TOPIC 3

CONSIDERATIONS FOR LOCATION AND SITE SELECTION

• Understand the concept of your Franchise.

• Research.
• Be in contact with your Franchisor.
• Sign the contract with Professional Supervisor.
• Easy access to the home of the Franchisee.
• Not too large, not too small.
• Demographic to say no instead yes.

Geographic Strategies to be Considered on Choosing Location

1. Market Analysis
2. Site Selection
3. Regional Compatibility
4. Economic Conditions
5. Legal and Regulatory Environment

Key Factors for Franchise Site Selection Success

1. What Market am I trying to reach?

2. What’s my Territory, and is it Exclusive?
3. How does the Local Community affects franchise Site Location?
4. Will the Franchise Location Selection be right in the future?
5. How much does the Franchise site cost?

Steps in Investigating Franchise Opportunities

1. Do a background check of the company.

2. Familiarize the Franchise Disclosure Document (FDD)
3. Investigate and know the franchise system.
4. Call or meet existing Franchisees
5. Don’t miss the discovery day
6. Decide based on your research
Becoming a Franchisee (What are the things to be considered?)

1. Evaluate Opportunities
2. Call Existing and Former Franchisees
3. Draft Business Plan/Projections
4. Legal Review of the FDD and Franchise Agreement
5. Attend Discovery Day
6. Confirm Financing
7. Finalize Entity Choice and Ownership Percentages
8. Sign the Franchise Agreement and Pay the Franchise Fee

FINANCIAL OBLIGATION OF FRANCHISEES

1. Initial Franchise Fee

2. Territory Fee
3. Training Fee
4. Royalty Fee
5. Marketing or Advertising Fee
6. Renewal Fee

Other FINANCIAL REQUIREMENT

1. Financial Background
2. Liquid Capital
3. Net Worth
4. Credit Score

What is a Franchise Franchising Agreement

• A legally binding contract between a franchisor and a franchisee.

• Defines the rights and responsibilities of each party.
• Establishes the framework for operating a franchised business.

Types of Franchise Franchising

• Single-Unit Franchise
• Multi-Unit Franchise
• Area Development Franchise
• Master Franchise

FINANCIAL RESOURCES OF FRANCHISEES

• Traditional Bank Loans or Lender Financing

 • Franchisor Financing
• Personal Assets
• Rollovers As Business Startup (ROBS) or Retirement Funding
• Home Equity Funding
• Borrowing from Friends and Family

Other Option for Franchising a Franchise

1. Alternative Lenders
2. Crowdfunding
3. Partnerships
4. Local Grants and Other Funding

How to Choose a good location for your Franchisee Business

1. Franchise Characteristics And Your Targeted Customers

2. Be Aware of All The Standard Business Practices And Local Laws In The Area
3. Demographics Is Important

Financial Package includes:

1. Franchise disclosure document (FDD)

2. Franchise financial statement
3. Return on Investment (ROI) Analysis

Franchise Leases

LEASING

The following factors will ultimately drive the leasing method

• Nature of the franchise system and the policies and procedures of the franchisor
• risks that each party is prepared to take
• The level of control that a franchisor wishes to retain over the premises/site of the business.
METHOD 1 - The Franchisee locates the premises, negotiates the lease with the landlord directly and
holds the lease in its name.

The FRANCHISEE locates the premises, negotiates the lease, and holds the lease.

• Use of the Premises

• Lease Term and Options
• Handover Date
• Commencement Date
• Option to Renew
• Outgoings

Franchisee Lease Key Commercial Issues:

• Plans for redevelopment that may exist at the time of signing, outgoings expenses
• Personal guarantees
• Lease make good expenses. It is also worthwhile chatting to:
• Existing tenants nearby to see what trading conditions exist
• Whether they are aware of plans for the area
• Existing franchisees in the franchise system to determine if they are happy with the franchise

METHOD 2- The Franchisor locates the premises, negotiates and enters into the lease, and then
licenses occupation to the franchisee or sublease.

• Lease Incentive- The license to occupy and any other associated documentation
• Cost- security deposit, upfront rent, fit out, and other business establishment costs
TOPIC 2

The Franchising Market Process

1. Product
2. Place
3. Price and
4. Promotion

The Franchisor’s Principal Responsibilities

1. Business image
2. Determining the market direction
3. Recruitment and selection of franchisees
4. Grand opening and ongoing advertising programs in support of the local franchisee's units

The following types of people will likely take the plunge into franchising

1. The Immigrant
2. The Mompreneur
3. The Baby Boomer
4. The Professional Woman
5. The Gen-year

4 Essential Factors:

1. How it will support the franchise system’s operations

2. How it will foster communications with franchisees
3. What financial results the firm and its franchisees can anticipate
4. How it will market its franchise once the franchise program is in place.

Strategic Planning Steps

1. Clarify your vision, mission, and values.

2. Conduct an environmental scan.
3. Define strategic priorities.
4. Develop goals and metrics.
5. Derive a strategic plan.
6. Write and communicate your strategic plan.
7. Implement, monitor, and revise performance
Key aspects of selling include:

1. Prospecting
2. Qualifying
3. Presenting and Demonstrating
4. Handling Objections
5. Closing the Sale
6. Follow-up

Key aspects of marketing research include:

1. Market Analysis
2. Customer Analysis
3. Competitive Analysis
4. Product Research
5. Promotion Research
6. Distribution Research

TYPES OF CO-BRANDING METHODS

1. Ingredient co-branding
2. Joint Product co-branding
3. National to local co-branding

Managing the Franchisor’s Operation Process

1. Training and Support

2. Standardization
3. Quality Control
4. Communication
5. Legal Compliance
6. Adaptation and Improvement
TOPIC 1

PROS OF OWNING A FRANCHISE

1. Less Risk, Higher Success Rate

2. Brand Recognition and Awareness
3. A New Industry
4. Training and Support
5. Access to Resources
6. Marketing and Advertising Assistance
7. Potential Growth

CONS OF OWNING A FRANCHISE

1. High Initial Investment

2. Ongoing Fees and Royalties
3. Lack of control
4. Limited creative opportunities
5. Contracts aren’t permanent
6. Risk of Brand Image
7. Exit Challenges

The Four Phases Franchisor-Franchisee Relationship

1. Recruitment
2. Growth
3. Maturity
4. The end or a new beginning

Franchise Basics

1. Franchisor-Franchisee Relationship
2. Franchise Agreement
3. Franchise Fee
4. Royalties
5. Franchise Disclosure Document
The Advantages of Franchising

1. Capital
2. Motivated Management
3. Speed of Growth
4. Staffing Leverage
5. Ease of Supervision
6. Increased Profitability
7. Improved Valuations
8. Reduced Risk
9. Penetration of Secondary and
10. Tertiary Markets

The Disdvantages of Franchising

1. Pre-Unit Contribution
2. The Specter of Litigation
3. The Issue of Control
4. The Investment in Franchising