To break down a large goal into manageable tasks is necessary to be able to confidently complete any project. It is no different for finding a franchise business that meets your goals. We've broken down the process of buying a franchise into 3 simple steps: Exploration, Evaluation and Execution. This is our proven, E3 Process.
These steps can further be divided into sub parts. The following breakdown shows the typical path toward franchise ownership.
Exploration: Explore Your Goals
Analyze Lifestyle Needs
Analyze Business Goals
Analyze current financial position and future goals
Help Determine Type of Business
Evaluation: Evaluate Your Options
Research Applicable Franchises
Obtain Franchise Packet and FDD
Speak in-depth with Franchisors
Interview Existing Franchisees
Second Interview with Franchise
Consult with Attorney and Accountant
Visit Franchise Headquarters
Execution: Execute Your Plan
Enter Into A Franchise Agreement
Obtain Real Estate
Franchise Initial Training
Complete Construction
In-Store Training
Open For Business
On-Going Support
We've developed our proven E3 process of franchise due diligence to simplify and expedite the entire process. Contact one of our FranFinders expert Franchise Consultants today for your free franchise consultation.
Wednesday, April 27, 2011
Wednesday, April 20, 2011
How Important is Due Diligence? Very.
The entire process of franchise due diligence, for both a Franchisor and a Franchise Candidate, should be about determining whether there is unified thinking. The best advice is to step back at the end of your due diligence process and ask yourself the following question: Did the process help both parties to determine if they have unified thinking about the franchise business at hand? If the answer is not yes, then you've either got more work to do, or something with the system is not right, and you should examine alternatives.
Franchising is about finding the right strategic-partnerships to allow both parties to prosper at a higher level together than they would if they were not to enter into an agreement to do business together.
First of all, you must be comfortable with the Franchising concept itself. The business of the Franchisor is not Franchising. Their business is fast food, or muffler parts, or telecom consulting. Franchising is their strategy to execute that business with optimum results.
Franchising is the Franchisor's strategy to penetrate and dominate a marketplace - simultaneously. You've got to be comfortable with the Franchisor's strategies to do just that. If those strategies make sense to you, it can be a great ride in achieving success together. It can be a great ride in building a brand that increases in value as time marches on. Franchising is also the Franchisor's strategy of pooling resources. Those resources include the resources of the Franchisor, as well as those of the individuals that join the system as Franchisees including their ideas, talents, motivations, financial and management resources.
If you are comfortable with these basic concepts of Franchising, you should then assess your needs, wants and desires to make sure that they can be met with a successful Franchise in the system. You should also bring to the surface all of your fears, uncertainties, and doubts to determine if you feel you can help solve them with the business of the Franchisor, and the future you can create for yourself with that business. The worst thing you can do is leave them buried.
Then there are the basic pragmatic questions. Will the Operating Systems of the Franchisor help you to deliver the business products and services more efficiently, and will they help you avoid re-creating a whole slew of wheels? Will the Support Systems help you to deliver the products and services better and better over time? Will the Brand continue to increase in value for your benefit?
Finally, can you see yourself reaching your goals, dreams and objectives by operating a successful business in the Franchisor's system? Will the Franchise help you to achieve those goals and dreams?
If the Franchisor's strategies make sense to you, and you can see yourself achieving your goals and dreams through the Franchise and its systems, then you have unified thinking - and the sky can be your only limit
When conducting your franchise due diligence, keep in mind the free services of FranFinders expert franchise consultants
Franchising is about finding the right strategic-partnerships to allow both parties to prosper at a higher level together than they would if they were not to enter into an agreement to do business together.
First of all, you must be comfortable with the Franchising concept itself. The business of the Franchisor is not Franchising. Their business is fast food, or muffler parts, or telecom consulting. Franchising is their strategy to execute that business with optimum results.
Franchising is the Franchisor's strategy to penetrate and dominate a marketplace - simultaneously. You've got to be comfortable with the Franchisor's strategies to do just that. If those strategies make sense to you, it can be a great ride in achieving success together. It can be a great ride in building a brand that increases in value as time marches on. Franchising is also the Franchisor's strategy of pooling resources. Those resources include the resources of the Franchisor, as well as those of the individuals that join the system as Franchisees including their ideas, talents, motivations, financial and management resources.
If you are comfortable with these basic concepts of Franchising, you should then assess your needs, wants and desires to make sure that they can be met with a successful Franchise in the system. You should also bring to the surface all of your fears, uncertainties, and doubts to determine if you feel you can help solve them with the business of the Franchisor, and the future you can create for yourself with that business. The worst thing you can do is leave them buried.
Then there are the basic pragmatic questions. Will the Operating Systems of the Franchisor help you to deliver the business products and services more efficiently, and will they help you avoid re-creating a whole slew of wheels? Will the Support Systems help you to deliver the products and services better and better over time? Will the Brand continue to increase in value for your benefit?
Finally, can you see yourself reaching your goals, dreams and objectives by operating a successful business in the Franchisor's system? Will the Franchise help you to achieve those goals and dreams?
If the Franchisor's strategies make sense to you, and you can see yourself achieving your goals and dreams through the Franchise and its systems, then you have unified thinking - and the sky can be your only limit
When conducting your franchise due diligence, keep in mind the free services of FranFinders expert franchise consultants
Wednesday, April 13, 2011
What to Ask a Franchisee During Validation
When you begin your franchise due diligence process of determining whether a particular franchise is right for you, you will need to contact current and past franchise business owners. This part of the process is referred as validation. During validations, you speak with the owners and get their perspective.
Following are a list of suggested questions to ask current franchise owners:
How long have you been in business?
Would you make the same decision again?
How is corporate support?
Are your earnings meeting your expectations?
What profit margin can I expect? - year 1, year 2, year 3
How long did it take you to break even?
Any unforeseen expenses?
What is your biggest challenge in the business?
How long do you plan to stay in this business?
What do you wish you would have known when you started?
What is the best thing about this company?
As you can see, these are the basic questions that will help you see beyond the surface of any franchise. With the help of a franchise consultant you will be able to find the answers, helping you make the right decision, thus making validation an extremely important step of the franchise due diligence process.
Following are a list of suggested questions to ask current franchise owners:
How long have you been in business?
Would you make the same decision again?
How is corporate support?
Are your earnings meeting your expectations?
What profit margin can I expect? - year 1, year 2, year 3
How long did it take you to break even?
Any unforeseen expenses?
What is your biggest challenge in the business?
How long do you plan to stay in this business?
What do you wish you would have known when you started?
What is the best thing about this company?
As you can see, these are the basic questions that will help you see beyond the surface of any franchise. With the help of a franchise consultant you will be able to find the answers, helping you make the right decision, thus making validation an extremely important step of the franchise due diligence process.
Wednesday, April 6, 2011
How Franchises Came to Be (Brief History)
The word Franchise comes from old French meaning privilege or freedom. In the middle ages a franchise was a privilege or a right. In those days, the local sovereign or lord would grant the right to hold markets or fairs, to operate the local ferry or to hunt on his land. This concept extended to the Kings granting a franchise for all manner of commercial activities such as building roads and the brewing of ale. In essence the king was giving someone the right to a monopoly for a certain type of commercial activity. Over time the regulations governing franchises became a part of European Common Law.
Over the centuries the franchising concept has evolved as the economies of the nations of the world have evolved. In the 1840’s in Germany certain major ale brewers granted franchises to certain taverns, giving those taverns the exclusive right to sell their ale. This was the beginning of the concept of franchising as we know it today.
The first American franchise business is reputed to be the Singer Sewing Center, developed by Isaac Singer in 1858. After Singer invented the sewing machine, he encountered two significant obstacles in bringing it to market. Consumers had to be taught how to use the new invention before they would buy, and Singer lacked the capital to manufacture his machine on a mass basis. Once Singer seized upon the idea of selling the rights to local business people to sell his machine and train users, his enterprise expanded rapidly. Fees for the license rights helped fund his manufacturing, and because each franchisee was self-financed, Singer was spared the expense of hiring each center’s manager. Singer had written franchise contracts, which were the forerunners of modern franchise agreements.
In the 1880’s cities began to grant monopoly franchises to streetcar companies and utilities for water, sewerage, gas and later electricity.
Around the turn of the century, the oil refinery companies and the automobile manufacturers began to grant the right to sell their products. At this stage in the evolution of franchising it was essentially just the granting of the right to distribute and sell a manufacturer’s products.
Business format franchising, which is the dominant mode of franchising today came onto the economic scene after World War II with the return of the millions of US servicemen and women and the subsequent baby boom. The baby boom is still driving the economy and will continue to do so into the next century. There was an overwhelming need for all types of products and services, and franchising was the ideal business model for the rapid expansion of the hotel/motel and fast food industries.
During the explosion of the 60’s and 70’s there were many abuses in franchising. There were a number of totally fraudulent franchise companies that literally took peoples money and ran, and there were a number of companies that were undercapitalized and poorly managed which went bankrupt, leaving a trail of failed franchisees who had lost everything.
It became clear that the franchise industry had to change in order to remain a viable business concept. On the industry side, The International Franchise Association was created with the specific intent of uplifting the entire industry. The IFA holds training in all aspects of franchising which greatly enhances the professionalism of the industry. Members of the IFA are required to adhere to the IFA’s Code of Ethics which set a high standard. The IFA works closely with the U.S. Congress and the Federal Trade Commission on improving how the industry relates to the franchisees.
On the government regulatory side, the Federal Trade Commission, in 1978, required that all franchisers submit to all potential franchisees a disclosure document called the Uniform Offering Circular or UFOC, before receiving monies. The UFOC provides very detailed information on the franchise company, such as its history, information about the officers, litigation history, audited financial statements, the franchise agreement, which is the contract between the franchiser and franchisee and a current list of franchises with owners names and telephone numbers. The intent of the UFOC is that it provides enough information so that the prospective franchisee can make an informed decision. The FTC doesn’t actually review the UFOC unless there is a complaint and it decides to conduct an investigation.
Recently, in 2007 the FTC updated and modernized the Franchise Law. Most importantly is the replacement of the UFOC with the Federal Disclosure Document or FDD.
The role of franchise consultants came into the segment roughly in the 1980's. Since then, they have helped many find, fund and start a franchise.
Over the centuries the franchising concept has evolved as the economies of the nations of the world have evolved. In the 1840’s in Germany certain major ale brewers granted franchises to certain taverns, giving those taverns the exclusive right to sell their ale. This was the beginning of the concept of franchising as we know it today.
The first American franchise business is reputed to be the Singer Sewing Center, developed by Isaac Singer in 1858. After Singer invented the sewing machine, he encountered two significant obstacles in bringing it to market. Consumers had to be taught how to use the new invention before they would buy, and Singer lacked the capital to manufacture his machine on a mass basis. Once Singer seized upon the idea of selling the rights to local business people to sell his machine and train users, his enterprise expanded rapidly. Fees for the license rights helped fund his manufacturing, and because each franchisee was self-financed, Singer was spared the expense of hiring each center’s manager. Singer had written franchise contracts, which were the forerunners of modern franchise agreements.
In the 1880’s cities began to grant monopoly franchises to streetcar companies and utilities for water, sewerage, gas and later electricity.
Around the turn of the century, the oil refinery companies and the automobile manufacturers began to grant the right to sell their products. At this stage in the evolution of franchising it was essentially just the granting of the right to distribute and sell a manufacturer’s products.
Business format franchising, which is the dominant mode of franchising today came onto the economic scene after World War II with the return of the millions of US servicemen and women and the subsequent baby boom. The baby boom is still driving the economy and will continue to do so into the next century. There was an overwhelming need for all types of products and services, and franchising was the ideal business model for the rapid expansion of the hotel/motel and fast food industries.
During the explosion of the 60’s and 70’s there were many abuses in franchising. There were a number of totally fraudulent franchise companies that literally took peoples money and ran, and there were a number of companies that were undercapitalized and poorly managed which went bankrupt, leaving a trail of failed franchisees who had lost everything.
It became clear that the franchise industry had to change in order to remain a viable business concept. On the industry side, The International Franchise Association was created with the specific intent of uplifting the entire industry. The IFA holds training in all aspects of franchising which greatly enhances the professionalism of the industry. Members of the IFA are required to adhere to the IFA’s Code of Ethics which set a high standard. The IFA works closely with the U.S. Congress and the Federal Trade Commission on improving how the industry relates to the franchisees.
On the government regulatory side, the Federal Trade Commission, in 1978, required that all franchisers submit to all potential franchisees a disclosure document called the Uniform Offering Circular or UFOC, before receiving monies. The UFOC provides very detailed information on the franchise company, such as its history, information about the officers, litigation history, audited financial statements, the franchise agreement, which is the contract between the franchiser and franchisee and a current list of franchises with owners names and telephone numbers. The intent of the UFOC is that it provides enough information so that the prospective franchisee can make an informed decision. The FTC doesn’t actually review the UFOC unless there is a complaint and it decides to conduct an investigation.
Recently, in 2007 the FTC updated and modernized the Franchise Law. Most importantly is the replacement of the UFOC with the Federal Disclosure Document or FDD.
The role of franchise consultants came into the segment roughly in the 1980's. Since then, they have helped many find, fund and start a franchise.
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