“Franchise Questions Answered”

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WHAT IS FRANCHISING?
what is franchising

FRANCHISING EXPLAINED…

 

Franchising is a contractual agreement between two parties; a Franchisor and a franchisee which enter into a Franchise agreement along with a Franchise disclosure document which is governed by the Federal trade commission that sets forth the system of operations of the Franchise among additional information that lawfully needs to be disclosed in “Items” contained in the Franchise agreement.

 

The Franchisor generally has established and proven methods of practices that govern the system, a brand which is appealing to entrepreneurs looking to join an already established brand, products or services, and successful methods. However, it is not a requirement for the system to be proven in order to Franchise a concept though Franchisees may want to enter into an agreement with a franchisor with a proven concept. With the aforementioned there are many startups that have seen significant successes in Franchising their concept even if it is not yet an already proven system or model.

 

There are many variables that prospective franchisees consider when deciding to sign on the dotted lines. One thing is for sure, the Franchisor has an expressed obligation in the Franchise agreement to provide the franchisee with a well-illustrated system of doing business via an operating manual that encompasses how the business operates, requirements the Franchisee must follow, expectations and a variety of additional important detailed information that facilitates the Franchisee in following the Franchisors methods, curriculum, products, the dos and don’ts of the Franchise, and why. The Franchisor’s operations manual is an integral part of the functions of the Franchisors system and overall operating methods.

 

Furthermore, generally the franchisor has an obligation to ensure it has a foundational support system in place for the franchisee. From initial training to marketing strategies the system in place offers general guidance in leading the Franchisee to success. Additionally, the franchisor usually has proprietary offerings which can be work product, products and services or specific company policies that constitutes its intellectual property rights and sets forth guidelines in which the Franchisee must follow in order to be in compliance with the Franchise agreement, Franchise disclosure document and operating manuals.

 

In exchange for allowing the Franchisee to adopt and learn the methods of operations, utilizing the brand name, obtaining support systems from franchisor and/or selling Franchisors proprietary products or services, the Franchisee pays an initial Franchise fee, usually a monthly Royalty fee, and contributes to a local or national marketing fund based on the structure of the franchise agreement. Although Franchise agreements are similar in nature, there is not a one size fits all. Each franchise agreement is created to establish the systems legal framework, the Franchisor and Franchisee obligation to the system, and to ensure that both parties comply to their respective contractual obligations; at which time the Franchise in its entirety is most often successful. It is a proven statistic that Franchises are often significantly more successful than that of a single unit operator. Franchising has proven to be the fastest growth vehicle for most brands and both parties (Franchisor and Franchisee) to the agreement can experience significant success.

IS MY BUSINESS FRANCHISEABLE?

YES! This is a largely debated and misconstrued question. This very question is considered so much from worthy brands that it actually diverts goals, sets forth doubt and causes confusion that leads to stifled growth. Whether you have one location, one idea, a product or a particular technique, YOU CAN franchise the model. Many speak of “Feasibility” or have Q&A’s to “find out” if you are franchiseable when it should NOT be considered when working with a consultancy company that has done it, has the knowledge and a process tailored for you to Franchise your brand.

You do not need multiple locations, or need to be earning a million dollars a month to franchise. You simple have to have a concept, a system of doing business, and a willingness to want to grow, that makes you “FRANCHISEABLE”! When Working with Franchise Guardian® we will ensure that you have all the systems in place, the model is sound, and your brand is desirable to prospective franchisees so you are prepared and modeled for success.

We will teach you every facet of the franchise sector and stand by your side for as long as you need. We have taken businesses from one, to many Franchise units, making some changes along the way to hit milestone growth goals and succeeded greatly. We use our streamlined process for each franchise, no matter what the industry is and GROW fast. If you have a deep desire to want to grow, reach out, we will make it happen!

HOW IS A FRANCHISE STARTED?
How franchises are started

There are many ways Franchise systems are created. The most common is when a business concept, after creation, renders successful results, has a proven Model which can easily be replicated. Often Franchise chains start once the model is launched and tested/proven in the marketplace, has great reviews from consumers and is appealing to both the consumer looking for a quality product or service and entrepreneurs looking to start a business venture that is attractive to them. It is much easier to learn from the Franchisors already established brand, successes and failures, than to go it alone. Many successful start-up Franchises will retain consultancy firms with the know-how, experience and framework that facilitates the Franchisor in establishing all that is required to launch on a state, national or international level. When Franchise systems are established using the best business practices, both parties (Franchisor and Franchisee) experience success in brand growth and market share.

ARE THERE A LOT OF FRANCHISES
How many franchises are there

Think of a brand, I am sure that you just identified a franchise. Most household names are franchise systems done right. Brands that have established models that work both for the franchisor and the franchisee. However, you will be shockingly surprised to learn that there are many thousands of brands that have hundreds and thousands of locations that you have not heard of. The franchise industry is widespread, contributes greatly to the economy worldwide, creates job opportunity and generates trillions in revenue.

WHAT KIND OF BUSINESS CAN FRANCHISE?
FRANCHISE BUSINESSES

Franchising is NOT specific to one industry sector, in fact, almost every sector has a hand in franchising. Whether a service franchise, product or a specific method of doing business, or even a unique technique, it can be franchised. There is NO restrictions on what a franchise model may look like so long as it has the ingredients that make up the special relationship between a franchisor and franchisee.

WHY WOULD AN ENTREPRENEUR WANT TO INVEST IN MY BRAND?
Why franchisees invest

This is one of the most FAQ when a company decides to franchise. Before explanation, let’s think about a brand that is a franchise that is successful and would otherwise seem to be easy to go it alone. How about McDonald’s, YES, McDonald’s is a franchise. What is important in understanding a franchise and why it works so well is what is not often considered. Many may believe that starting a business is easy or that they have a better idea, and maybe they do, but the system, operating model, the Franchisors notoriety and already proven system is much more promising than a mere guess that a conceptual thought of launching a brand. It is appealing to many entrepreneurs to want to (a) be a part of an already created brand with all of the elements for success (b) being a part of something much larger than yourself or being part of large team (c) having a support systems to steer you away from pitfalls that can be costly or (d) they want to be an absentee owner and enjoy the benefits of having that ability with a franchise  (e) they love the brand that the franchisor created (f) initial and ongoing training. There are so many reasons why entrepreneurs join franchises and it is not a “why” instead it is a when and how many join a franchise system.

WHAT IS THE FTC RULE?
FTC franchise compliance

Simply put, the FTC rule governs the relationship between a franchisor and franchisee. It establishes guidelines that a franchisor must follow when offering a franchise. The primary purpose for the FTC rule is the same as why the Security exchange commission  (SEC) governs the stock market. The rule establishes compliance and fair dealings. For more information please visit www.ftc.gov  

WHAT IS THE COST OF A FRANCHISE?
cost to franchise business

Franchises vary largely in startup costs and the investment requirements. The cost does not dictate what can be earned or the likelihood of success. A prospective franchisee can buy into a franchise for as little as $5,000.00 or as much as $5 million dollars; all of which is determined by what your budget is and what franchise concept is appealing to you. Many Franchises offer financing themselves or financing partners that provide an easier way for you to become a part of the franchise. Each franchise offers different initial start-up costs, ongoing investments and one should explore all options. However, choose something you are passionate about, or have trust in, that way you have the drive to succeed within the system.

WHAT REVENUE STREAMS CAN I EXPECT AS A FRANCHISOR?
Franchise cost

The broad answer is Many. Depending upon your business concept, there maybe a few revenue streams or dozens. It is not merely you becoming a “Franchisor” that makes your company a success, it relies more on how you structure your franchise. Franchise Guardian® Staff will identify the many possible revenue streams that a Franchise System can provide. We will evaluate every possibility, discuss the pros as well as the possible cons and determine the best course for your brand. The most common added revenue streams are as follows; Monthly royalty fees, Monthly marketing fund fees, Distribution of the concept’s products income, development income and the Franchise Fee.

DO I HAVE TO HAVE MORE THAN ONE LOCATION TO FRANCHISE?
Dedicated sales team

NO! You can have ZERO units to franchise a concept. This is a misconceptions and Franchise Guardian® Staff will evaluate your concept, offer you the best strategy and advice in proceeding forward. You have an idea, let’s talk!

The most common concern from New Franchisors is that you need to have a chain of locations, or be in business for a decade, or have a multi million dollar operation. This is all FALSE. Every major brand started with ONE location, ONE company, ONE employee, ONE first dollar of revenue. As a matter of fact, some of the largest franchise brands started with ONE unit and went on to build thousands of franchise locations and some opened additional Corporate locations along the way.

Everything starts with the number ONE, do not let that discourage you. Your brand is as large as YOU think it is and strive to make it more then one. Turn one into 100, 1,000 and on and on.

HOW LONG DOES IT TAKE TO BECOME A FRANCHISOR?
Franchise in 45days

This will largely depend on how aggressive your plans are.. Franchise Guardian® has the framework, the systems and team to launch your brand as a franchise in as little as 45 days. Let our team join your team and make it happen.

WHAT IS THE COST TO FRANCHISE MY BUSINESS?
Cost of franchising

This amount can be significantly different. Once deciding that you are ready to franchise your brand you must ensure that you do your due diligence fully. There are steps that are required of every franchise to take in order to be ready to offer franchises. The largest misconception is that you will pay for your legal framework and your off to the races, this could not be further from the trust. It is imperative that you choose the right firm to get started. Some firms can provide you all of your legal framework, all of the operational elements of your franchise, and provide you all of the know how to launch your brand successfully into the franchise sector. Some firms can create your franchise, including, but not limited to; consultancy, operations manual drafts and guidance in completing, Franchise agreement, franchise disclosure document, trademarking, auditing of local, state and federal filings, marketing strategies, and operational changes within the brand to ready you for a national launch for the same price as a firm may charge you for just the Franchise agreement and franchise disclosure document. Be very careful when choosing a firm, it can be the difference between slow to no growth, or rapid and aggressive successful growth.

 

Remember, You can hire us for one or all of our services. The Franchise Guardian® team will do an in depth analysis of the initial cost and will even formulate a comprehensive plan for success. Reach out today for a free consultation and let’s start to grow NOW.

ARE THERE FUNDING OPTIONS AVAILABLE TO FRANCHISE?

YES! Whether by electing Franchised Guardian® “Steps payments options” that was created to ensure a step by step trust relationship, or choosing to obtain financing directly from franchise Guardian®, or a third party you choose, you have options. Reach out today and find out the steps to grow rapidly, you will be surprised how affordable this is when teaming up with Franchise Guardian®!