What You Need To Know About Franchising Your Business or Concept
What You Need To Know About Franchising Your Business or Concept
The Success of Franchising
Never before in the history of marketing has a method been more successful for business owners to expand than in franchising. According to the U.S. Department of Commerce, franchising has a failure rate of only 3.7 percent.
Franchising is expected to reach $2 trillion by 2010, according to the Federal Trade Commission.
A survey was conducted with the help of the International Franchise Association to its franchisor membership and one of the questions that was asked to existing franchisees was…”Would you purchase your franchise if you had it to do over again?” The answer was positive from 93 percent of the owners. This confirms the success of franchising in the lives of franchise owners.
What is franchising?
To define franchising in one word would be “marketing”. Franchising is a very sophisticated method of marketing a product or service that just happened to be federally regulated in the United States and many foreign countries. Although franchising as a method of marketing can be dated back thousands of years ago, modern day franchising had its origin around 1850 when Singer Manufacturing Company began offering distribution agreements to individuals to represent their product. Franchising has come a long way since then.
Around the 1900’s, the oil and gas industries along with the automotive and bottling industries, used “trademark” franchising exclusively. By the mid 1930’s numerous businesses used “business format” franchising as their method of expansion. But by the 1950’s with businesses like McDonalds, franchising came into it’s own. It was not until October 21, 1979 that the federal government enacted FTC Rule 436 which requires franchisors to comply with various regulations and guidelines in the offering of a franchise. This rule is still required to this day.
What is a Franchise?
A franchise in a word is an “agreement”. It is the contractual relationship that binds the parties together. The true value of any franchise will depend on the agreement itself. It is very important that the agreement be marketable too!
Some of the items that require careful consideration are:
• The initial franchise fee
• The trademarks and use of
• The continuing fees (royalties)
• The terms and conditions of the agreement
• The territory
• The training provided
• The support of the franchisor
Who is Considered a Franchisor?
The federal government says that any business that is being offered to the general public that requires the potential buyer to sign a written contract and that contract contains their three (3) elements:
• The “Marks”, tradename, service marks, or trademark
• Significant controls or assistance
• Remuneration of $500 or more within a time period of 6 months
What the FTC Rule Requires
FTC Rule 436 requires that the franchisor comply with several basic things. All have to do with the actual offering of the franchise to a potential buyers and the manner in which it is offered. They are:
Provide the potential buyer with full disclosure in a required format which identifies various items of disclosure (when using the Uniform Franchise Offering Circular, 23 items with numerous sub items are required).
Provide the full disclosure document 10 business days before you the buyer is required to pay any money or sign any agreement with the franchisor.
The franchisor is prohibited from giving “earning claims” or “projections” of earnings unless certain requirements are met by the franchisor.
Regulation States
In addition to the FTC Rule, there are 15 States that require separate registration to allow a franchisor to market the franchise within their jurisdiction. Those states are:
• Hawaii
• California
• Oregon
• Washington
• North Dakota
• South Dakota
• Minnesota
• Wisconsin
• Illinois
• Indiana
• Michigan
• Virginia
• New York
• Maryland
• Rhode Island
What do you need in developing a franchise?
The development of a franchising is a continuious process so long as you are offering franchises. Some of the items that you are going to need are as follows:
• Corporate Structure
• Federal Trade Mark Registration
• Audited Financial Statements
• Uniform Franchise Offering Circular
• Promotional & Marketing Materials (could be a web site)
• Manuals (Development & Operations)
• Franchisee Training Program
• Franchisee Support
• Registration in Regulatory States
• Profile of who your franchisees will be
• Marketing Procedures
How long does it take to develop a franchise?
What are the costs associated with franchising?
Some franchisors can begin the process with a budget of under $40,000. However, the costs are continuous just like development. If a franchisor elects to begin marketing while still in development, money will begin flowing into the franchisors bank account from the sale of franchises. This eases the financial burden of the franchisor. Recently a franchisor began franchising who had a limited budget but was committed to the venture and within 8 weeks of development had 12 franchises sold which brought into the company $300,000 in fees.
Does my business need to be in operation for a period of time before I franchise?
There are no requirements or restrictions concerning the business or length of time in existence. However, a track record that allows you to understand your business is important if you are going to teach others how to operate and run the business.
What You Need To Know About Franchising Your Business or Concept - To learn more about this author, visit Ken Hollowell's Website.
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What You Need To Know About Franchising Your Business
The Success of Franchising
Never before in the history of marketing has a method been more successful for business owners to expand than in franchising. According to the U.S. Department of Commerce, franchising has a failure rate of only 3.7 percent.
Franchising is expected to reach $2 trillion by 2010, according to the Federal Trade Commission.
A survey was conducted with the help of the International Franchise Association to its franchisor membership and one of the questions that was asked to existing franchisees was…”Would you purchase your franchise if you had it to do over again?” The answer was positive from 93 percent of the owners. This confirms the success of franchising in the lives of franchise owners.
What is franchising?
To define franchising in one word would be “marketing”. Franchising is a very sophisticated method of marketing a product or service that just happened to be federally regulated in the United States and many foreign countries. Although franchising as a method of marketing can be dated back thousands of years ago, modern day franchising had its origin around 1850 when Singer Manufacturing Company began offering distribution agreements to individuals to represent their product. Franchising has come a long way since then.
Around the 1900’s, the oil and gas industries along with the automotive and bottling industries, used “trademark” franchising exclusively. By the mid 1930’s numerous businesses used “business format” franchising as their method of expansion. But by the 1950’s with businesses like McDonalds, franchising came into it’s own. It was not until October 21, 1979 that the federal government enacted FTC Rule 436 which requires franchisors to comply with various regulations and guidelines in the offering of a franchise. This rule is still required to this day.
What is a Franchise?
A franchise in a word is an “agreement”. It is the contractual relationship that binds the parties together. The true value of any franchise will depend on the agreement itself. It is very important that the agreement be marketable too!
Some of the items that require careful consideration are:
• The initial franchise fee
• The trademarks and use of
• The continuing fees (royalties)
• The terms and conditions of the agreement
• The territory
• The training provided
• The support of the franchisor
Who is Considered a Franchisor?
The federal government says that any business that is being offered to the general public that requires the potential buyer to sign a written contract and that contract contains their three (3) elements:
• The “Marks”, tradename, service marks, or trademark
• Significant controls or assistance
• Remuneration of $500 or more within a time period of 6 months
What the FTC Rule Requires
FTC Rule 436 requires that the franchisor comply with several basic things. All have to do with the actual offering of the franchise to a potential buyers and the manner in which it is offered. They are:
Provide the potential buyer with full disclosure in a required format which identifies various items of disclosure (when using the Uniform Franchise Offering Circular, 23 items with numerous sub items are required).
Provide the full disclosure document 10 business days before you the buyer is required to pay any money or sign any agreement with the franchisor.
The franchisor is prohibited from giving “earning claims” or “projections” of earnings unless certain requirements are met by the franchisor.
Regulation States
In addition to the FTC Rule, there are 15 States that require separate registration to allow a franchisor to market the franchise within their jurisdiction. Those states are:
• Hawaii
• California
• Oregon
• Washington
• North Dakota
• South Dakota
• Minnesota
• Wisconsin
• Illinois
• Indiana
• Michigan
• Virginia
• New York
• Maryland
• Rhode Island
What do you need in developing a franchise?
The development of a franchising is a continuious process so long as you are offering franchises. Some of the items that you are going to need are as follows:
• Corporate Structure
• Federal Trade Mark Registration
• Audited Financial Statements
• Uniform Franchise Offering Circular
• Promotional & Marketing Materials (could be a web site)
• Manuals (Development & Operations)
• Franchisee Training Program
• Franchisee Support
• Registration in Regulatory States
• Profile of who your franchisees will be
• Marketing Procedures
How long does it take to develop a franchise?
What are the costs associated with franchising?
Some franchisors can begin the process with a budget of under $40,000. However, the costs are continuous just like development. If a franchisor elects to begin marketing while still in development, money will begin flowing into the franchisors bank account from the sale of franchises. This eases the financial burden of the franchisor. Recently a franchisor began franchising who had a limited budget but was committed to the venture and within 8 weeks of development had 12 franchises sold which brought into the company $300,000 in fees.
Does my business need to be in operation for a period of time before I franchise?
There are no requirements or restrictions concerning the business or length of time in existence. However, a track record that allows you to understand your business is important if you are going to teach others how to operate and run the business.
What You Need To Know About Franchising Your Business or Concept - To learn more about this author, visit Ken Hollowell's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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Casey GollanCasey Gollan, Business Coaching & Mentoring Programs. Add $1 Million to $10 Million in the next 1 to 3 years. Since 1996 Casey has to added hundreds of millions of dollars to businesses. Watch a free video see client results Business Coaching website. - Visit Casey Gollan's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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