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

2. “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

3. 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

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

5. 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

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

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

8. 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

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

10. 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

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

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

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

14. 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)

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

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