Why Should You Expand Your Business as a Franchise?

Posted by Aine Meade under Franchise,
May 26, 2008

There are many reasons why you should consider expanding your established business as a franchise and you will find 10 great reasons here to do just that!

1. Business Growth

Your business will grow much quicker as a franchise network than an independent sole trader. New outlets will add to your business portfolio and increase your exposure, profitability and sense of business success. The costs you pay at the beginning to transform your business into a franchise will be paid by costs retracted from franchisees investing in the business.

Also costs incurred from setting up independently owned business outlets will be much higher than the costs you will have to pay for franchisee training, PR, launch assistance and so on. The long term benefits of franchising far outweigh the benefits associated with setting up independent business outlets.

2. Franchisee Investors

By the time you recruit a franchisee, they will have been through a rigorous selection process, personal and professional questions, and much more. Thus, you will be certain that when the franchisee takes on to invest in your business, they will share your passion for the business model and your vision for its future growth and profitability.

This is the great thing about franchising your business- knowing that other people share your business dream and will put all their effort into making it a success. They will be more motivated and hard working because they are sharing a business dream that works for them, rather than independent business managers who are salaried by you. Franchisees have a vested interest in the business because simply, there livelihoods depend upon its success.

3. Increase in Business Profitability

As you recruit more and more motivated franchisees and gradually grow your business franchise network, you will be in essence “weeding” out the competitions stronghold in the market your business franchise is located. In other words, as you grow stronger and bigger and draw in existing and new customers with a “new product or service” that’s different from the competition- you will be reducing the competitions impact on its consumer market.

The potential for you to attract more customers through effective marketing and advertising campaigns both on a local and national level will ensure your success against the competition of independently owned businesses.

4. Consumer Service

One thing is certain when you franchise your business and that’s the continual recognition of the one brand your franchise will offer. All of your franchisees will be implementing the same business model functions and will ensure the highest quality of service and product despite where each business is located and this will generate and maintain loyal customers.

Customers will receive the same “quality of service” set down by you as the franchisor in any franchise outlet the customer decides to visit.

5. Local Knowledge

As an independent business owner you may want to expand the business in many different locations. But researching a particular location for your business can be expensive and time consuming.

However, expansion through franchising and potential franchisees eliminates the need for research as the potential franchisee will bring to the table a wealth of information that will be invaluable for the business network expansionist objectives. You can tap into local business knowledge which you may otherwise have been unable to attain.

6. Group Purchasing

As a franchisor of an established franchise network you will be able to take advantage, as well as your franchisees, of centralised buying power from suppliers and manufacturers. An independent business owner would find it more difficult to buy in bulk and budget constraints would hamper their buying power.

As a result of this, your franchisees will be able to offer services or products at a much lower price, once again beating the competition hand down!

7. Dedicated Distribution

As a manufacturer or service provider, establishing the sales function of your business as a franchise operation provides you with a distribution network that is entirely focused on the supply of your product or service to your customers.

8. A problem shared is a problem halved!

If you choose to franchise your business you pass the responsibility of the business management onto your franchisees. This reduces the stress or problems you may incur as a company owner of a chain of independent business outlets where you will have to take care of management of all outlets.

In franchising, the franchisee will act as your manager of its individual unit and will work to the best of his/her abilities since it is a vested interest for them to do well. As a franchisor you can set out in your operations manual a section dedicated to management structures and guidelines and benefit all franchisees involved.

9. Advertising

As your network develops all of your franchisees will benefit from group advertising campaigns initiated by you, at a national and local level. Creating effective communication links between all franchisees- regular coffee lunches (telecommuting if possible), annual meetings and conferences etc- will aid feelings of “community” amongst the franchise network and in turn fuel customer referrals from one franchise operation to the next.

10. Business Success

When you choose to franchise your business the first thing you will notice is an increase in return of your investment. A franchisor’s profits are generated on much lower capital investment, and although the revenue received from the franchised units is less than that from independently owned business outlets, a higher percentage of that revenue is profit.

As you can see franchising can be an effective and highly rewarding way to expand your business. As a prospective franchisor, you must be aware that not all business people are cut out for franchise expansion. It will take hard work, perseverance, time and money to develop the franchise network and you must be prepared for this.

However, with so much guidance and help available from relevant franchise associations and organisations; franchise portals and franchise business, financial and legal consultants, you will be more than able to make the successful transition from business owned to franchise network in no time!

Good luck!

Aine Meade is a Website Editor for Franchise Direct, a leading Internet franchise advertising portal. Aine creates high quality franchise information for its international websites in the U.S., and Europe. Aine has a BA (First) in English and History; MA in Literature & Publishing; Diploma in Media Journalism and a Diploma in Marketing.

1 Comments

Franchisees - How to Develop An Effective Sales Plan

Posted by Aine Meade under Franchise, How-To Guides,
May 13, 2008

When you are starting a franchise business for the first time, you need to be aware in advance of the type of products and services you will be selling to consumers within a particular target market industry. While in saying this, it might seem obvious to you, but understanding what your business is providing and to what customers you will be targeting is essential to the long term success of your business.

In order to ensure your business is successful from day one, consider writing up an effective sales plan, where you can state clearly who your customers are, what potential customers you need to target, how to pitch your sale and close the deal.

View the following points on how you can create an effective sales plan…

1. Study Your Consumer Base

The first step you should take in writing up an effective sales plan is to conduct some useful consumer market research. Understanding who your customers are and what their needs are will be essential to your selling pitch of products and services.

For example, if you are setting up a café franchise in your local community, you will want to target business professionals for lunch time specials, couples and families for evening meals and brunches, and finally take-away customers who will want on-the-go sandwiches and beverages. In understanding your market requirements and needs will make it easier for you to sell your services within a “niche market”.

Secondly, if you have existing clients who already know about your business brand and services, you should not rely solely on their consumer presence, but rather widen your existing consumer base to include new customers and find innovative ways to retain and build consumer loyalty to your brand and business.

In this way, you will effectively manage more business sales than if you didn’t carry out some vital consumer market research…

2. Set Realistic Goals

After deciding who your customer base is and why and how you will target them, the next step is define realistic goals on how you will achieve consistent sales growth for the forthcoming months of business.

This is not an easy task, but one that must be ascertained prior to the launch of the new franchise business. In order to be successful in the long term, you must set realistic weekly and monthly sales goals and it is up to you or a sales employee to determine these goals and how to reach them.

Most importantly with this step is not to be too ambitious with your sales targets, you need to allow yourself some flexibility if some months are much slower than others and to determine if a great month will balance out a bad one!

In order to assess your predictive sales targets you can enlist the help and advice of the franchisor, which will have completed the very same process with established franchisees. Never be afraid to ask for help when it comes to successful sales of your business…

3. Target the Right People

Now you know exactly what groups of consumers you would like to target and the realistic goals you have in achieving your sales quota for the month/year, the next step is to follow through with the sales pitch and deliver some results!

Once again, achieving sales targets can mean a number of different things and can be achieved via a number of different formats depending on the franchise business and industry you are working in. For example, if you are selling luxury holidays online, you will be targeting consumers via email, internet and phone. If you are in the fast food industry you can achieve sales targets via marketing and promotional offers to get consumers to come to your fast food restaurant. Whatever method of sales you choose to implement you must target your consumer base effectively with no “hard sell” unless really needed!

4. Practice Your Sales Pitch

If you are targeting consumers directly either by phone of face-to-face you must perfect your sales pitch on how you can promote and actively sell your products or services. You must know the main benefits of your product and service and use these points as your main argument when posing the sales pitch.

Before you meet face-to-face with a potential client be sure you know as much as you can about the individual and how your product or service could enhance their life personally or their business. This will ensure you know exactly how to win over the customer and how the service or product of your business will have a positive impact on them when they decide to buy.

5. Closing the Deal

This is the most important part of the sales plan and you must attract attention for your product or service via marketing and advertisings as much as you can. Creating brand awareness amongst the consumer market you are targeting will ensure on some conscious level of the consumer’s knowledge of whom and what you are in business.

Be careful of objections to your sale and identify some other “benefits” you could use to attract the customer in a different sales pitch. Remember customers will want to know why you are providing this service or product so be upbeat, positive and passionate about your business.

After you close a deal, remember to maintain after-sales customer care so that you retain your customer and build an effective and loyal relationship. This will help your business to grow and be consistently successful.

1 Comments

Does Size Truly Matter?

Posted by Kimberly Ellis under Franchise,
May 12, 2008

Sometimes size does matter. When talking about a piece of chocolate cake – bigger is always better. When evaluating new cell phones – smaller gets the nod. In franchising, there are some advantages to being part of a large franchise system and other advantages to joining a small system. The question is not, “Which is better?” but “Which is better for you?”

Advantages of Large Franchise Systems

Everyone is familiar with the really big franchise companies such as McDonalds, Subway. Each has over 25,000 units and they are ubiquitous around the country if not the world. Since franchise companies generally start out with a single unit, growth of this magnitude takes years and years to achieve. Large franchise companies have had the opportunity to test and prove their value over and over again, which is the main attraction of franchising  a proven operating system.

Perhaps the most obvious advantage of a large franchise is name recognition. When you see the Golden Arches your mouth will start watering even before you smell the hamburgers frying. Larger systems will have larger advertising budgets, meaning there will be more, and usually better, national advertising campaigns, increasing name recognition. Even moderately large systems, those with units numbering in the hundreds, have been around long enough to have tweaked their operations to the point they provide a pretty low risk to potential buyers. A smaller or newer franchise system may have to adjust their operations many times before achieving optimal results.

Support is an additional advantage of being a franchisee in a large franchise system. To achieve growth, a company will need to have a dedicated support staff that can help franchisees with any issue or problem. Also, larger companies are more likely to provide new franchisees with such specialized resources as demographic profiling, real estate assistance and technical support.

Advantages of Small Franchise Systems

With all of the advantages of a large franchise system, not everything is a bed of roses. First of all, there’s the whole idea of being a small fish in a large pond. If you like individualized attention, in a small system you may have a direct line to the company’s president or vice president. In a large system, you contact person may be a low-level employee in the giant corporate structure.

Franchisees in a small franchise system can have a greater say in the business as a whole and will sometimes have more flexibility in managing their own businesses. Once a system grows to a substantial size, there will generally be extensive rules for franchisees as well as a staff who ensures the compliance of each and every regulation – from the color of your businesses’ roof to the way you greet customers at the counter. At a smaller franchise system you will usually find fewer rules. If you like to do a bit of experimenting, a smaller franchise company may allow you to do so and will even welcome your ideas and suggestions.

Another advantage of smaller franchise systems is that they are less likely than large franchisors to be sold out in your area. If you want to join a large franchise, you may have to wait until an existing franchisee wants to sell.

And that brings up another point: Subway does not need to look for franchisees. They probably get hundreds of inquiries every week if not every day. Of those inquiries they are only going to be interested in awarding franchises to people with very strong qualifications. A smaller, newer franchise company is going to be more interested in you and may be willing to make accommodations so that you can join the team.

The franchise company and the people running it are more important than the size of the business as far as franchisee satisfaction goes. If you are interested in a business but unsure if you’d be a good fit, there’s one sure way to find out and that’s by talking to a number of franchisees in the system.

You will need to ask if they felt the support and training they received prior to opening their franchise unit was adequate. Find out how they feel about the support they are currently receiving and if they feel they are on track to meet their financial goals.

Both large and small franchise concepts have advantages and disadvantages so the more you understand about the company and your role as a franchisee, the better equipped you will be to make the decision.

Kimberley Ellis is the President of Bison.com, a leading online resource for franchise and business opportunities. She has been quoted as an industry expert in USA Today, Wall Street Journal and a variety of local and regional publications regarding trends in business and franchising. Kim combines her entrepreneurial spirit with a diverse background in marketing and operation to help others succeed in franchising.

0 Comments

Choosing a Franchise

Posted by Kimberly Ellis under Franchise,
April 14, 2008

More and more, women are discovering that franchising is a great way to become a business owner. Whether your background is banking or baking, marketing or mothering, you’ve probably developed a set of skills that will translate to any number of franchise opportunities. And, because a franchisor will provide you with the systems, operations and training, you can make a complete career change without starting at the bottom and working your way up!

But how do you find the franchise opportunity that is right for you? With several thousand franchised businesses in the U.S., your options are nearly limitless. But don’t despair – here’s a list of steps you can take to narrow the choices to a few that really match your needs, skills, personality and aspirations.

ONE

The first step to finding that perfect franchised business is to take a serious look at what you, the potential franchisee, will be able to offer.

1. What skills, experience and interests do you have?
2. How much money can you invest and how much would you like to make?
3. Are you comfortable managing others or would you prefer to work alone?
4. Where do you want to work? Are you willing to relocate?
5. What hours are you willing to work and what lifestyle expectations do you have after the business is established?
6. How do you feel about selling and the sales process?
7. What do you feel to be your strengths and weaknesses in business?

Make a list of your answers to all of these questions and then use this as a guide as you do your research. This will help you quickly eliminate those businesses that just don’t fit and help you stay focused on what is important to you.

TWO

Now you are ready to begin doing some serious searching. Start with item 1 on your list and think about your talents and interests. Do you love working with children? There are a plethora of wonderful franchises that enhance the lives of children and help their parents – everything from baby aerobics to teen tutoring. Is travel your passion? Why not consider a travel franchise?

Did you slurp a delightful fruit smoothie while on vacation but can’t find the same brand in your neighborhood? Maybe that’s the business you’ve been looking for. And don’t overlook service businesses – they can offer high profits for a low investment.

Another source to get you started is a franchise advertising website, such as Bison.com. These sites often have the franchise companies organized by category to help you narrow your search and usually list the basic financial requirements of the business and the type of franchisee they are looking for.

THREE

At this point you have found a number of franchise companies that look promising and you’ve compared the information available on their web sites against your list. Your next step is to contact these companies and request their UFOC (Uniform Franchise Offering Circular, a document every franchise in the United States is required to provide) and then to review it carefully.

The UFOC will tell you the history of the company, the training and marketing programs, and what costs, royalties and fees you will be required to pay. Some franchisors also provide earnings claims in the UFOC that will help you estimate the potential of the business.

Franchise companies are required to revise and file their UFOC yearly and whenever major changes are made so the information is usually very current. By paying attention to what you discover in a company’s UFOC, you can weed out franchises that just don’t measure up. Some warning signs of a franchise that is facing challenges are extensive litigation with franchisees or a closing rate of units greater than what’s being opened.

FOUR

CALL EXISTING FRANCHISEES! Step four is crucial to your understanding of how the franchisor works with its franchisees. This is not a step you can skip or do haphazardly. Contact information for existing franchisees is available in the UFOC and it’s a good idea to make a list of the questions you will be asking before you make the calls.

Existing franchisees are your best source of information for finding out what really happens in a business on a day-to-day basis. You can ask what they like and dislike about the business and if they are happy with corporate support. They may be able to give you ideas about what they’d do differently if they were starting their business again and even give you a feel for the type of earnings their franchise makes.

Gather a variety of opinions from franchisees in different areas of the country and particularly any franchisees in areas similar to the one you are in. These calls should give you a clear idea of how the franchisor helps a franchisee during the start-up phase, how the franchisee feels about the training and support provided and a better idea of the business culture of the franchisor.

FIVE

Hopefully you’ve now found one or several companies that will meet your needs.

When you’ve made it this far, it’s time to go to Discovery Day (an on-site meeting with a franchisor). At this meeting you will be introduced to the top people in the home office and you may make a visit to a local franchisee, allowing you to ask even more questions and maybe to get some hands-on experience with the business.

Discovery Days are very interesting and exciting. When you leave, you will have a good understanding of the franchise. Don’t forget that this is a two-way street. They’ll be evaluating you as thoroughly as you evaluate their business.

SIX

Your last step is both exciting and terrifying at the same time: you need to make a decision. If you have followed all the steps and have been very honest with your self-evaluation and research, you should have confidence that you are making the right decision. Be aware that fear is a normal reaction to new experiences – just don’t let it stop you from achieving your dreams.

Congratulations – you’re ready to be a franchisee!

0 Comments

Do You Have What it Takes to Be Successful as a Franchise Owner?

Posted by Kimberly Ellis under Franchise,
April 8, 2008

Have you ever wondered if you have the personality and skills to be a successful franchisee? There are over 2500 franchise companies operating in the US, each requiring a plethora of different skill sets in a franchise owner.

I’ve heard some companies say they have many franchisees who came from corporate downsizing, former CEOs and CFOs and such. Others claim they don’t want franchisee candidates with too much structure. Some companies want a marketing and sales background and others prefer someone without preconceived ideas so they can train that person in their system, their way.

Confusing? You bet! But there are a few key characteristics that you should be aware of to determine if franchising could work for you. Are you cut out to be a successful franchise owner? Consider the following:

Making Connections

A successful franchisee needs good interpersonal skills. Seem obvious? Well think about this carefully. In your current and past jobs, did you really enjoy working with people?

A franchisee will need to manage employees and work to retain them. You’ll have to build good-will with your customers and gain their loyalty and trust. In many cases, a franchise owner’s role will be to make community connections by joining civic organizations and networking with various groups.

If you are truly a people person, you have one of the most valuable assets to successful franchise ownership.

Following a System

Many people think being your own boss requires you to be a true entrepreneur, someone who wants to take charge and challenge each step in the process.

That’s simply not true for franchising. If someone has already done the work, tested the procedures and proven that a system works, a clever person will pay attention and follow that system. This person is truly focused on success.

Someone willing to listen and learn from others to avoid making mistakes will avoid many of the pitfalls of business ownership and find success sooner. That is the essence of franchising.

Willing to Ask for Help

In the same vein, a good franchisee candidate is someone who will let the franchisor help and support them. At most franchise companies, there are teams of people who will train you in every aspect of the business. There are people to call for help. There are people who will come to your place of business to show you the way. The motto of franchising is that you are in business for yourself but not by yourself. It is up to you to take the help and follow the advice. When you are successful, the franchisor is successful.

Doing Whatever it Takes

There is just no substitute for hard work, particularly during the first year. A successful franchisee is someone who is willing to do whatever it takes to get the job done. They show their employees by example. They put in whatever hours necessary to get the job done.

If you are someone who understands what it takes to be successful and have the motivation to make your business succeed, you have the cornerstone of a winning franchisee personality.

Avoiding Risks

Starting a business by yourself is taking a big risk. Buying a franchise reduces the risk. In fact, successful franchisees are typically risk averse. They want to minimize their risk as much as possible and so they choose a strong franchise system with a proven track record.

If you love to take big, bold risks, franchising probably isn’t for you. If you are careful and thorough in your franchise research so you know just what you are signing up for, then you have the stuff to triumph as a franchisee.

So, how many of these qualities do you have? Unlike a magazine survey on health concerns, you can’t get some of the answers wrong and still be in good shape. You need all of the above attributes to consider yourself a great candidate for franchise ownership.

This new business you are considering is your business and the money you invest is your money. You’ll want to have every advantage possible to make it successful. So before you begin research on a franchise company, do some soul searching about your own assets and how they fit with a franchise opportunity.

There’s nothing more exciting than embarking on that road to owing your own business. Just make sure you can avoid the speed bumps along the way.

0 Comments

How to Evaluate a Franchisor’s Training Program

Posted by Kimberly Ellis under Business Ideas, Entrepreneurs, Entrepreneurship, Franchise, How-To Guides, Starting Up,
March 15, 2008

Not long ago I took a trip to Tuscany and spent a week in a cooking class. Before the trip I spent time researching my options. I wanted to know who would be teaching the class, what courses and dishes would be covered, how hand-on the class was, if wine-pairings with the dishes would be addressed and if the class included trips to the local farmer’s markets to select fresh produce. Finding just the right cooking school was important to me because I would be spending a significant amount of money traveling to Italy and I wanted my experience to be well worth my time and effort.

For a woman interested in buying a franchise, evaluating the training a franchise business offers should involve even greater research – after all, this is about your future – not a vacation.

As part of your due diligence when researching a franchise opportunity, find out everything about the training a franchise system provides. A good training program should cover not only the product or service but also setting up the business, marketing, employee management, business procedures, reporting, etc.

The best way to find out about the scope of the training program is to ask existing franchisees. Find out what stood out about the training they received and what they feel could have been covered more completely. Ask them how prepared they felt when they opened their business and what ongoing training they have been provided.

Keep in mind that the franchisees you talk with may have been through various versions of the training program. Problems that existed at one time may have been fixed. Or, you may find that a training program that was fine in a company’s early days is now out-of-date. Be sure to include in your research franchisees who have had the same training you will receive to get an accurate assessment of its value.

Ask current franchisee if they received a training manual and if the information is updated periodically. Also ask if the franchisor offers other training resources such as conference calls, webinars or intranet sites. Ongoing training is important for many companies who adjust their business with changes in the marketplace. If this applies to the business you are reviewing, find out what they do to keep each franchisee up to speed.

An addition source of training may come from periodic conferences held by the franchisor. Besides providing additional education about the product or service, conferences offer franchisees an excellent opportunity to connect and network with other franchisees in the system. A network of peers is one of franchising’s invaluable resources so be sure to ask if this is an opportunity the franchisor provides.

Although this is less of a problem today than in the past, some industries may have an “old boy’s club” mentality among franchisees. You will be able to tell by reading the UFOC if there are other woman franchisees. Include some women in your due diligence calls so you can get an idea of the business culture and the prevailing attitude towards woman franchisees.

Many franchisors will have field support personnel who are available to be at your site during your grand opening and at periodic intervals during your first year in business or longer. Having someone right there to answer your questions may help calm your first-day jitters so find out if this a serviced provided by the franchisor.

If, after your franchise investigation process is completed, you don’t feel the offered training will adequately prepare you to run your new business, it’s time to step back and look at other opportunities. As reported in the August 2006 Franchising World magazine, a recent study by FRANdata found nearly 2500 franchise concepts in 18 different industries and almost 900 of these concepts were started over the past three years. You don’t have to compromise – if one company does not have the training you are looking for, there are sure to be many other companies who can meet your needs.

I’m happy to report that the cooking school in Tuscany exceeded my expectations and I left there able to prepare a number of authentic and delicious Italian dishes. Had I not researched the available schools so thoroughly, I might have been very disappointed with my choice.

To get full value for your investment in a franchise business, the training should answer all your questions and set you up as a confident and successful owner.

Franchisee training should include:

• Everything you need to know about the product or service
• Everything about using/protecting the brand
• How to find your business location
• How to negotiate a lease
• How you complete the permits and buildout
• How to find, hire and manage employees
• How to market your product or service
• How to keep books and records for the business
• The reporting requirements and processes
• Where to get the equipment needed for the business
• How or where to buy supplies and inventory
• How to get help when you have a problem

0 Comments

Seven Sure Steps to Choosing a Franchise

Posted by Kimberly Ellis under Franchise,
March 15, 2008

Franchising is a wonderful way to go into business for yourself. So many things have already been established for your benefit: branding, marketing, processes, products, systems, etc. Building a business through franchising has been so successful that franchised businesses generate jobs for more than 18 million Americans and account for 9.5 percent of the private-sector economic output, according to a study released by the International Franchise Association Educational Foundation.

If you are convinced that you want to investigate franchising for your next career move, how do you go about finding just the right one?

This is one subject about which much as been written. Everyone has their own version of what you need to do to find that one, perfect concept for you and for your market. At FranChoice, helping people find their ideal franchise opportunity is what we do. As a result, we have worked with thousands of people looking to find the right franchise and realize their dreams.

Here then is our recommended approach of determining what to look for in a franchise that will meet your needs, expectations and goals:

STEP 1
Before you start looking at franchises, take stock of that most important component of the equation – YOU.

• What skills, experience and interests do you have?
• Consider your past jobs and determine what you liked best and least about them; then make a list of your strengths and weaknesses.
• How much money can you invest and how much would you like to make?
• Are you comfortable managing others or would you prefer to work alone?
• Where do you want to work? Are you willing to relocate?
• What hours are you willing to work while the business ramps up and what lifestyle expectations do you have after the business is established?
• How do you feel about selling and the sales process?

By starting with a list of what you have to offer and what you need from a business, you can create a strategy and model for your research.

STEP 2
Keep an open mind. Whether (at Step 1) you use a resource like FranChoice or do your own franchise research via the Internet, it is best to keep all options open when considering a franchise.

An inexperienced person may approach the process by thinking, “Well, I love donuts. How about a donut franchise?” And after spending days or weeks of research on Krispy Kreme, Dunkin’ Donuts and others, the individual may find he doesn’t have the required capital, the territory he wants is not available, and he’d have to give up weekends if owning a food franchise.

Another ineffective way to begin your franchise research is to lock yourself in to one or two concepts. If you think, “I’ll only look at ice cream and exercise franchises,” you may miss finding that that gem of a concept that would mesh perfectly with your needs.

With thousands of franchise companies available, keeping an open mind is the best strategy you can employ to get on the ground floor of that new, hot concept or to find something that will really take off in your market.

STEP 3
Let’s say you’ve found an assortment of franchises that look promising. What do you do next?

Contact the franchisors and request information about their concepts. You will probably get call from someone in the franchise development department who will gauge your interest and advise you if the territory you seek is available. You will want to thoroughly view the web site information and any brochures and videos they send you.

Keep notes on your impressions. Are their materials professional and up-to-date? Are you treated courteously by a friendly and knowledgeable member of the corporate office? Are your questions and concerns answered to your satisfaction?

What you see from the company at this time may be an indication of the type of support you would receive as a franchisee in their system.

STEP 4
Your next step is to read the company’s UFOC (Uniform Franchise Offering Circular), a document every franchise in the United States is required to provide. From this you will learn the history of the company, the training and marketing programs, and what costs, royalties and fees you will be required to pay.

Some franchisors also provide earnings claims in the UFOC that will help you estimate the potential of the business.

The UFOC is full of information about the franchise and it clearly explains the responsibilities of the franchisee (you) and the franchisor. Your UFOC review and understanding is a very significant part of the research process.

By paying attention to what you discover in a company’s UFOC, you can weed out franchises that just don’t measure up. Some warning signs of a franchise that is facing challenges are extensive litigation with franchisees or a closing rate of units greater than what’s being opened.

STEP 5
We consider this step to be of monumental importance when judging the likelihood of finding happiness in a particular franchise: CALL EXISTING FRANCHISEES!

Existing franchisees are your best source of information for finding out what really happens in a business on a day-to-day basis. You can ask what they like and dislike about the business, if they are happy with corporate support, and even get a feel for the type of earnings a franchise makes.

Gather a variety of opinions and you’ll get a clear picture of not only the franchise itself but of how you’d fit into the organization. That is why this step is so significant to your being able to make a definitive decision.

STEP 6
Your next step is to narrow down your choices. Okay, maybe it’s not all that easy. Let’s review what you’ve done so far:

1. Made a list of your strengths, experiences and needs
2. While keeping an open mind, found some companies that look promising
3. Requested information
4. Reviewed the UFOC
5. Talked with existing franchisees

Hopefully you’ve now found one or more companies that will meet your needs.

When you’ve made it this far, it’s time to go to Discovery Day (an on-site meeting with a franchisor). At this meeting you will be introduced to the top people in the home office and you may make a visit to a local franchisee, allowing you to ask even more questions and maybe to get some hands-on experience with the business.

STEP 7
The last step, of course, is making the final decision. Like any major decision, you will be filled with anticipation and anxiety, excitement and fear. Those are very normal feelings, experienced by almost everyone.

But if you’ve done your homework and followed the steps as outlined, you should be very comfortable with your decision. Congratulations – you’re ready to be a franchisee!

0 Comments

Pros and Cons of Investing in a Franchise…

Posted by Aine Meade under Franchise,
March 12, 2008

Perhaps the main motivation for potential franchisees willing to invest in a franchise or business opportunity is to escape the mundane world of “nine to five” working for someone else to fulfilling a long-cherished dream of business ownership. However it is naïve to think a franchise is the “perfect” business ideal. As with everything in life, there are both advantages and disadvantages, and in the case of franchising this is no different.

If you are aware of the pros and cons of investing in a franchise prior to signing on the dotted line, you are in a much stronger position to make positive changes as you go along. So here is a list of the pros and cons of investing in a franchise…

Advantages…

1. Proven business concept

A franchise should have an established brand name and corporate image before deciding to expand the business concept into franchising. The franchisor should have tested and proven the business model works effectively before expanding it as a franchise operation. You should always check the business model has been successfully proven, by talking to existing franchisees. In this way you know the “hard work” of starting a new business has been completed. It is your job as the franchisee to help the franchise network grow successfully.

2. Reduced Risk

Following from the above, franchising sets out to attract franchisees by eliminating much of the risk associated with starting a new business from scratch. It does this mainly through the franchisor putting the concept to the test of the marketplace and remedying any faults with the system prior to expansion. With the franchisor keeping a watchful eye on business pitfalls that might emerge for franchisees, risk is again reduced. The possibility of failure comes, as the saying goes, with the territory!

3. Combined Resources

The combined strength of a franchise network can have many advantages that a single start-up business can not avail of. The main advantage of the combined network is in the opportunity for franchisees to avail of bulk buying at competitive rates from large suppliers.

A well-established franchise can enjoy the same buying power as big companies can. But you should also double check with a franchise investment that you are either to buy your supplies from head office only or you are allowed to buy from different suppliers depending on time, money and other restrictions. Nevertheless, the extensive buying power of a large franchise network can be advantageous for the growth of a new unit.

4. Finance

It is much easier for a potential franchisee to attain the relevant financial funding from a reputable financial institution than it is for an individual setting up a business from scratch. Why? Banks and other financial organizations "love" the idea of franchising and know only too well the minimal risk associated with lending to a franchisee. That is, the franchisee, albeit he/she may be inexperienced within the business system, has the support and backing of a well-known franchise business model, existing franchisees and of course the franchisor. This makes lending money to a prospective franchisee more attractive than lending to a new business start up.

5. Exclusive Territory

Franchising seeks to eliminate the danger of competition within a specified franchisee territory, by granting each new franchisee the right to operate in a territory exclusive to him or her. However you must be aware that although you can avail of an exclusive territory to conduct your business endeavours, a similar franchise operation to yours can set up shop beside you and there is nothing you can do but rise to the challenge of competition.

As a potential franchisee you should research your preferred area for business and analyze any competition you may have and then ensure the franchisor can grant you exclusivity. This will help your chances of success and potential profitability.

6. Independence

As a franchisee although you may not have full control of the franchise network operations, such as marketing campaigns, business accounts etc, for many franchisees the idea of having someone else guide and help the business grow is a good thing. The overall success and failure of the business will depend on you, and that is a sure mark of being your own person- you should accept that you alone are not the sole author of the business. Franchisees generally are aware of this prior to investing in a franchise and this contributes to the success of the business.

Disadvantages…

1. Inflexibility

Franchising brings with it a certain amount of inflexibility, that is, the franchise operation and network is governed by a set of pre-described rules and the operations manual set out by a franchisor. This inevitably results in the continual need for uniformity amongst all franchisees involved within the franchise network.

These restrictions can be seen as a point of cohesion and strength. However, if the industry market is unstable, the franchise in general may be slow to react to fast industry changes. This can be frustrating on the part of the franchisee who may want to react to industry changes as they come along, while they must wait from an initiative set down by the franchisor.

The wisest franchisor will overcome this problem by a free flow of regular communication between franchise and franchisees. Regular seminars, conferences and talks will enable difficulties to be raised and solutions sought within a matter of hours. This creates cohesion and a sense of community participation for all involved and the risk of inflexibility decreased dramatically.

2. Not quite your own boss

The tight restrictions franchisors place on controlling the franchise network might appear too constricting for potential franchisees. But it is a necessary pre-requisite for franchisors to keep a tight rein on the franchise network of franchisees in order for the business to grow and expand successfully. The ideal situation is for the franchisor to maintain control over standards while at the same time allowing franchisees sufficient freedom to enjoy running the operation as their own business.

It is impossible for a franchisee not to put their own imprint on the business and in most cases a franchisor is happy to let the personality of the franchisee shine through the business operation. The best franchisors will encourage franchisees to contribute to the development of the whole operation.

3. Regular Royalty Fees

As part of the franchise agreement between you and a franchisor, you will be expected to pay a regular royalty fee at a specified time, how much and how frequently will be a clause stated within the franchise agreement. For some franchisees the idea of paying a regular fee to the franchisor can be a sore point.

However tough this may seem, continuing fees are an important issue to understand before accepting and signing the franchise agreement. You may run your franchise business successfully without the support of the franchisor in the long term.

Nevertheless, the franchisor can urge a franchisee to increase turnover in order to boost the amount paid in fees, which is calculated as a percentage of sales. The franchisee may prefer to increase profitability which does not mean an increase in turnover. This is undoubtedly a potential weakness in a franchise system and one to look out for.

4. The Franchisor- An “Unknown Element”

A potential franchisee does not have long to get to know the business personality of the franchisor in question and if you encounter a difficult relationship with the franchisor after investing, you will have a very troublesome business relationship to contend with.

Therefore, one of the risks associated with investing in a franchise operation is the “unknown element- that is the franchisor- involved. As a franchisee it is up to you to research the franchisor and the business by talking to existing franchisees and asking relevant business questions.

As you can see here from the outline of pros and cons of a franchise investment, the advantages of investing in a proven business model clearly out-weigh the disadvantages, and with careful consideration of the cons a potential franchisee can eliminate the cons quite quickly and focus on the positives of the business operation.

0 Comments

Franchisor Support: What can you expect from your franchisor?

Posted by Kimberly Ellis under Business Ideas, Entrepreneurs, Entrepreneurship, Franchise, Home-Based Business, How-To Guides,
March 7, 2008

Franchise%20support.jpg

If you are considering a franchise as your next career move, you probably already understand a number of the benefits to being a part of a franchise system. However, as each franchisor will offer different levels of assistance, it can be confusing to someone trying to evaluate a potential franchise purchase.

Since the value of a franchise is that the system has been developed to have replicable results, you will want any system you evaluate to score high in those areas that are important to the success of your unit.

Location – Location – Location
If your franchise is going to be site-dependent, the franchisor should, at a minimum, provide guidelines for selection of a site and the general terms of a lease agreement applicable to this type of location. Some franchisors will provide company personnel who will help you search for and select a site while some even work with national real estate brokers to find the best properties. If your franchisor provides help in site selection and lease negotiation, you are working with a good company.

Build-out Assistance
A typical franchise will provide each franchisee with instructions for the design and lay-out of the store along with details of where to purchase the components. As group buying power an important benefit of being part of a franchise company, you should expect to pay less for these components as a franchisee than if you purchased them as a sole proprietor.

At the high end of franchisor build-out assistance are those companies with design groups who help the franchise design the store, sometimes with such high-tech devices as CAD (computer-aided design) systems. Also, some franchisors will even hire a construction team to do the build-out and then deliver the components right to the new business.

Initial Training
The majority of franchised businesses do not require a new franchisee to have previous industry experience, primarily because they believe they can train a person with good business acuity to run the business successfully. A good training program is therefore essential. Most franchise companies will bring the franchisee to corporate headquarters for classroom training and some will allow time for hands-on training at a nearby franchise unit or corporate store.

This initial training should cover all aspects of the operations of the business, including book-keeping, record-keeping, operations, recruiting and retaining employees, and finding customers. The franchisee should receive an operations manual and get answers to any remaining questions she may have so that she feels confident she will be able to get her business up and running.

Some franchisors will provide corporate or field personnel to work side-by-side with the franchisee during grand opening and during the first week of operations, ensuring the franchisee has mastered the training and achieves a comfort level with the business. Franchisors that are willing to train a franchisee’s manager along with a franchisee are providing a value-added service.

On-going Training and Assistance
A good franchise business will continue to improve and evolve with time and the addition of new units and on-going training is often a necessity. Similarly, a good franchisor will offer continuing educational opportunities to franchisees as well as providing on-going assistance as needed. Many franchisors provide a help-line for issues that come up in the field and some will make regular visits to the franchisee’s location. A company that provides conferences or other opportunities for a franchisee to connect with fellow owners has the best interests of their franchisees in mind as these opportunities allow for creative problem-solving, the sharing of best practices and can reenergize the business focus.

Marketing Expertise
Your franchisor should provide you with a complete marketing plan for your new business that covers grand opening through at least the first 3-6 months. Since the franchisor has every reason to want you to succeed, a savvy franchisor will do much more. Many will provide you with the actual marketing materials, professionally produced. These may include pieces such as posters, banners, direct mail postcards, newspaper ads, and maybe TV and radio spots, all of which can be customized for your location.

Permits, Compliances and Other Legal Issues
Depending on the type of business, you may also need assistance in dealing with local governmental agencies for various permits. If your franchise involves food or beverage, there are numerous health-code compliance issues you will need to handle. Your franchisor should provide help in these areas so that your opening is not held up waiting for permits to come through.

There are several ways to find out how the franchisor handles these support items. The first, of course, is that you will want to ask questions about each as part of your investigation into the business. The second step is to talk to existing franchisees about the support they received and how well prepared they were to open and run the business.

Be sure to ask these franchisees if they felt there was anything missing from the training and support they received and if there is anything they wish had been more complete or done differently. If the company you are investigating scores well with these franchisees, you can be confident you will be happy with the support they will provide to you.

0 Comments

Gaining Promotion: Importance of Marketing and PR

Posted by Aine Meade under Franchise,
February 29, 2008

Perhaps one of the most important elements in driving the success of your business or franchise venture is to market you business in the most effective manner to get high visibility of your company, products and services. While you may think a start up business will not have the capital available for a huge advertising campaign that involves national exposure on television, billboards etc, but PR can offer a cost-efficient and effective alternative...

One great aspect in investing in a franchise is the instant solid brand recognition you receive from the start. Your business will have been established within a consumer’s mind prior your investment in the franchise. However, in order for your franchise to succeed within its own exclusive territory, you need to gain promotion of your business with local people to make it truly successful.

Your first step in building a visible marketing business portfolio is to create awareness of your business within the local market place. And how do you achieve this? Gaining coverage in local media, whether it be press or radio or local TV, will help put your business ‘on the map’ and has the added advantage over advertising of being more likely to be read- and more likely to be believed!

If someone reads an editorial piece on how good your business service, products is, then they are more likely to trust this source, than a 30 second advertisement recorded on radio…In saying this, editorial coverage has also the added benefit of providing you with the opportunity to say more about your business, products and services than a short advertisement will allow.

So what makes a good PR story? The launch of your new business within the local market place is a good start. Thereafter you should announce:

new business gains;

achievements and awards;

special deals;

promotions and

family, birthday and seasonal occasions.

A regular flow of newsworthy information will increase your business credibility and visibility in your locality and even outside of your local marketplace. This is a classic example of pull factor, whereby word of mouth can drive new customers to come looking for you. Once you have achieved this pull factor, your well on your way to business success and profitability…

Next make sure you send your story to the right place. It is important to find out the correct names of editors, writers, news reporters, radio editors who you will be contacting to promote your PR story. Keep your communications simple and to the point. Journalists do not what novels! They want snappy and short editorial pieces of news that is to the point, gives factual information and possibly a short bio of the business. Where possible include a photograph to illustrate your story too. As readers our eyes are drawn first to pictures in the pages of newspapers and magazines, and a good picture with your PR story should grab attention…

There are other forms of “PR” that falls under the banner heading of press releases, such as your business sponsorship of local sports events and charity events, supporting customers and clients can be an effective means in creating brand awareness and high visibility of your business. The principle of PR is based on fostering positive perceptions of your business through communication of information. What people feel and say about you- your customers, suppliers, business franchisees and franchisor, the wider community- will influence potential customers and make a real difference to your business success in the future.

In short, PR is not just about generating a “feel good factor” but in making a significant contribution to real business success for you and the franchise operation.

For more information on PR and marketing campaigns and incentives, please feel free to leave me a comment…

0 Comments

Looking for a New Career? Franchisor Training Can Be Your Shortcut to Success!

Posted by Kimberly Ellis under Franchise,
February 23, 2008

If you are like most women, you chose a career path at the tender age of 18 or 19 and have dutifully followed that path for many years. But let’s say you’ve grown tired of your career, or worse yet, never liked it to begin with. What are your choices?

-Stay where you are and make the best of it
-Change careers and start all over at the bottom
-Take advantage of the training offered by a franchisor and become your own boss in any industry you choose!

Let’s imagine a woman has been in public relations for ten or fifteen years but has a burning desire to spin pizzas instead of situations. What is she to do? As everyone knows, it isn’t easy for someone 40 or 50 to quit a career and start over, especially if she wants to try an entirely different field. She would have to give up a steady income and face months or years of reinventing herself. Perhaps she’d take a job at a pizza parlor and hope to learn enough to open her own shop someday. An alternative solution may be that she could buy a pizza franchise and take advantage of the training and support offered by the franchisor. Provided she has the financing, that would-be pizza chef could be managing a team of pizza spinners in just a few months.

Many or even most women will change careers at least several times their lifetime, whether because of changes in the economy or workforce, or because their careers don’t provide them with enough money/control/opportunities/ etc. While it was once common for someone to keep the same job from college to retirement, this had changed dramatically, particularly in the past 10 or 20 years, and this trend is expected to continue. Studies suggest that teens today may have between six and 12 careers in their lifetime.

Besides – many people really enjoy the challenge of a taking on a new career. Corporate executives replace their suits with sweats and open fitness centers. Doctors become fried chicken moguls and teachers get remade as pet groomers.

How do they make the transition? Many times through the power of franchising and one of the bonuses you’ll discover about franchising is that they can train you to excel in a job you’ve never done before!

No Experience Necessary

If you are a woman who is ready for a career change via franchising, the training a provided is one of the most important benefits a franchise system will offer you. The benefit of training goes both ways. It provides you with the tools you need to learn a new career and be successful in your new business. But it is also important to the franchise company. The franchise system depends on the integrity and stability of their brand from store to store and franchisee training is essential to this process.

You’ll find that a good franchise system will take pride in their training programs because, through the payment of royalties, your success becomes their success.

And guess what? Most franchises don’t require you to have experience in their field. In fact, many don’t even want a franchisee with previous industry experience. Because the systems of a franchise are structured for maximum success, previous industry experience often gets in the way when training a new franchisee.

Branding

Branding is another area where a franchise can offer you a shortcut. From California to Washington DC, you can buy a Häagen-Dazs ® Mayan chocolate cone and the quality and taste of the product will be exactly the same. If you own a Häagen-Dazs Shop, the public will know what you sell and that awareness will often make the difference between the success and failure of your business. Imagine how long it would take you to create a branded awareness of your new business if you started from scratch, not to mention the cost of hiring firms to create and advertise your brand.

Just as important to the quality of the product is the service the public expects from a franchised concept. You never know what to expect from the staff at “Jane’s Ice Cream Parlor” on the corner but you can trust that the people serving you at a Häagen-Dazs Shop will be friendly, clean and efficient. Why? Because the franchisor has set standards for employees and provided training and guidance in hiring practices. Everything that effects the perception of their brand is accounted for in the franchisor training.

Franchisors Care About Your Success

Your number one reason for choosing a franchise business over creating your own concept is that studies show your chances for success are exponentially greater. The franchisor has done many things before franchising the business that you, as a franchisee, you won’t need to, including establishing and building the brand, testing a variety of marketing concepts, finding the best way to deliver a quality service or product, and researching the best value in suppliers.

Most franchisors offer help to their franchisees in a combination of important areas, which may include: site assistance, initial training, operations systems, field support, grand opening assistance, national marketing programs, on-going training, and full-time encouragement for you to succeed. They become your business coaches and cheerleaders as you establish your new career.

The greatest merit of a franchise system is that you should be able to walk right into your new business after training and expect to have the tools needed to make it successful. It’s up to you, of course, to put in the hard work that will make that success a reality.

If you are thinking about a career change, don’t overlook the advantages of letting someone else do much of the work for you. A great franchise will offer you the training and tools you need to not only start a new career but to own your own business in any field you choose! Consider it a “shortcut to success.”

1 Comments

Top 10 Franchise Food Trends for 2008

Posted by Aine Meade under Franchise,
February 19, 2008

The food franchise industry is the largest and the most profitable of all the franchise industries. The biggest sub-industry of the food sector is fast-food franchises, such as McDonald’s, KFC, Burger King, 7-Elevin Inc, and many more fast-food franchises. But every year there is always a new departure in the food industry that rivals fast-food eating and dining, and 2008 is no different.

This begs the questions, which way are consumer food trends heading for 2008? Although consumers are constantly bombarded with messages about healthy eating, encouraging them to cut down on fats, sugar and salt, obesity levels are still at an all time high. Convenience foods and takeaways are increasing. Nevertheless, there is a still a huge part of the market that is interested in new, healthier food which is all part of a global campaign for awareness of living a healthy, balanced life.

As a result the food industry is responding to consumer’s demands and changes in the market for fast-food convenience food. I have identified 10 key food trends that are encompassing this new desire for healthier foods, and these trends will be big news in the food franchise industry in 2008.

1. Wellness Foods

In response to government and health organizations warnings for greater awareness of what we take for granted in relation to excessive food habits, food companies are producing more foods with lower salt, less fat, more grains and fibres as well as other types of nutritionally beneficial ingredients.

The combination of nutrition and medicine is offering franchisors the opportunity for unlimited scope for new product developments. Recent examples include green tea drink with ginger that burns calories rather than adding them, vitamin enhanced beer and dark chocolate sold as an antioxidant.

2. New World Foods

There is a burgeoning interest in new foods sourced from “new” or “exotic” places. Superfruits like the purple acai berry from the rain forest, which has already achieved a market place in health food shops could make the transition to mainstream if undertaken effectively by clever business people.

Some have suggested that Peruvian cuisine- a combination of Spanish, Italian, Indian, Japanese and native cookery- could be the next big ethnic food. Coconut is finding new uses such as natural juice while fruit soups have also been encouraged as holding consumer potential.

3. Ethical/Environmental eating

This trend overlaps with wellness since both espouse organic and free range foods. However ethical eating goes beyond natural taste and health and into the realms of green politics and anti-globalization. It includes concepts of “fair-trade” and “sustainable” and also “food miles”, which brings together the related concepts of locality and seasonality. Good farming practices in terms of the treatment of livestock are also part of this trend. Organic or free-range food products will be a top of the food list for food franchises 2008-2012...

4. Ethnicity

Ethnic flavors that draw inspiration from distant cuisines are increasingly popular in the U.S. and across Europe. Vietnamese cuisine is becoming popular and, in cities, sushi is now a mainstream restaurant cuisine, and, in some locations, a mainstream supermarket product.

Spanish cuisines and South American restaurants are identified as trends with consumer potential. Similarly Asian food is also becoming quiet a popular food trend across the U.S., with great tasting low fat cuisines full of flavor becoming the dish of the day!

5. Water

Water is huge and is increasingly becoming a political and social conundrum, with the effects of global warming and the reduction in levels of water both for living and for consumption. The market potential for bottling naturally flavored water is huge and continues to be a highly lucrative industry. For example, there are now water bars, water menus along with some water sommeliers in restaurants to pair water with good food choices.

6. Specialities

Making ordinary food special, such as the way water can now be viewed as having health or other benefits, and can come in a range of product variations, is another growing trend.

An example is salt which has been diversified into gourmet sea salt, Hawaiian Red, Black Lava, Sel Gris, pink salt from the Andes and Tahitian vanilla salt. The variations are endless and any “ordinary” food product can be diversified into numerous “types”.

7. Portion Control

Portion control is one of the keys to attaining a healthy diet and losing weight effectively. This principle is also having a key influence on products and services within the franchise industry, such as “portion-controlled scoops”, or “portion-controlled plates” that help individuals effectively measure what is a good amount or bad amount of the food groups for each meal.

In addition, Spanish tapas, Greek meze, and Japanese izakayas are all types of the “portion-controlled” food an individual can buy in a restaurant. Manufacturers have also developed calorie-controlled mini portions of snacks and confectionary in response to healthy eating trends.

8. Constant Diet

Dieting will always be big franchise industry news, with the rise in products and services that help people diet lose weight and manage their weight. The increased pace in everyday life, the stress and longer working hours has ensured a consumer society that is dependent on quick food products.

But this is not great for the waistlines! Manufacturers have as a result come up with new services and products to encourage healthier eating and dieting. More personalized diets tailored to an individuals needs is becoming the new constant diet trend…

9. Provenance

Consumers are increasingly becoming aware of where their food comes from and its origins for safety. This trend overlaps with both wellness eating and ethical eating, but it is also a food trend and consumer preoccupation in its own right. Consumers no longer accept less than transparency. And this means products and services must display origins of content and structure...

10. Retro eating

Consumers, particularly boomers and generation X, tend to evoke sentiments of traditional food products. For the younger demographics, the concept of retro eating can be fun and exciting. There is an association with foods that are additive-free and pure, which, ostensibly, predate mass production and factory farming. And then there are as many new angles to retro eating as there are hindsight re-interpretations of history.

Appeasing today’s consumer is no small task. Food products need to address health concerns with features such as whole-grains, pro-biotics, omega-3, antioxidants, carotenes, vitamins, sugar-free and low-salt together with a dash of the three E’s- ethnicity, exoticism, and ethics- to top it all of, they need to be packaged in convenient, calorie-friendly portions!

1 Comments

The Uniform Franchise Offering Circular: Just How Important is the UFOC?

Posted by Kimberly Ellis under Franchise,
February 14, 2008

I started playing golf about 10 years ago and over time have come to love the game. Although technique is a large part of what drives many golfers back to the greens, golf also has a very specific set of rules that define the game and create an equal playing field. The rules spell out how to play, how to keep score and how to determine a winner.

Franchising, too, has a set of rules, and these rules are manifested in a document called the Uniform Franchise Offering Circular (UFOC). Each prospective franchisee of every franchise company in the U.S. will receive this document as a requirement of the Federal Trade Commission. Effective since 1979, the stated purpose of the FTC rule is:

“The Rule is designed to enable potential franchisees to protect themselves before investing by providing them with information essential to an assessment of the potential risks and benefits, to make meaningful comparisons with other investments, and to further investigation of the franchise opportunity.”

In other words, the UFOC should provide you with enough information to be able to make an informed decision about purchasing the franchise. The UFOC serves as a protection for the individual against making a decision based on information not supported by fact and should be read carefully by each and every woman looking at buying a franchise as it contains such “need to know” items as the costs and fees involved, any litigation history of the franchisor and much more.

The FTC Rule requires franchisors to provide the UFOC to the prospective franchisee at the earlier of the first personal meeting or 10 business days before the franchisee signs an agreement or pays any money. (The UFOC will probably contain a receipt for you to sign and date, to show they have complied with this rule.) It also provides that the franchise agreement must be given to the prospective franchisee at least five business days before the franchisee signs any agreement or pays any money. A franchisor’s UFOC must be updated on an annual basis, or sooner if certain conditions are met.

Here are some of the items a UFOC must contain:

• History and Experience. The franchisor must provide you with a history of their past activities, especially as it may relate to potentially negative information. This information must be provided not only for the company itself as well as for its predecessors and affiliates but also for the officers and directors. The information includes factors like the business experience of the company and its principles and any fairly recent litigation or bankruptcy history for either.

• Financial Factors. The company must disclose to you the relevant financial terms of the franchise opportunity. This would include the initial franchise fees, other startup costs, and an investment range estimate for your total cost to get into the business. The UFOC must also disclose any other fees, such as the royalty, marketing and renewal fees that the franchisee will have to pay throughout the life of their franchise.

• Obligations and Restrictions. The company must disclose the obligations of both you and the company under the terms of the franchise agreement. They must also spell out any mandated restrictions that you will operate under in terms of your purchasing options and behavior as a franchisee. This may include such items as site selection and development, training, trademarks, customer service, advertising, personnel, territory, reporting and dispute resolution.

• Earnings Claims. FTC rules leave it up to the franchisor whether they want to supply information about the earnings that can be achieved in their business. If a franchisor does want to provide earnings claims, they must follow stringent rules on how this information can be given to a prospective franchisee. It is essential for the franchisor to make sure that the data provided is as accurate and representative as possible and they must also clearly label any assumptions or qualifications on the data provided. As a result, earnings claims can take a variety of angles and approaches, so reviewing the background information is vital.

• Exhibits. The company must also provide other data including audited financial statements, current franchisee lists with contact information, contracts and receipts. Item XX, information regarding franchisees of the company, is particularly important to you as you will be calling a number of these franchisees to learn about the business from the franchisee point of view. Item XXII contains the Franchise Agreement, which you will want to review with your franchise attorney before signing.

Individual State Requirements
In addition to the laws that mandate disclosure, there are also some states that have passed specific laws to further protect franchisees in that state. These laws may add additional disclosures or rules about franchise agreement terms. As an example of this, there are a number of states that require that the legal venue for any dispute must be in their state rather than in the state where the franchise company is located. These types of additional requirements vary from state to state but any that are appropriate to your situation in your state should be disclosed in the UFOC you receive.

Your responsibility
The most important point to remember regarding the UFOC is that you need to read and understand the material that the franchisor is disclosing to you. The FTC has a requirement that these document