Owning Your Own Business: Franchise Owning Your Own Business: The American Dream

“in biz for yourself, but not by yourself” Franchising “in biz for yourself, but not by yourself” More expensive than starting a biz, but less costly to operate, less likely to fail

Robert Fulton – steamboat licensing Post WWII economic boom US History Pre-Civil War Robert Fulton – steamboat licensing Post WWII economic boom 1970’s – 1990’s – maturation of franchising

Conditions for Franchising Federal Trade Commission (FTC) regulates licensee distributes goods with licensors labels licensor exercises significant control licensee pays initial fees

Roles Company/franchisor authorizes use of its brand name provides training, continual support gets a % of sales (royalty) – usually based on gross sales gives marketing expertise, reputation insists on consistency dictates standards of performance and product

Franchisee pay fee must use trademark manages outlet assumes most of debt, risk

consistent/reliable expectations Advantages Competitive benefits customer base consistent/reliable expectations

Pre-Opening benefits initial comprehensive training operation, product, services, methodologies manuals, site selection, design, construction, reduced cost of equipment learn from mistakes they have already made

Ongoing benefits continual training, support group purchasing power advertising, marketing materials modernization support

restrictions on product, service, territory, marketing, advertising Disadvantages Loss of independence “entrepreneur lite” restrictions on product, service, territory, marketing, advertising Tendency to be over-dependent balance system with personal ability

Public expectations poor service at one branch affects you bad news at one branch affects you Unrealistic expectations must be realistic about finances

List industries of interest to you careful of fads Selection Personal audit needs & happiness List industries of interest to you careful of fads

Examine companies in that industry well-established vs. newer fees, royalties services

Meet w/ franchisor brokers/reps – be aware of their goals visit HQ – ask questions profitability, return, history, training, expansion, research, financial health Disclosure document (must by law)

Visit other franchisees assess positives, negatives Consult accountant & franchise attorney

Make a rational decision based on your goals for your life!