Transcript Slide 1

How to Find the Right Franchise for You
Jerry Pollio
1800.866.826.0103
What is Franchising and Is It for Me?
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Most people associate the word “franchise” with fast food restaurants. But there
are many more types of franchise businesses, including everything from
advertising to automobile repair, printing services to adult care and many more.
• Franchising is a network of interdependent business relationships that allows a
number of people to share:
• A brand identification
• A successful method of doing business
• A proven marketing and distribution system
In short, franchising is a strategic alliance between groups of people who have specific
relationships and responsibilities with a common goal to dominate markets, i.e., to
get and keep more customers than their competitors. Franchising requires the
same attributes needed to run any successful business, leadership, passion and
willingness to do whatever it takes to succeed!
Franchise Statistics+Veteran Owned
Franchises
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Franchise businesses account for nearly 50% of all retail sales in the United States.
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There are an estimated 5,000 franchise companies operating in the U.S. doing business
through nearly 500,000 retail outlets.
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A 2009 study by the United States Chamber of Commerce found that 86% of franchises
opened within the last five years were still under the same ownership and 97% of them
were still open for business.
PwC estimates that there were 66,275 veteran-owned franchised businesses in the
United States in 2007. Veteran-owned franchises account for 13.4 percent of all
franchised businesses. These firms provided nearly 815,000 full-time and part-time jobs
and paid out $24.2 billion in labor income (including wages and salaries, benefits, and
proprietors‘ income). Veteran-owned franchises had annual business receipts of $139.3
billion and directly accounted for $41.6 billion of GDP in 2007. Including the direct,
indirect, and induced impacts, veteran-owned franchises supported more than 1.5 million
full-time and part-time jobs in 2007, or about 1.0 percent of all nonfarm private sector
jobs in the U.S. economy . Veteran-owned franchises directly or indirectly provided $59.1
billion in labor income and generated $100.7 billion in GDP in 2007, or about 0.8 percent
of the total national nonfarm private sector GDP.
(PwC is a consulting firm hired by IFA to conduct Veteran Franchise Ownership)
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Franchise Statistics
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A U.S. Department of Commerce study conducted from 1971 to 2007 showed that
during that time less than 5% franchise business were closed each year.
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Total sales by franchised business are projected to reach $1.7 trillion, this year.
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1 out of every 12 business is a franchised business.
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In 2008, the median gross annual income, before taxes, of franchises was in the
$75,000 to $124,000 range, with over 30% of franchisees earning over $150,000
per year.
90% of franchise businesses are still operating after 10 years, whereas, 82% of
independent businesses have failed according to the U.S. Dept., of Commerce.
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Legal Factors to be Considered a
Franchise
Franchising is defined by state and federal laws as a commercial relationship in which
three factors are present:
1. A licensed trademark
2. A prescribed marketing plan
3. The payment of a franchise fee for the right to participate in the program.
When these three factors exist, the relationship is regulated as a franchise by state
and federal laws. Franchising is governed by the FTC and state laws.
A “Business Opportunity” is similar to a franchise without the restrictions and
royalties. This can be an advantage with SOME industries. Brand recognition
would not be a factor.
Advantages of Buying a Franchise
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In Business for yourself, not by yourself!
Lower Risks with predictable results
Established product or service
Experience of Franchisor (learning curve is diminished)
Group purchasing power
Name recognition with national leverage
Efficiency of operation
Management Assistance
Business Plan
Start-up Assistance
Assistance in Franchising
Proven System of Operation
70% of Americans prefer to Buy Veteran(www.buyveteran.com)
Disadvantages of Buying a Franchise
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Payment of Franchise Fee: “or advantage?”…best rate for business consultant
On-going Royalty: “or advantage?”… paid by customer
Conformity to Standard Operating Procedures
Inability to make changes readily
Underfinanced, inexperienced, weak franchisor
Duration of relationship
Dependent upon franchisor’s success
If legal problems arise owners will be indirectly effected or in worst case, large
litigation could cripple a franchise’s ability to operate and compete in the
marketplace.
The E-Myth Revisited
by Michael Gerber
• The Turn Key Revolution
Right to a Business System
The real “product” is the sales technique rather than what you sell
• Development Processes of a Business
Strategic Objective
Organizational Strategy
Management Strategy
People Strategy
Marketing Strategy
Here’s a link to a pdf summary on the book: E-Myth Revised
Who Am I
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A Franchise Advisor is simply a “matchmaker”. I am licensed with one of the
nations most respected franchise advisory firms in the nation with more than 25
years of franchise expertise, resources and industry partnerships.
I take your goals and match them to companies that should meet those goals.
(This may mean identifying what your goals and objectives are.)
I reduce your time and aggravation researching franchises….how do you pick?!!
I am objective and unbiased with no sales rhetoric.
I work with over 250 companies that have been screened, analyzed, and reviewed.
My services are paid by the franchise community and at no cost to you! I find the
right business for you and you purchase that business, the company pays the
SAME if you work directly with them or with me.
I can also help you locate funding options that can save you thousands of dollars.
Business Model versus Business Name
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How many employees do you want?
How many days and hours do you want to be “open”
What are your income goals…. Needs?
Do you want a home based business, traditional retail, or mobile products &
services?
Are your assets covering the full start up costs or do you want funding?
Do you want one location or many?
Do you want ownership to be hands on, passive, part time, full time?
What are your “must haves” in your business?
What do you feel are your primary strengths and weaknesses?
Keep in mind a franchise agreement is generally a 10 year commitment so due
diligence is paramount from both a personal and professional perspective.
The Right Fit
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Same Company with “like” locations….. How does one have better results than
others?
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The “Natural” choice for you? How to find it.
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The risk factor = the research factor. How do you get the information you need to
make a smart franchise decision?
Plan with your “end game “ in mind. Realize that in your ramp up phrase money
will be tight so planning and being prepared is critical.
Bottom Line, a franchise purchase is a life changing event when done right it will
bring you years of security for you and your family. Done wrong it could ruin your
life!
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Financial Foundation
Can you afford a franchise?
– Research process …. Know what you can afford and what your willing to invest
before you start looking
Is financing available:
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Credit Score? www.creditchecktotal.com. Cost $1.00 no hard inquiry
Use the Franchisor or Consultant referrals
Talk to your Banker or Credit Union
Veterans Business Outreach Center, Carlos Gutiérrez, M.S., MBA
Ph. (956) 665-7567, [email protected]
Sprigster Crowd Source Funding Exclusively for Our Veterans+Franchising.
Finance Options?
– SBA Loans + Vet programs “Patriot Program” + 7a from approved SBA Lenders
– 401K conversions with no IRS penalty, taxes provided you purchase a franchise
Franchise Types
Single Unit Franchise
Multiple Units
Area Developer
Master Franchise
Some franchise systems will only offer single units while others only area developers
opportunities.
Franchise Categories
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Account / Tax Services
Advertising / Direct Mail
Auto & Truck Rentals
Automotive Prod. & Svcs.
Batteries – Retail & Comm.
Beverages: Special
Business Consultants
Business / Mgmt Consultants
Campgrounds
Check Cashing / Fin’l Svcs.
Children’s Services
Clothing and Shoes
Computer / Electronics / Internet
Construction Mat’ls & Svcs.
Consumer Buying Svcs
Convenience Stores
Cosmetics
Dating Services
Drug Stores
Educational Prod & Svcs.
Employment Svcs.
Finess
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Florist Shops
Food/Restaurants
Golf Eqt, Prod & Svcs
Greeting Cards
Hair Salons & Services
Health Aids & Services
Home Furnishings
Home Inspection
Hotels and Motels
Insurance
Janitorial Services
Jewelry
Laundry & Dry cleaning
Lawn / Garden / Agriculture
Maid & personal Services
Maintenance
Marine Services
Optical Aids & Services
Packaging / Ship / Mail Svcs.
Painting Services
Paralegal Services
Payroll Services
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Pest Control Services
Pet Sales/ Supplies & Svcs.
Photography
Printing / Copying Svcs.
Real Estate Services
Recreations Svcs.
Rental Eqt & Supplies
Retail Stores
Security Systems
Senior Care
Sing Products & Services
Tanning Centers
Telecommunication Svcs.
Transportation Services
Travel Agents
Vitamin & Mineral Stores
Weight Control
Partial Franchise List
Many offer a VetFran Discount
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Maaco
Alphagraphics
Closet & Storage Concepts
Kitchen Tune-Up
Tutoring Club
It’s A Grind
Action Coach
Express Personnel Services
Global Recruiters Network
Carvel Ice Cream
W.G. Grinders
Great Wraps
Maui Wowi
FastSigns
Wild Birds of America
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Budget Blinds
Nationwide Floor & Window
A-Pro Home Inspections
Fantastic Sam's
Planet Beach
Closet Taylors
1-800-Dry-Clean
Molly Maid
Doc Popcorn
Crestcom
The Alternative Board
Aussie Pet Mobile
Handyman Matters
Homecare Alliance
Established versus Newer Franchises
Established Franchises:
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Name Recognition
More regional and national advertising
More costly to get in
More refined training and support
Newer Franchises:
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Cutting Edge Concepts
More affordable
Lower cost
More flexibility
Opportunity for emerging companies
Process in becoming a Franchisee
1. Analyze Lifestyle Needs
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2. Analyze Business Goals
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3. Analyze current financial position and future 17.
goals
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4. Help determine type of business
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5. Obtain confidential questionnaire
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6. Research applicable Franchises
7. Obtain Franchise Packet & FDD
8. Return Receipt of FDD
9. Speak in-depth with Franchise
10. Interview existing Franchisees
11. Second interview with Franchise
12. Consult with Attorney & Accountant
13. Visit Franchise Headquarters
14. Enter into A Franchise Agreement
Obtain Real Estate
Franchise Initial Training
Complete Construction
In Store Training
Open for business
On-Going support
Pre-Sale Disclosure – FDD
Franchise Disclosure Document
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Description of the franchisor, predecessors and
affiliates
Identity and business experience of officers and
directors
Litigation history
Bankruptcy history
Initial franchise fee
Additional costs and fees
Initial investment
Restrictions on sources of products & services
Franchisee’s obligations
Financing arrangements for franchisees
Franchisor’s obligations
Territorial Protection
Trademarks, service marks and trade names
Patents, copyrights & proprietary information
Franchise requirement to operate the business
16. Restrictions on sale of goods and services
17. Renewal, termination, transfer and dispute
resolution of the franchise
18. Endorsements by public figures
19. Earnings claims
20. Names, addresses, and telephone numbers of
current and former franchises
21. Financial statements
22. Contracts and agreements
23. Receipt
Exhibits
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Franchise Agreement
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Equipment Lease
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Premise Lease
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Loan Agreement
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Others
Validation Process
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Questions…..ask…ask….ask!!! You are the one that validates!
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The goal is to know what to expect the day you open the doors!
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Every franchisor is different with how they help you through the process…. One is
NOT better than the other. You are the one to validate.
Very Important! These successful owners may one day be your business partners
so treat them with care and respect as you speak with them. Remember at one
time, they too where validating the business just like you!
The validation process in franchising is one of the best ways to firm up all that you
have been told and shown! Use this process wisely take notes and share your
thoughts and comments with the Consultant and Franchise Director.
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Questions to ask the Franchisee
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How long are you in business?
Would you do it again?
How is the corporate support?
Are your earnings meeting your expectations?
What is your biggest challenge and why?
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? What would you like to change if
anything?
Tell me about your discovery and selection process.
Can you tell me a little about your background and prior experience?
Questions to ask the Franchisor
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What training will I have?
What short term and long term support is available?
Are there any national accounts? Will I have an opportunity with those accounts in
my territory?
How many income streams?
Do you help with projections?
What is expected COGS?
Have there been failures with franchisees? Why?
What is success rate of franchisees?
How are you different than other “like” companies?
Give me your success and failure profile in your system.
Case Study #1
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Home Based Business Model
Case Study #2
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Retail Business Model
Case Study #3
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Retail Food Business Model ”Franchising the Beginning”
Case Study #4
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Business to Business Model (B-2-B)
The Future of Franchising
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You are in the right place at the right time.
People are disenchanted with corporate jobs, because of the dot.com failures and
the corporate scandals.
20-34 year olds are going into business for themselves three times as frequently as
35-55 year olds, many looking at franchising.
The “Baby Boomers” are retiring from their jobs, but are too young to truly retire.
Women are going into business twice the rate of men, and many looking at
franchising.
Minorities – another fast growing group going into franchising
Veterans and military personnel are disciplined, focused and well trained with
transferable skills that execute well in a successful business system. Many
transition and or explore their options for when they will retire from the military.
Frantrepreneur
(fran*tre*pre*neur) n.
A cross between a traditional entrepreneur
and a modern franchise owner. One
possessing the desire to be a business owner
without the desire to recreated the wheel.
The ability to follow a proven system for the
benefit of personal and professional goals.
Franchise Phrases
“Be in business for yourself, but not by yourself”.
“ Learn from the success and failure of others.”
“Franchising is a process of bottling success and giving it to other people for use in
developing their own successful business.”
“Why would you spend years and the investment required to establish a successful
brand when you could buy a franchise which would give you immediate access to a
successful business system and a brand name which others already have made
successful?”
“Why work for someone else when you can work for yourself and reap the rewards of
your efforts?”
Remember…..
A dream is just a dream.
A goal is a dream with a plan and a
deadline!
From Dr. King:
Many men die at 22-23 years old but
are buried at 60-70!
Franchise Futures
Contact Information
• Based in Houston, TX, Jerry , 1.866.826.0103
• Thank you for courage, dedication and
commitment to help keep this nation safe and
free! Myself and my partners are here to help!