Nuts & Bolts of Franchising by iFranchise Group

An Overview of Franchising

Is it an appropriate strategy for your business?

} FTC rule 436 cites three elements that

legally define a franchise:

◦ The use of a common trademark ◦ The exercise of control or provision of assistance ◦ The collection of fees, royalties, mark-ups or other monies from the franchisees } If you have all three elements, you are a

franchise, regardless of what you call it

} Some state definitions vary, but are similar

} The ability to expand using franchisees’ capital } Franchisees are typically more motivated to

succeed than salaried managers

} Franchising promotes increased quality at the unit

level

} Franchising enables a company to grow faster than

it otherwise could through corporate expansion

} Reduced risk and liability for the franchisor } Fewer concerns over day-to-day operations

} Established and profitable } Unique in the marketplace } Readily teachable to others } Attractive in terms of the proven return on

investment

} Marketable as a franchise opportunity } Transferable to other markets or types of locations

Call us to see if your business is ready to franchise

(708) 957-2300

See a more detailed test here. 4

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Develop a business implementation plan

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Draft legal documents required by law

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Develop an Operations Manual

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Establish quality control mechanisms that franchisees will be required to follow

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Plan your marketing

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Develop a website dedicated to your franchising effort

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Develop marketing materials to help sell franchises

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Design a franchise sales strategy

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Advertise your franchise opportunity to generate leads

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Should be developed by experts Be sure the person doing the work has extensive franchise experience Must focus on implementation as well as the development of your franchise program Include organization charts, staffing analysis, primary and secondary research, detailed cash flow and sensitivity analysis Don’t rely on guesswork – thorough planning is critical to the long-term success of any franchise program

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Franchise legal documents should be drafted by a qualified franchise attorney Be sure the lawyer is a franchise expert, and has at least ten years of franchise experience Consultants with expertise in developing and managing franchise systems can assist you and your attorney in developing the business relationship (franchisor/franchisee) to be detailed in the legal documents

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Motivate and train your corporate staff to understand and support the franchise system

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Develop a comprehensive Operations Manual

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Prepare a detailed training program

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Consider on-line training tools

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Beware of Liability Concerns: ◦ Inaccurate or incomplete information provided in an Operations Manual can create liability. ◦ Franchisor liability can also be created if an Operations Manual inadvertently triggers “Agency Law”

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If you’re planning for aggressive expansion, create a formal written marketing plan outlining your strategies and budget Maximize quality control and brand awareness by expanding regionally first – before you consider national growth

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Don’t expand faster than your support capability

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Use a specialist in helping you plan for growth.

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Remember, one incremental franchise sale can mean hundreds of thousands of dollars gained or lost

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Your marketing materials create a critical first impression of your franchise opportunity

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Your website should be your first concern

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Develop a mini-brochure for the sake of economy

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A full-sized brochure or e-brochure is essential for credibility Work with professionals who understand the unique nature of marketing a franchised concept What you can and cannot say in your marketing is regulated by state agencies – be sure to have your attorney and the states review all materials

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Your franchise program will not succeed unless you select quality franchisees Develop a comprehensive and detailed strategy for evaluating and approving franchise candidates Prepare your staff for supporting your franchise sales effort Obtain ongoing coaching from experts with experience in franchise sales The franchise sales process cannot be taught in a day

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Voted #1 Franchise Consulting Firm in North America in an Independent Survey of 1,000+ Franchisors, Multiple Years in a Row More hands-on experience than any other firm ◦ ◦ ◦

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Consultants with over 800 combined years of franchise experience 98 out of the top 200 franchise companies Offices in Chicago, Dallas, Los Angeles, Boca Raton, Miami-Fort Lauderdale, Atlanta, Toronto, Dubai, UAE & Riyadh

More “senior level” experience ◦ ◦

Hands-on experience at start-up and established franchisors Former CEOs, CFOs, EVPs of more than 50 different franchise companies

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The ability to bring more resources ◦ ◦

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Adia (now Adecco), Armstrong Tile, Auntie Anne’s, Dunkin Donuts, LINE-X, Pearle Vision, McDonald’s, PIP Printing, Schlotzsky’s, Snap-on Tools, Snelling & Snelling, and other national brands

Faster completion Ability to provide assistance in several areas simultaneously

Breadth across four functional areas ◦ ◦ ◦ ◦

Strategic planning Quality control Marketing Organizational development

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Franchise experience in 50+ countries

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Numerous awards and publications

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Develop business and implementation plans

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Coordinate development required legal documents*

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Create operations manuals and training tools

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Develop marketing plans, including digital marketing strategies

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Develop marketing tools (websites, brochures, videos)

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Develop sales strategies and methodologies

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Provide long-term implementation assistance Our relationship is based on the unique needs of each client *In conjunction with selected independent franchise legal representation

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We accept a limited number of engagements

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We focus on long-term project involvement

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We specialize in implementation strategies and assistance We invest in people, not overhead ◦ Senior Consultants average 25+ years of experience ◦ We bring real world expertise to your franchising efforts ◦ Our consultants do not learn at your expense

See consultant bios here.

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Consulting and legal costs vary depending on the scope of each project Our pricing is designed to meet the needs of each client with whom we work Do not go into franchising undercapitalized ◦ Expect to pay consulting and legal fees of $50,000 or more ◦ In addition to consulting fees, plan on spending about $10,000 per franchise sale on advertising ◦ Be wary of anyone who tells you that you can franchise without a significant commitment of resources

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Call us to discuss your concept If your business is qualified, we will schedule a no-cost consultation Your consultation will determine: ◦ Is franchising the right strategy for you? ◦ Is your business franchisable? ◦ What steps do you need to take? ◦ What specific costs should you expect?

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Visit our web site at ifranchisegroup.com

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Review our corporate brochure

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Request a free copy of our book titled How to

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Franchise Your Business

Call us at (708) 957-2300 to talk about your concept and learn more about the services offered by iFranchise Group

info@ifranchisegroup.com (708) 957-2300 ifranchisegroup.com