What To Expect from the Initial Franchise Presentation

One of the most popular television shows recently has been “Who Wants to Be a Millionaire?” When it comes to deciding upon your “Final Answer” about your future and your franchise selection you need to study and do your home work. That is, you need to complete your due diligence, a thorough investigative process, as you prepare to take to the stage as a contestant during the initial franchise presentation.

The day that you meet with the prospective franchisor company face-to-face at the company headquarters is often referred to as Franchise Discovery Day. At that point you have the opportunity to learn detailed facts and figures about the firm’s business model, and you have the chance to be the one asking the questions, and by all means, be well-prepared to do so. Ideally, you will have already consulted with a few existing and even former franchise owners with regards to their experiences.

This critical meeting will center around the Franchise Disclosure Document (FDD) which is required by the Federal Trade Commission. The FDD (formerly called the UFOC - Uniform Franchise Offering Circular) is a legal, binding agreement that covers the following topics and must be reviewed at least 14 days before a franchisee ever signs the contract:

• History of the franchise
• Franchise fees and royalty fees
• Information about franchisor executives, directors
• Company litigation history
• Terms of the franchise agreement
• Estimates of initial costs, inventory, insurance
• Renewal options
• Territorial boundaries
• Products and services
• Training program
• Franchisee obligations

The franchisor also must provide information regarding the reponsibilties it has to the franchisee:

• Training program
• Territories and locations
• Advertising and marketing support
• Management and operational planning support
• Trademarks, patent and copyright information
• Audited financial statements
• Existing franchise statistical information
• Vendor and product restrictions
• Renewal, termination, dispute terms

Caution: before you sign amy Franchise Disclosure Document, it is imperative that you seek legal advice as well as counsel from your financial advisor. Remember the Boy Scout motto: “Be Prepared.”

Finally, similar to the “Who Wants to Be a Millionaire” program, know that you have a “lifeline”—the opportunity to collaborate with one of FranFinders franchise consultants whose professional experience can be invaluable.

How to Spot a “Hot” Franchise Business

“When you’re hot you’re hot, and when you’re not, you’re not” according to the Jerry Reed classic song of the same name. No truer words have been spoken that could describe a multitude of franchising opportunities.

Practically everyone wants to be associated with the latest and greatest, the next big thing, whether it involves a franchise, the latest phone, or the newest car. Be careful where you tread, however, because what may seem hot at the time, could just be a flash in the pan. Conversely, what’s old can often be new again.

Customer demands and needs may vary from year-to-year. External market conditions, such as the economy, government regulations, or competitive pressures can change your business dynamics overnight. So, how do you decide what is hot and what is not?

Let’s take a look at several key factors that may help you in your decision-making process:
•Start by simply getting a general feel about trends by sheer observation of the marketplace
•Do in-depth research on-line, read trade journals, attend shows, even participate actively on social media (LinkedIn, Facebook, Twitter, etc.)
•Venture out and meet experts in the your industry or field of interest
•Consider counter-trends: if everyone is into burgers, perhaps consider hot dogs
•Study demographics and buying habits of various age and income groups in your region
•Realize that a tried and true franchise may seem old, but just one new item might change the face and fortunes of the franchise
•Consider your risk-aversion and risk-taking profile

When it comes to the bottom line—your bottom line—it is up to you to assemble all of the facts you have gathered, study them, face them head on.

Then decide what is best, for not only your finances, but also with regard to your personality, lifestyle, business experiences, as well, of course, what people truly want and need. In other words, select the hot franchise business that meets your needs and objectives, not just the “flavor of the day.”

Only when you match each of those parameters to the plethora of franchise opportunities, will you be making an informed decision as objectively as possible.

To help you further in your franchising quest for the “hot” opportunity is one of the expert franchise consultants with FranFinders.

Pushing Past Fear – Taking the Leap Toward Franchise Ownership

As President Franklin D. Roosevelt proclaimed in his first inaugural address: “…let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

Think about that quote for a minute. Not only can it apply to your challenging decision to take the leap toward franchise ownership; it also reinforces that you are not the only one who has ever harbored any negative thoughts.

It is normal to have some self-doubt, otherwise you would not be human. Think of the Super Bowl football heroes who say that they have had butterflys in their stomachs before the game of their lives—and then went on to victory and stardom.

Make no mistake about it: franchising is a major life decision. What should override all other aspects of this assessment is that you have a dream—a goal of being a business owner, the head of your own company, a better lifestyle for you and your family. If you can envision it, however, more than likely, you can achieve it.

On the other hand, people can be true visionaries…while others act as Pollyanas. Which are you? Consider these important factors in your thought process:

• What is your motivation? Escaping a bad employer, had a job loss, or truly self-motivated?
• Do you have a plan? Where will you find the financial resources?
• Are you willing to roll up your sleeves and pitch in?
• How well are your people skills and ability to deal with the public?
• What is your business background? Your overall strengths and weaknesses?

These points are not mentioned to discourage you from becoming a franchisee, but rather to help you start an authentic self-assessment. Still, for many, these represent questions that you may not have had to consider in the past, and an objective gut-check is not always easy to do.

That is why you need a mentor to help you through the franchising maze that encompasses self- awareness, financing, multiple franchise choices, personnel selection, plus legal and compliance issues, to name just a few hurdles. All of these elements you need to seriously consider, even before you sign on the dotted line, which itself can be somewhat nerve-wracking.

What To Look for When Considering An Existing Franchise for Sale

One of the best reasons that many entrepreneurs enter the world of franchising would be that, in a broad sense of the word, it is perceived as a “turn-key” operation, given all of the marketing, branding, training and overall support you can receive from the franchisor.

Taking that “turn-key” approach to the next level might be someone’s rationale for buying an existing franchise for sale where presumably the owner has an established base of customers, vendor relationships and possibly, owner financing. Before you decide to go in that direction, however, it might be a good idea to carefully review some of the advantages and disadvantages of that strategy:

•Start by reviewing your overall business goals and aspirations. For example, just because the franchise location might be convenient for you may not mean it is convenient for customers because of pending road construction.

•Conversely, a site not so close to home may be prime for new development which could add store traffic.

•If your desire is to own several units, getting involved with an existing location may not match your financial targets or demographics.If these issues do not represent hurdles for you to achieve your goals, then you should proceed to do your due diligence. Here are a few methods to consider for learning about the existing franchise:

•Check with your franchise broker who can help you find existing franchises that may be for sale that match your interests.

•The corporate franchisor may also be a source of information about the performance of the existing unit(s) for sale.

•Consult with your financial advisor and arrange to review the “books” for the past couple of years in order to determine cash flow, expenses, taxes, margins, and other financial data.

•It is also advisable to retain an attorney so that you can ascertain if the seller currently has, or has experienced in the past, any litigation, or perhaps has other building code, tax, or human resource issues.

You need to be inquisitive and intuitive at the same time. Even as you rely upon your accountant or attorney, you - the actual potential franchisee - need to ask pointed questions, and probe deeper as to why the current owner wants to sell.

Do not conclude or assume anything until you are totally satisfied with every answer. That way you will enter into any agreement with your eyes wide open and with full confidence in your business venture.

The Pros and Cons of Start-up Franchises

You’re quite certain that buying a franchise business represents your ideal pursuit of happiness in business. One of the final questions remaining before you now is “What type of franchise arrangement will work best for me?”

As you mull your decision like Hamlet—“To be (a start-up), or not to be (a start-up),—that is the question…”—note that you can still choose the industry vertical, e.g. fast food. The crux of the matter is whether you want to be a big fish in a little pond or vice-versa?

It all boils down to a soul-searching, face-the-music gut-check that seriously weighs the pros and cons of going with a tried and true emporium with brand recognition, or taking more of a risk with the newest, hot entry into the market. Here are a few key tipping points that might help you to focus better and to help match your options with your overall goals, financial status and personality:

•If you can get in on the ground floor of a new operation, you will have the opportunity to be on the cutting edge, the first on your block. On the other hand…the franchisor has no experience to support this new system. So, do you have extraordinary marketing and business skills to overcome this issue?

•The “XYZ” corporation may have found an ideal niche that serves an unmet need in the market which could foretell growth. On the other hand…their product or service may turn out to be little more than a “me-too” concept with no uniqueness. Are you absolutely certain that this company does have a unique selling proposition?

•Purchasing a start-up franchise probably means that your upfront costs as a franchisee will be relatively lower than buying from a company with hundreds or thousands of locations. On the other hand… the franchisor will likely have lower financial reserves to support marketing/training.

Again, maybe you have prior business experience that can offset this disadvantage—do you have what it takes?

To assist with helping you measure the arguments for and against a start-up, is the advice of a FranFinders expert franchise consultant.