Before Investing In A Franchise Identify The Total Franchise Investment
November 19, 2018
Identify the total franchise investment before deciding to invest in a franchise opportunity. This means including the money your investing in the franchise plus any opportunity costs, like your earnings from a current job. Your projected return on investment gives an estimate of what you could expect to earn from your franchise investment. You need to include all your costs, otherwise your true investment will be understated.
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Finding The Best Franchise Opportunity That Fits Your Profile
November 12, 2018
Franchise candidates need to follow a specific process if they want to find the best franchise opportunity that fits their franchise profile.
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Hidden Ways Franchisors Can Manipulate Item 19
March 30, 2018
At the current time 60% of franchisors provide a financial performance representation (“FPR”) under Item 19 in their Franchise Disclosure Document. As the disclosure of an FPR becomes more prevalent so too does the quality of the financial information become more important. Franchisors that provide more accurate and detailed FPR’s will be providing valuable and practical information to prospective franchisees. Providing more financial disclosure will be a valuable edge for a franchisor. However, some franchisors will provide information in their Item 19 that can be misleading and confusing to franchise candidates.
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Before Renewing Your FDD Have all the Facts
March 5, 2018
It’s that time of the year again when countless emails and solicitations are directed to franchisors reminding them to revise and renew their FDD. Although your franchise attorneys are best qualified to oversee this important activity it’s important to view the FDD renewal as a two-step process. By following our recommendations you’ll be assured of having a competitive, compliant and complete FDD.
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Maximize Market Penetration and Branding with Multi-Unit Franchisees
March 2, 2018
As Multi-unit franchising grows in popularity, especially in the Quick Serve Restaurant sector this franchise model continues to expand into other franchise sectors growing in popularity. In an article in Restaurant Finance Monitor in June 2016, editor John Hamburger observed that “200 franchisee entities operate over 25,000 restaurants in the United States, and the number is growing. The restaurant space is not alone — fewer and fewer franchisee entities are operating more and more franchised businesses. Multi-unit operators, some quite large, are changing the dynamics of the franchise industry.” Some multi-unit franchisees are large enough to be publicly traded companies.
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Franchisors Prepare to Answer These Questions the Right Way
January 29, 2018
As part of a franchise candidate’s due diligence process, it should be expected that certain questions will be directed to franchisor staff. Although many of the questions will be of the typical and usual variety, there can be certain questions that require a careful and detailed response. If a franchise candidate doesn’t receive the answer they expect, it will reflect poorly on the franchisor representative or franchise broker who is representing the franchisor. The better prepared a franchisor representative is to answer certain questions the right way, the better the impression the candidate has.
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The Meaning of Changing Franchise Investments
December 13, 2017
A recent study by Franchise Grade® analyzed changes in the average franchise investments from 2013 to 2016 for the ten major franchise sectors. While there have been various changes in average franchise investments during this time, some changes were more dramatic than others. It’s important as a prospective franchisee to understand why certain changes take place. For example, in the case of the Real Estate franchise sector, the average franchise investment decreased by 46%, which was by far the largest decrease among the ten sectors. The reasons for this change can be attributed to the rebound in residential real estate values after the demise of the Great Recession. After suffering more than any other franchise sector Real Estate has been on the rebound.
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Growing Your Franchise System Takes More Than Leads
November 30, 2017
Traditionally, the primary measure of franchise success has been system growth. Whether in press releases or industry ranking reports, new franchise locations take’s precedent over other news. It’s rare when a franchisor or PR agency publishes news about an accomplishment other than the addition of a new location.
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A Road Block to Franchise Growth is Right Under Your Nose
November 23, 2017
New franchise growth is the top priority for emerging franchise brands. Yet, many of these franchises have an obstacle on the road to more franchise locations. They miss the important step in the franchise process. That is at the beginning, a candidate needs to speak to a franchisor representative and the franchise does not provide one.
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Franchise Candidates Need to Dig Deeper
November 16, 2017
There are numerous books, articles and blogs that provide advice on how to evaluate a franchise opportunity. A common thread that runs through is the recommendation that before a prospective franchisee invests they must review and validate the information disclosed in the Franchise Disclosure Document and obtain feedback from franchisees. This approach is an effective way to evaluate a franchise and when coupled with the assistance of professional advice can be an effective way to evaluate and protect your franchise investment. However, to complement this approach I would advise prospective franchisees to dig deeper into the franchise and gather more information.
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