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It’s Time to Know Just How Marketable Your FDD Is
Posted by Franchise Grade Team March 11, 2016
Using the term marketable to describe a Franchise Disclosure Document might appear to be a misnomer, however, when one considers the relevance of an FDD it may be acceptable to use the term. This is because the FDD not only fulfills a franchise regulatory requirement but also presents a profile and performance summary of a franchise as well as a comparison to other franchise categories and systems.
Read moreFranchisors Need to Control Their Franchisee Development Strategy
Posted by Franchise Grade Team February 26, 2016
A number of years ago, Subway founder Fred DeLuca was asked to explain his development strategy for Subway. His response was simple: “I want to be where every McDonalds is and to locate as close as possible to them because they have the best site location strategy.” Whether Fred’s comment was serious or not, one cannot question Subways success.
Read moreFranchisee Candidates Need to Evaluate the Franchisors Corporate Culture
Posted by Franchise Grade Team January 21, 2016
There are numerous activities that relate to the process of evaluating a franchise opportunity. These activities include; reviewing the FDD and especially the franchise agreement, gaining feedback from franchisees and analyzing the performance of the franchise system. However, one area that doesn't get the attention it deserves pertains to the culture of the franchisor. Corporate culture begins with franchise leadership and works its way throughout the organization. The importance of corporate culture applies to all companies, with the exception that franchisees rely upon the franchisor to provide the vision, guidance and support necessary to operate a healthy franchise system.
Read morePlanning your Future: A Prospective Franchisee's Exit Guide
Posted by Franchise Grade Team July 16, 2015
A new franchisee must necessarily create a very detailed business plan for getting the new business from a great idea to a functioning, operating, profitable, and successful franchise. A critical but sometimes overlooked component of that plan is an “exit strategy”, which addresses two basic scenarios: Best Case and Worst Case.
Read moreRecords Retention: What To Do As A Franchisee
Posted by Franchise Grade Team July 13, 2015
As a new franchisee, one of the first things you’ll be doing is amassing a physical and virtual mountain of paperwork – documents which comprise the vital records required for your new business. In fact, creating these records begins as early as the Franchise Disclosure Document (FDD) you receive from the franchisor, and the resulting Franchise Agreement (FA) that seals the deal between you and the franchisor. These two are but a small component of the franchise records you will be required to maintain during the entire lifetime of the franchise and beyond.
Read moreWorking Capital Requirements
Posted by Franchise Grade Team June 10, 2015
A critical but often misunderstood category in the Franchise Disclosure Document is Additional Funds or working capital which is the last category in Item 7 – Estimated Initial Investment. Most franchisors provide an Additional Funds or working capital amount of three months. These funds are estimated to cover expenses to operate the franchise during the initial period of operations.
Read moreDoes Franchising Need Reform?
Posted by Franchise Grade Team May 30, 2015
Does the franchise system need to be reformed? Before answering that question how much do you know about franchising? Listen in as Josh Brown discusses very interesting statistics from FranchiseGrade.com.
Read moreDoes an FAC or IndFA Add Value In A Franchise System?
Posted by Franchise Grade Team May 28, 2015
A franchisee advisory council or an Independent Franchisee Association may provide value in other ways such as engagement with the franchisor, preventing costly litigation, a forum for dispute resolution, sounding board for the introduction of new products or services by the franchisor and a vehicle for assessing the attitude of the franchise network.
Read moreAnnualized Costs Of Initial Franchise Investments
Posted by Franchise Grade Team May 12, 2015
One of the leading causes of franchisee failures is undercapitalized franchisees. Being able to more accurately predict the financial requirements of a franchise investment and compare the results to available investment capital can lower the risk of being undercapitalized.
Read moreHow Item 19 FPRs Are Shaping The Franchise Industry
Posted by Franchise Grade Team May 7, 2015
Item 19 Financial Performance Representations (FPR) are a key component in any prospective franchisee's due diligence process. FPRs help them to analyze a franchise investment for the opportunity of a return. They are critical in constructing a pro forma income statement and cash flow projections.
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