Is Franchising Right for you? - ExecutiveFranchiseMatch.com

Franchising – Is It a Strategy That Fits You? 70%of All People Have Thought Seriously about Owning Their Own Business.

Is it The Right Dream For You?

Common Reasons for Business Ownership ▪

Control your own financial freedom

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Build an asset for future sale

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Create more control and freedom for your time

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Fair reward - make money for yourself instead of the company

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Emotional fulfillment of building your own dream

Common Reasons for Business Ownership (continued) ▪ Satisfaction and happiness in day-to-day activities ▪ Build an asset to pass on to family members ▪ Create an opportunity to work with family ▪ Remove threat of job loss ▪ Replace lost income stream ▪ Other?

Franchising – What’s It All About?

▪ Franchising is not a business or industry itself ▪ Franchising is a business strategy ▪ Franchising is a strategy of the Franchisor designed to penetrate and dominate a marketplace

▪ Efficient distribution system Hamburger meat, muffler parts, coffee grounds Knowledge, training, software, databases

▪ Leverage growth through resources of stakeholders Knowledge, experience, effort, purchasing power, financial

▪ Similar goals & unified thinking among participants ▪ Strategic-Partnership

Elements of a Franchise ▪ ▪ ▪ ▪

Brand - the Franchise name associated with the products or services delivered in a memorable and satisfying experience Operating System – institutionalizes an excellent service delivered in a memorable experience so it can be done over and over again from unit to unit in a consistent manner Support System – helps the Franchisee get better and better at delivering the service in a memorable experience – helps a Franchisee improve their performance Franchisee – the individual motivations or reasons for being a part of a vibrant system

Value of Systems in a Franchise ▪

Reduced Risk – Proof of success is in place

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Operating System – Success Formula has been established for you

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You don’t have to re-create the wheel – or many wheels

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Other Franchisees with their ‘feet on the street’ – emulate the best Advice & support from the Franchisor – position of experience

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Collaboration – Share best and worst practices with similar people

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Systems continually adjusted, changed, & improved

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Training systems

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Sales & marketing strategies and systems

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Manuals & other documentation

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Letters, contracts, agreements, documents – all in place

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Development costs – shared resources

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Purchasing power

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Many others…

Entry to a Franchise System ▪ Franchise Fee The Franchise Fee is the cost of putting the Franchisee into the business of the Franchisor, not as a partner, but as a participant.

Entry fee to the point of the completion of the initial training programs Access to all of the Franchisor’s systems

▪ Royalty Fee The Franchisor’s share of the customer’s money generated by each Franchisee using the Franchisor’s systems The oil that makes the engine run

▪ Advertising & Marketing Fee Used to build Brand presence to benefit all members Advertising campaigns, marketing campaigns, co-op programs, Search Engine Optimization, Creative Artwork, collateral development costs, etc

Evaluation – Making an Informed Decision ▪ System of discovery – two-way exchange of information ▪ Step-by-step qualification system should be in place ▪ Open & honest exchange of information ▪ 30 – 120 days to complete the due diligence process ▪ Should never feel pressure to move too quickly yet the

information you need must be accessible – usually on a schedule set out by the Franchisor

▪ Includes open access to all Franchisees in the system ▪ The goal is to feel comfortable to make an informed decision about becoming Strategic-Partners

Franchisor Disclosure – Get All of the Pertinent Information ▪ Exchange information on a fair and equitable basis ▪ Formal Disclosure Documents ▪ No decisions – documents for 14 days ▪ Cooling off period – final documents for 7 days ▪ Full disclosure of all Franchisees ▪ Earnings Claims – most don’t, some do ▪ Financial performance data will be obtained from Franchisees

Important Consideration – Exit Strategy ▪ How will the business be valued at time of exit?

▪ Do the customers/clients carry an ongoing future cash flow value?

▪ How will the value be affected by changing demographic conditions?

▪ How will the value be affected by changing competitive environment?

▪ Franchisor should be willing to discuss

Facing the Fears – Realizing the Dream Common and expected fears – we all have them ▪ Fear of change, failure, unknown – perfectly natural ▪ Naysayers are everywhere – the ‘fire hose brigade’ ▪ Listen to advisors but trust yourself too ▪ Face it – feel it – blast past it – the only path to the dream ▪ It will never be the perfect time where all the stars line up Opportunity Finances Family Market Conditions Demographics Advisors

Franchise Broker/Consultant Value Delivery of Currencies of Value ▪ Money – help avoid wasting your resources pursuing less than optimal matches for you

▪ Time – spend my time to help you sort through thousands of Franchise options

▪ Security in decision making – help you eliminate systems that don’t fit for you and your characteristics

▪ Knowledge – apply my specialized Franchise knowledge and experience for your benefit

Franchise Broker/Consultant Value – continued ▪ Provide education about Franchising ▪ Interview/Profile/Discuss/Follow up ▪ Identify characteristics most important to you ▪ Help identify best options for you ▪ Match your qualifications to appropriate systems ▪ Help with selection of systems to learn about ▪ Introduction to appropriate personnel at those Franchisors ▪ Act as a buffer between you and Franchisor ▪ Help with information exchange process

If you’re thinking of Franchise ownership please contact Mike Smith Smith Franchise Consulting 416-986-4321 mike@smithfranchising.com www.executivefranchisematch.com