaveconsolidatedthetwenty-threepointsintothirteenpoints,butallareincluded.
THE FDD1. Franchisor,predecessors,affiliatestheofficersandtheirbusinessexperience2. Litigationandbankruptcy3. Theestimatedinitialinvestmentandallfeesincludingtheinitialfranchisefee,ongoingroyalties,advertisingfees, sitefees,transferfees,etc.4. Restrictionsonthesaleofproducts,services,andalsoontheirsources5. Franchisor’sobligationsandthefranchisee’sobligations6. Availablefinancingandterritoryrights7. Obligationtoparticipateintheoperationofthebusiness8. Renewal,termination,transferanddisputeresolution9. Earningsand/orsalesclaims10. Listofoutletsandfranchiseesincludingallwholeftinthelastyear,andthreeyearsofopen/closedunits11. Auditedfinancialstatementsofthefranchisor12. Franchiseagreement,leasesandotherdocuments13. ReceiptoftheCirculartobesignedbytheprospect
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A FRANCHISE IS...”AN AGREEMENT FOR CONSIDERATION BY WHICH A PERSON PERMITS THE DISTRIBUTION OF GOODS OR SERVICES UNDER HIS TRADEMARK, SERVICE MARK,
OR TRADE NAME, DURING THE TERM OF WHICH THE GRANTOR RETAINS CONTROL OVER OTHERS OR RENDERS SIGNIFICANT ASSISTANCE TO OTHERS.”
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Beware of ROAD BLOCKS!A Dream DeniedManypeoplewhodreamofindependencefindafranchisethatcapturestheirinterest.Howeverafterashorttimeofafewdaysoraweekatmost,thatinterestandevenexcitementisgone—evenbeforetheyhavedoneanyseriousresearchontheopportunity.Whathappened?TheyencounteredaROADBLOCK!Wecallthisroadblock“beingambushed.”Feelingambushedisoverwhelmingandcanstopyourightinyourtracks,however,youneedtoevaluatethefactsthencontinuemovingforward.
THE SPOUSAL ROAD BLOCKThisisafamiliarevent.Thebusinessseekerclaims,“I’vetalkeditoverwithmyspouse,andhe/shesaysit’smycall.WhateverIwanttodoisjustfine!”Fineuntilthehopefulownercomeshomeandstartstalkingaboutthefranchise.Suddenly,theobjectionsandconcernsbegintoflow.Soon,thetaskofbusinessownershipbecomescomplicatedbymaritaldisagreementandwhatwassopromisingnowappearsimpossible. •THESOLUTION 1. Owningabusinessisafamilydecision.Evenbeforethesearchbegins,thecoupleneedshonestdiscussionsaboutthe benefitsandchallengesofbusinessownership. 2. Whenthereisagreementtogoforward,bothpartiesshouldattendanyfuturediscussionstogethersothateachhas thesameinformation.Wouldyouwantyourspousetobuyahousewithoutknowingyouropinion?Investingina businessisanevenmoreimportantdecisionandcallsforfullagreementfrombothpartners.Anaddedbenefitisthat onemayaskaquestionthepartnerdidnotconsider.
THE FRIEND/NEIGHBOR ROAD BLOCKItisflatteringtobeaskedforyouropinion.Theminuteyoumentionyourinterestinabusiness,yourfriendsandneighborswillcheerfullyprovidetheir(uninformed)opinionsaboutyourchoice. •THESOLUTION Whywouldtheirchoicesmatchyours?Theyhavedifferentbackgroundsandinterests.Giveeachopiniontheworthit deservesbasedontheknowledgeandbusinessexperienceoftheopiniongiver.
THE SELF & INTERNET ROAD BLOCKOftenpeopledestroytheirowndreamsofbusinessownershipbyconfusingcasualinquirywithrealresearch.Itisaclassiccaseof“shootingyourselfinthefoot.”Forexample,youcanbeinterestedinacertaintypeofbusinessandcheckouttheYellowPagesorsearchenginestoseehowmanyofthemthereare.Thatisinteresting-butittellsyounothingaboutthesizeofthemarket,themarketsnicheortheretailbusinesstargets.Itmaybethatthemarketisundeservedoryoumightaskacompetitoraboutthebusiness.Don’texpectanunbiasedopinion! •THESOLUTION Seriousresearchabouttheindustryandthefranchiseisabsolutelyrequiredandfranchiseesalreadyinthebusinessarean excellentsourceofinformation.YourFranNetConsultantwillcoachyouthroughtheresearchprocess.
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The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Expect to get NervousBuyingabusinessisaseriousdecision.Noonemakesaseriousdecisionwithoutgettingalittlenervous,oratleastsomebutterfliesinthestomachatsomepoint.Ifyoudon’tgetnervous,youmaynotknowenough!
Good,solid,seriousresearchandgoodadviserswillleadyoutoagooddecision.Talktothesuccessfulfranchisees-they’retheoneswhocangiveyouthemostinformationonhowtosucceedintheirfranchise.
Also,besuretotalktotheunsuccessfulfranchiseesandlearnfromthem.Findoutwhattheywouldhavedonedifferentlytoavoidmakingabaddecision.
Whenyouhavegatheredtheinformationandarehonestaboutyourownabilities,youwillmakeasmart,educateddecisionforyourself....despitethebutterflies!
EXPECTTOGETNERVOUS.DEALWITHIT.DON’T LET NERVES STEAL YOUR DREAM.
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If you don’t follow your dreams, you will work for someone who did!
The “Right Way” – The “Right Business” Get direction from a franchise expert and be on your way to success in the business of your dreams!
Why Use a FranNet Consultant?Youwouldn’tbuildabuildingwithouthiringatalentedandexperiencedteamofprovenprofessionals.Thearchitect,engineers,andconstructioncrewareseasonedexpertswhoknowwhatittakestobuildasturdy,successfulbuildingthatwilllastformanyyears.Buildingsuccessinfranchiseownershipshouldbenodifferent.FranNetConsultantsworldwidehaveproventrackrecordsofhelpingindividualsfindtherightbusinessthatbestfitstheiruniquepersonalityandexperience,andthatcanbesthelpthemachievetheirbusinessgoals.Bestofall,thereisneveranycosttoyouforusingourservices.BelowarewaysthatFranNetcanbenefityou.
• PROFILE Wewanttobesureweunderstandyou,yourgoalsandyourdreams.Ourfirststepistotalktogether.Thenwe’llaskyoutofill
outourBusinessPreferencesQuestionnaire(seepages12-13).Byfillingoutthesefewpages,itwillgiveusmoreinsightintothekindofbusinessthatmaybetherightoneforyou.
• MODEL Next,wewillstudyyourquestionnaireandarrangeaconversationeitherbyphoneorinperson.Weusuallyspendatleastone
totwohourswithyoutodevelopamodeloftheperfectbusinessforyou.Later,youwillusethismodeltoevaluatebusinessesyouchoosetoreview.Thismodelisuniquelyyourssowewanttomakesureyoufeelit’scorrect.Bestofall,youwillbeabletocompareeachbusinessyoulookattoyourmodelandwillhavealevelplayingfieldagainstwhichtomeasurethem.
• MATCH Whenyouaresatisfiedthatyouhaveidentifiedyourmodelcorrectly,wewillbereadytosuggestbusinesstypesthat
structurallyandstrategicallymeetyourmodel.Whenyou’veidentifiedsomebusinesstypesthatyouthinkmatchyourmodel,we’llidentifyandsuggestspecificcompaniesyoumaywanttobeintroducedtosoyoucanstarttolearnaboutthemingreaterdetail.Overtheyears,we’vescreenedhundredsofFranchisorsandworkedwiththousandsofpeoplejustlikeyou.Moreimportantly,mostpeopledon’tknowthechoicesthatexistinfranchisingandtendtomakedecisionswithoutsufficientknowledge.Wecanhelpyouunderstandyourchoicesandfindtherightmatchforyou.
• RESEARCH Thismaybethemostimportantstepofall.Wecan’tdoyourresearchforyou,soit’syourjobtodothe“heavylifting”and
conductacompleteandthoroughinvestigationofanybusinessthatyouthinkmayberightforyou.We’llevengiveyousomesamplequestionsandaFour-StepResearchProcess(seepages14-15)tohelpyougetstartedwiththisallimportantstep.
• PURCHASE Whenyouarereadytobuy,wecanhelpyoulocatefinancingsources,franchiseattorneysandotherresourcesyoumay
findhelpful.FranNetwillprovideyouwithguidance,information,andsupportasyouseekyourgoals.WeareethicalandexperiencedConsultantswhocanhelpyoufindwhatyouwantaffordablyandsafely.Nootherfranchiseorganizationhasasmuchexperienceandasmuchsuccessinhelpingprospectivefranchiseesfindbusinesses.
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