FRANCHISING IS AN EXPANSION METHOD

Guest post by: Chuck Woolweaver
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FRANCHISING IS AN EXPANSION METHOD - By Chuck Woolweaver

1. Expansion Capital – Franchisees furnish most of the capital required for the franchisor’s expansion - equity, business loans - for the development of real estate, leasehold improvements, FF & E (furniture, fixtures & equipment), inventory, pre-opening and ongoing working capital.

2. Local Unit Management – Franchising provides the franchisor with the motivated and effective local management needed to ensure a professionally operated business. Unlike a typical employed manager, the franchisee makes a financial and personal investment in the business and therefore, remains highly motivated.

3. Time to Market – Because franchisee’s provide the expansion capital and local management, the franchisor can expand at a faster rate than if the franchisor was required to raise the needed expansion capital, recruit and train local management and build the "company operations" infrastructure that would be needed to expand outside the franchisor’s current local marketing/trade area.

Franchising can be Very Profitable - According to the International Franchise Association, the average new franchisor sells 6-8 franchises in their first 12 months and 15-20 thereafter. With franchise fees averaging $20,000 - $30,000, that's a potential income of $120,000 to $150,000 in franchise fee income in your first 12 months. In addition, franchisees are generally required to pay you - the franchisor - an ongoing monthly royalty of 5-8% (national averages) of their gross sales. Using a basis of $500,000 first year gross sales per franchise location as an average, your annual royalty income will exceed $200,000 from these initial franchisees. You may also receive income (10-20% mark-up) from any proprietary products that are unique to your business and only available from you. Also, most franchisors require their franchisees to spend a minimum of 3% of gross sales for local advertising of their business - (which promotes your trade name at the same time) and the franchisee contributes 1% of their gross sales to the franchisor to cover the cost of producing professional advertising materials and programs.
FranchiseConsulting.Net specializes in assisting companies develop a successful (and highly profitable)franchise program.

THE CRITERIA TO DETERMINE YOUR “FRANCHISEABILITY”
• A good track record of profitability.
• A unique or unusual concept.
• Broad geographic appeal.
• Relatively easy to operate.
• Relatively inexpensive to operate.
• Easily duplicated.

With over 30 years experience - domestic and international - and over 400 franchises sold worldwide, and author of "Franchise Sales & Marketing Strategies" - I can generally have your company ready to begin franchising within 45-60 days (non-registration states).

Service includes:

1. Development of Franchise Disclosure Document (FDD), Franchise Agreement, Required Exhibits.
2. Development of Operating Manuals - Operations, Marketing, Site Selection
3. Consultation on Layout & Design of Franchise Sales Brochure
4. New Franchisor Training - utilizing my book "Franchise Sales and Marketing Strategies"
5. Will consider handling your initial franchise sales.

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Franchising Overview

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FRANCHISING IS AN EXPANSION METHOD - By Chuck Woolweaver

About the Author: Chuck Woolweaver

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Chuck Woolweaver has been actively involved in the restaurant and franchise industries for over 28 years and has developed over 400 franchised locations worldwide and is President of FranchiseConsulting.Net located in Boca Raton, Florida. He specializes in franchise development, marketing and sales and restaurant development and has been retained by a variety of companies in the United States, Far East, Middle East, Mexico, Canada and Europe for projects involving the development of restaurant facility designs and specifications, composing and publishing operating, business, and marketing manuals, development of menus and recipes, site selection, vendor selection and financial planning. Additional projects the company was involved in include franchise program development encompassing the creation and preparation of uniform franchise offering circulars, franchise agreements, franchise sales aids (in various media), and conducting franchise sales and marketing training. Chuck Woolweaver has written and published a number of articles on franchising some of which can be viewed on this web site.
Click here to visit Chuck's website.

More from Chuck Woolweaver
International Franchising Checklist
FRANCHISING IS AN EXPANSION METHOD
Development of A Franchise Program

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