Introduction toFranchisingJohn Reynolds, CFE

President, IFA Educational Foundation

International Franchise Association

• Founded in 1960, IFA is the world's oldest and largest organization representing franchising worldwide.

• IFA’s Mission: to protect, enhance and promote franchising. • IFA members include franchise companies in over 300

different business sectors, individual franchisees, and businesses that provide products and services to the industry such as marketing, law, and business development.

Based in Washington, D.C.

$14 million annual budget

30 Members - Professional Staff

Government Relations, Conferences, Media Relations,

Membership, Marketing, and Administration

International Franchise Association

IFA Website –

www.franchise.org

The U.S. Franchise Industry

• Job Creators– Nearly 18 million jobs

• 1 out of every 12 private sector jobs

• $304.2 billion in payroll (direct)

(2007 Economic Census.)

Franchises in Job Creation

The U.S. Franchise Industry• Revenue

Generators– $2.1 trillion in economic

output• $802 billion in direct output/ 9

percent of total economic output

• 3.9 percent of all private sector GDP (direct)/ 9 percent of total

• 3.4 percent of all GDP (including government & farm sector)

American Franchising Video

What is Franchising?

A marketing method in which the owner of a product or service, known as the “franchisor”, offers the right to operate and manage his product & service to others, the “franchisees”, in return for a fee and ongoing royalty payments.

Franchisee- Initial Fee - Royalty,- Infrastructure

Franchisor- Know-How - Support- Trademark

How To Investigate A FranchiseConduct market researchEvaluate strength of franchisorCall existing and former franchiseesHire a lawyer or accountant familiar

with franchisingRead the Franchise Disclosure

Document, or FDD – thoroughlyCheck the FDD for earnings claims or

financial performance estimates

FDD Highlights

Experience of franchise management

Bankruptcy and litigation history

Initial and ongoing fees

Territory rights (if any are granted)

Contact list of current and former franchisees

Supply and sourcing arrangements (if any required)

Franchise Agreement you will be required to sign

Fred DeLuca – worked in the first Subway restaurant in 1965to earn money to go to college. Now he and his franchise partners own more than 36,000 restaurants in 85 countries.

Start Small Finish BigBy Fred DeLuca & John Hayes

15 Key Lessons to Start – and Run – Your Own Successful Business

Two Men And A Truck – 1985 to 2012

Started by two brothers inhigh school with $350 and one truck, now 200+ locations across the U.S. and development rights in a numberof foreign countries.

Bill Rosenberg, founder of Dunkin’ Donuts, with his book Time To Make The Donuts

Started business in 1950selling coffee and donuts offthe back of a catering truck in factory parking lots.

Now more than 9,000locations world-wide.

For more information:John Reynolds

jreynolds@franchise.org

IFA website:www.franchise.org