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How to Find the Right Franchise for You Jerry Pollio 1800.866.826.0103

How to Find the Right Franchise for You Jerry Pollio 1800.866.826.0103

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How to Find the Right Franchise for YouJerry Pollio

1800.866.826.0103

What is Franchising and Is It for Me?

• Most people associate the word “franchise” with fast food restaurants. But there are many more types of franchise businesses, including everything from advertising to automobile repair, printing services to adult care and many more.

• Franchising is a network of interdependent business relationships that allows a number of people to share:

• A brand identification• A successful method of doing business• A proven marketing and distribution systemIn short, franchising is a strategic alliance between groups of people who have specific

relationships and responsibilities with a common goal to dominate markets, i.e., to get and keep more customers than their competitors. Franchising requires the same attributes needed to run any successful business, leadership, passion and willingness to do whatever it takes to succeed!

Franchise Statistics+Veteran Owned Franchises

• Franchise businesses account for nearly 50% of all retail sales in the United States.

• There are an estimated 5,000 franchise companies operating in the U.S. doing business through nearly 500,000 retail outlets.

• A 2009 study by the United States Chamber of Commerce found that 86% of franchises opened within the last five years were still under the same ownership and 97% of them were still open for business.

• PwC estimates that there were 66,275 veteran-owned franchised businesses in the United States in 2007. Veteran-owned franchises account for 13.4 percent of all franchised businesses. These firms provided nearly 815,000 full-time and part-time jobs and paid out $24.2 billion in labor income (including wages and salaries, benefits, and proprietors‘ income). Veteran-owned franchises had annual business receipts of $139.3 billion and directly accounted for $41.6 billion of GDP in 2007. Including the direct, indirect, and induced impacts, veteran-owned franchises supported more than 1.5 million full-time and part-time jobs in 2007, or about 1.0 percent of all nonfarm private sector jobs in the U.S. economy . Veteran-owned franchises directly or indirectly provided $59.1 billion in labor income and generated $100.7 billion in GDP in 2007, or about 0.8 percent of the total national nonfarm private sector GDP.

• (PwC is a consulting firm hired by IFA to conduct Veteran Franchise Ownership)

Franchise Statistics• A U.S. Department of Commerce study conducted from 1971 to 2007 showed that

during that time less than 5% franchise business were closed each year.

• Total sales by franchised business are projected to reach $1.7 trillion, this year.

• 1 out of every 12 business is a franchised business.

• In 2008, the median gross annual income, before taxes, of franchises was in the $75,000 to $124,000 range, with over 30% of franchisees earning over $150,000 per year.

• 90% of franchise businesses are still operating after 10 years, whereas, 82% of independent businesses have failed according to the U.S. Dept., of Commerce.

Legal Factors to be Considered a Franchise

Franchising is defined by state and federal laws as a commercial relationship in which three factors are present:

1. A licensed trademark2. A prescribed marketing plan3. The payment of a franchise fee for the right to participate in the program.

When these three factors exist, the relationship is regulated as a franchise by stateand federal laws. Franchising is governed by the FTC and state laws.

A “Business Opportunity” is similar to a franchise without the restrictions and royalties. This can be an advantage with SOME industries. Brand recognition would not be a factor.

Advantages of Buying a FranchiseIn Business for yourself, not by yourself!

• Lower Risks with predictable results• Established product or service• Experience of Franchisor (learning curve is diminished)• Group purchasing power• Name recognition with national leverage• Efficiency of operation • Management Assistance • Business Plan• Start-up Assistance• Assistance in Franchising• Proven System of Operation• 70% of Americans prefer to Buy Veteran(www.buyveteran.com)

Disadvantages of Buying a Franchise

• Payment of Franchise Fee: “or advantage?”…best rate for business consultant• On-going Royalty: “or advantage?”… paid by customer• Conformity to Standard Operating Procedures• Inability to make changes readily• Underfinanced, inexperienced, weak franchisor• Duration of relationship• Dependent upon franchisor’s success• If legal problems arise owners will be indirectly effected or in worst case, large

litigation could cripple a franchise’s ability to operate and compete in the marketplace.

The E-Myth Revisited by Michael Gerber

• The Turn Key RevolutionRight to a Business SystemThe real “product” is the sales technique rather than what you sell

• Development Processes of a BusinessStrategic ObjectiveOrganizational StrategyManagement StrategyPeople StrategyMarketing StrategyHere’s a link to a pdf summary on the book: E-Myth Revised

Who Am I• A Franchise Advisor is simply a “matchmaker”. I am licensed with one of the

nations most respected franchise advisory firms in the nation with more than 25 years of franchise expertise, resources and industry partnerships.

• I take your goals and match them to companies that should meet those goals. (This may mean identifying what your goals and objectives are.)

• I reduce your time and aggravation researching franchises….how do you pick?!!• I am objective and unbiased with no sales rhetoric.• I work with over 250 companies that have been screened, analyzed, and reviewed.• My services are paid by the franchise community and at no cost to you! I find the

right business for you and you purchase that business, the company pays the SAME if you work directly with them or with me.

• I can also help you locate funding options that can save you thousands of dollars.

Business Model versus Business Name

• How many employees do you want?• How many days and hours do you want to be “open”• What are your income goals…. Needs?• Do you want a home based business, traditional retail, or mobile products &

services?• Are your assets covering the full start up costs or do you want funding?• Do you want one location or many?• Do you want ownership to be hands on, passive, part time, full time?• What are your “must haves” in your business? • What do you feel are your primary strengths and weaknesses?• Keep in mind a franchise agreement is generally a 10 year commitment so due

diligence is paramount from both a personal and professional perspective.

The Right Fit• Same Company with “like” locations….. How does one have better results than

others?

• The “Natural” choice for you? How to find it.

• The risk factor = the research factor. How do you get the information you need to make a smart franchise decision?

• Plan with your “end game “ in mind. Realize that in your ramp up phrase money will be tight so planning and being prepared is critical.

• Bottom Line, a franchise purchase is a life changing event when done right it will bring you years of security for you and your family. Done wrong it could ruin your life!

Financial FoundationCan you afford a franchise?– Research process …. Know what you can afford and what your willing to invest

before you start looking

Is financing available:– Credit Score? www.creditchecktotal.com. Cost $1.00 no hard inquiry– Use the Franchisor or Consultant referrals– Talk to your Banker or Credit Union– Veterans Business Outreach Center, Carlos Gutiérrez, M.S., MBA– Ph. (956) 665-7567, [email protected]– Sprigster Crowd Source Funding Exclusively for Our Veterans+Franchising.

Finance Options?– SBA Loans + Vet programs “Patriot Program” + 7a from approved SBA Lenders

– 401K conversions with no IRS penalty, taxes provided you purchase a franchise

Franchise Types

Single Unit FranchiseMultiple UnitsArea DeveloperMaster Franchise

Some franchise systems will only offer single units while others only area developersopportunities.

Franchise Categories• Account / Tax Services• Advertising / Direct Mail• Auto & Truck Rentals• Automotive Prod. & Svcs.• Batteries – Retail & Comm.• Beverages: Special• Business Consultants• Business / Mgmt Consultants• Campgrounds• Check Cashing / Fin’l Svcs.• Children’s Services• Clothing and Shoes• Computer / Electronics / Internet• Construction Mat’ls & Svcs.• Consumer Buying Svcs• Convenience Stores• Cosmetics • Dating Services• Drug Stores• Educational Prod & Svcs.• Employment Svcs.

• Finess• Florist Shops• Food/Restaurants• Golf Eqt, Prod & Svcs• Greeting Cards• Hair Salons & Services• Health Aids & Services• Home Furnishings• Home Inspection• Hotels and Motels• Insurance• Janitorial Services• Jewelry• Laundry & Dry cleaning• Lawn / Garden / Agriculture• Maid & personal Services• Maintenance• Marine Services• Optical Aids & Services• Packaging / Ship / Mail Svcs.• Painting Services

• Paralegal Services• Payroll Services• Pest Control Services• Pet Sales/ Supplies & Svcs.• Photography• Printing / Copying Svcs.• Real Estate Services• Recreations Svcs.• Rental Eqt & Supplies• Retail Stores• Security Systems• Senior Care• Sing Products & Services• Tanning Centers• Telecommunication Svcs.• Transportation Services• Travel Agents• Vitamin & Mineral Stores• Weight Control

Partial Franchise ListMany offer a VetFran Discount

• Maaco• Alphagraphics• Closet & Storage Concepts• Kitchen Tune-Up• Tutoring Club• It’s A Grind• Action Coach• Express Personnel Services• Global Recruiters Network• Carvel Ice Cream• W.G. Grinders• Great Wraps• Maui Wowi• FastSigns• Wild Birds of America• Budget Blinds

• Nationwide Floor & Window• A-Pro Home Inspections• Fantastic Sam's• Planet Beach• Closet Taylors• 1-800-Dry-Clean• Molly Maid• Doc Popcorn• Crestcom• The Alternative Board• Aussie Pet Mobile• Handyman Matters• Homecare Alliance

Established versus Newer Franchises

Established Franchises:1. Name Recognition2. More regional and national advertising3. More costly to get in 4. More refined training and support

Newer Franchises:5. Cutting Edge Concepts6. More affordable7. Lower cost8. More flexibility9. Opportunity for emerging companies

Process in becoming a Franchisee1. Analyze Lifestyle Needs2. Analyze Business Goals3. Analyze current financial position and future

goals4. Help determine type of business5. Obtain confidential questionnaire6. Research applicable Franchises7. Obtain Franchise Packet & FDD8. Return Receipt of FDD9. Speak in-depth with Franchise10. Interview existing Franchisees11. Second interview with Franchise12. Consult with Attorney & Accountant13. Visit Franchise Headquarters14. Enter into A Franchise Agreement

15. Obtain Real Estate16. Franchise Initial Training17. Complete Construction18. In Store Training19. Open for business20. On-Going support

Pre-Sale Disclosure – FDDFranchise Disclosure Document

1. Description of the franchisor, predecessors and affiliates

2. Identity and business experience of officers and directors

3. Litigation history4. Bankruptcy history5. Initial franchise fee6. Additional costs and fees7. Initial investment8. Restrictions on sources of products & services9. Franchisee’s obligations10. Financing arrangements for franchisees11. Franchisor’s obligations12. Territorial Protection13. Trademarks, service marks and trade names14. Patents, copyrights & proprietary information15. Franchise requirement to operate the business16. Restrictions on sale of goods and services

17. Renewal, termination, transfer and dispute resolution of the franchise

18. Endorsements by public figures19. Earnings claims20. Names, addresses, and telephone numbers of

current and former franchises21. Financial statements22. Contracts and agreements23. ReceiptExhibits• Franchise Agreement• Equipment Lease• Premise Lease• Loan Agreement• Others

Validation Process• Questions…..ask…ask….ask!!! You are the one that validates!

• The goal is to know what to expect the day you open the doors!

• Every franchisor is different with how they help you through the process…. One is NOT better than the other. You are the one to validate.

• Very Important! These successful owners may one day be your business partners so treat them with care and respect as you speak with them. Remember at one time, they too where validating the business just like you!

• The validation process in franchising is one of the best ways to firm up all that you have been told and shown! Use this process wisely take notes and share your thoughts and comments with the Consultant and Franchise Director.

Questions to ask the Franchisee• How long are you in business?• Would you do it again?• How is the corporate support?• Are your earnings meeting your expectations?• What is your biggest challenge and why?• How long do you plan to stay in this business?• What do you wish you would have known when you started?• What is the best thing about this company? What would you like to change if

anything?• Tell me about your discovery and selection process.• Can you tell me a little about your background and prior experience?

Questions to ask the Franchisor• What training will I have?• What short term and long term support is available?• Are there any national accounts? Will I have an opportunity with those accounts in

my territory?• How many income streams?• Do you help with projections?• What is expected COGS?• Have there been failures with franchisees? Why?• What is success rate of franchisees?• How are you different than other “like” companies?• Give me your success and failure profile in your system.

Case Study #1• Home Based Business Model

Case Study #2• Retail Business Model

Case Study #3• Retail Food Business Model ”Franchising the Beginning”

Case Study #4• Business to Business Model (B-2-B)

The Future of FranchisingYou are in the right place at the right time.

• People are disenchanted with corporate jobs, because of the dot.com failures and the corporate scandals.

• 20-34 year olds are going into business for themselves three times as frequently as 35-55 year olds, many looking at franchising.

• The “Baby Boomers” are retiring from their jobs, but are too young to truly retire.• Women are going into business twice the rate of men, and many looking at

franchising.• Minorities – another fast growing group going into franchising• Veterans and military personnel are disciplined, focused and well trained with

transferable skills that execute well in a successful business system. Many transition and or explore their options for when they will retire from the military.

Frantrepreneur(fran*tre*pre*neur) n.

A cross between a traditional entrepreneur and a modern franchise owner. One possessing the desire to be a business owner without the desire to recreated the wheel. The ability to follow a proven system for the benefit of personal and professional goals.

Franchise Phrases“Be in business for yourself, but not by yourself”.

“ Learn from the success and failure of others.”

“Franchising is a process of bottling success and giving it to other people for use in developing their own successful business.”

“Why would you spend years and the investment required to establish a successful brand when you could buy a franchise which would give you immediate access to a successful business system and a brand name which others already have made successful?”

“Why work for someone else when you can work for yourself and reap the rewards of your efforts?”

Remember…..

A dream is just a dream.A goal is a dream with a plan and a

deadline!From Dr. King:

Many men die at 22-23 years old but are buried at 60-70!

Franchise FuturesContact Information

• Based in Houston, TX, Jerry , 1.866.826.0103

• Thank you for courage, dedication and commitment to help keep this nation safe and free! Myself and my partners are here to help!