"Those people who say it cannot be done, should not interrupt those people doing it"

INTRODUCTION

NOTE: Because Franchising is a complex and highly regulated industry - by both state and federal agencies - we do not offer, nor do we endorse, do-it-yourself franchisor start-up kits due to the high probability for litigation against the new franchisor from state and federal agencies and franchisees, at a very high cost.

FRANCHISING IS AN EXCELLENT EXPANSION METHOD

Franchising offers a number of significant benefits and solutions in terms of expansion capital, local unit management and time to market.

1. Expansion Capital – Franchisees furnish most of the capital required for the franchisor’s expansion - equity, business loans - for the development of real estate, leasehold improvements, FF & E (furniture, fixtures & equipment), inventory, pre-opening and ongoing working capital.

2. Local Unit Management – Franchising provides the franchisor with the motivated and effective local management needed to ensure a professionally operated business. Unlike a typical employed manager, the franchisee makes a financial and personal investment in the business and therefore, remains highly motivated.

3. Time to Market – Because franchisee’s provide the expansion capital and local management, the franchisor can expand at a faster rate than if the franchisor was required to raise the needed expansion capital, recruit and train local management and build the "company operations" infrastructure that would be needed to expand outside the franchisor’s current local marketing/trade area.

Franchising can be Very Profitable - According to the International Franchise Association, the average new franchisor sells 6-8 franchises in their first 12 months and 15-20 thereafter. With franchise fees averaging $20,000 - $30,000, that's a potential income of $120,000 to $150,000 in franchise fee income in your first 12 months. In addition, franchisees are generally required to pay you - the franchisor - an ongoing monthly royalty of 5-8% (national averages) of their gross sales. Using a basis of $500,000 first year gross sales per franchise location as an average, your annual royalty income will exceed $200,000 from these initial franchisees. You may also receive income (10-20% mark-up) from any proprietary products that are unique to your business and only available from you. Also, most franchisors require their franchisees to spend a minimum of 3% of gross sales for local advertising of their business - (which promotes your trade name at the same time) and the franchisee contributes 1% of their gross sales to the franchisor to cover the cost of producing professional advertising materials and programs.

EXAMPLE:

Fee Income: 1st Year Franchise Fee - $ 25,000 Franchises Sold - 6 Franchise Fee Income - $ 150,000	Fee Income: 2nd Year Franchise Fee - $ 25,000 Franchises Sold - 17 Franchise Fee Income - $ 425,000
Royalty Fee Income: 1st Year Royalty Fee - 7% Average Unit Sales - $ 500,000 Royalty Fee Income:* $ 210,000	Royalty Fee Income: 2nd Year Royalty Fee - 7% Average Unit Sales $ 525,000 Royalty Fee Income: $ 630,000
Total 1st Year Income - $ 360,000	Total 2nd Year Income $1,265,000

You will have to make adjustments based on your own situation and you may not be able to achieve these same results but, as you can see, Franchising can be Very Profitable!

IS YOUR BUSINESS READY TO FRANCHISE? An analysis and evaluation of your business to determine if it’s an acceptable franchising business model, should include 1. Proven Concept – Do you have an operating prototype that has proven market acceptability and is profitable? Are the operating margins sufficient to provide an above average ROI after the franchisee makes royalty payments? 2. Is Your Business Unique? – In a highly competitive marketplace, the franchise must stand apart from its competitors to attract potential franchisees. The "unique" market niche can be design (facility and product), delivery systems, business format, and marketing/advertising approach. 3. Is the Business easily "Trainable" and Understood - Keep in mind that most franchisee’s buy franchises in an industry that they are not familiar with. The business must be easily understood (trainable) and duplicated in a relatively short period of time for it to be successful. If the business model is to complex you will severely limit your ability to attract qualified franchise applicants.

4. Protected Trademarks – The Franchisor must have a valid trademark that will provide the identity that the franchise business will be conducted under. It is the Franchisor’s obligation to control and protect the trademark and service marks.

5. Franchisor Expansion Capital – Expansion capital is needed to provide the required Franchisor services to its Franchisee’s including; development and modifications to the business model (format); Franchisee start-up training; franchise marketing and advertising; legal and consulting fees; corporate and field support personnel. Although the Franchisor will receive initial franchise fees from franchisee’s that will substantially offset its operating cost, the Franchisor should not be totally reliant on this for its operating income. Without adequate operating capital, the pressure to sell franchises to survive will greatly affect the Franchisor’s ability to select the best and most qualified franchise candidates to expand the business.

FranchiseConsulting.Net specializes in helping companies with successful (and profitable), proven formats and business practices, enter into the exciting and profitable world of franchising. In the U.S. and internationally.

There are four basic and essential elements a company needs before they can consider franchising their business:

	Uniform Franchise Offering Circular, Franchise Agreement and related Exhibits as required by law
	Operating Manuals (i.e., Operations, Marketing, Site/Real Estate Selection, Training. Written in a franchisor format).
	Franchise Sales Brochure
	Franchise Sales and Marketing Strategy An intensive and comprehensive 2 day training seminar (at your offices) designed to prepare you to become a Premier Franchisor where you'll learn: The Laws governing Franchising Marketing your Franchise Program and Identifying the best Advertising Media for your business Selling Franchises without violating any Franchise Laws Creating a Franchisor Infrastructure All training material is included in a 330 page Sales & Marketing Strategy Training Manual developed by FranchiseConsulting.Net that you will use as a ongoing reference guide.

Once you have retain our services, we will come to your offices to interview you and your staff and complete a comprehensive Franchisor Questionnaire so we will have a better understanding of your business to enable us to begin developing your franchise program. Its is important to note that all materials are created specifically for your business.

In addition, after your training is complete (step four), we will return to your offices to meet with two prospective franchise applicants for the purpose of assisting and advising you in closing your first franchise sale.

FranchiseConsulting.Net will prepare all the above items at a very reasonable price and in a timely manner.

Global Experience in:
Far East - Canada - Asia Pacific - Europe
Middle East - Mexico - United States - Pacific Rim

Contact Us

(561) 703-8549

Home | Franchise Statistics | Range of Services | Chuck Woolweaver
International Franchising | FAQ's | State Registration  | Message Board  | Contact 

© Copyright 1999 -2001 FranchiseConsulting.Net.  All Rights Reserved.