Road Map to Success... · According to Robert T. Kiyosaki, author of the highly acclaimed book...

Road Map to SuccessLet FranNet be your guide for learning all the

facts about having your own business

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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!

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!”


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


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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3

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ting a 1000!

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ing a 2in any o

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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!


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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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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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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• 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 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 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


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%


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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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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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 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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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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?’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!


?’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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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.”


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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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!


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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Road Map to Success... · According to Robert T. Kiyosaki, author of the highly acclaimed book...

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