How do all of these franchise organizations manage their franchise sales process? It is remarkable how many franchise systems out there, in the United States a new franchise is opened every 8 minutes of each business day, that is an amazing rate of growth! So franchising works, I get it. How do you find franchisees once you have gone through this process of franchising a business though?
When evaluating franchise sales, it is critical to first identify who the franchise buyer is and who we are working to sell the franchises to. Franchise sales encompass a large array of different types of franchise offerings. The traditional franchise is the owner operator model where typically a moderately well capitalized individual buys into the rights to run and manage a single location of the franchise offering. This franchise sales approach is most effective when using a sales presentation that evokes an emotional response. For example, "Be in charge of your own financial future, become the captain of your OWN ship!" Presenting the franchise to the buyer is not about the financial details, the minutia of the business offering or other particulars, it becomes an emotional decision for the buyer to get into business on their own with your help. Franchise sales is about creating that emotional connection with the buyer, similar to the process of selling a home, the buyer falls in love with the idea and the notion that they will be in that house, neighborhood, they picture their family being raised in that home and envision the future they will have there. The individual franchise buyer is typically not a former executive or highly educated individual with millions to invest, it typically is just someone who wants to get into business for themselves and they know they need someone's help doing it.
The franchise sales process is typically a 30-120 day process with a potential candidate, some take much longer. The evaluation process takes place on both sides, the buyer judging whether the franchisor has the support, training and overall package to truly support them and the franchise sales person gauging whether the franchise buyer has the capital, experience and wherewithal to be a franchisee.
The second type of franchise sales is to sell to a multi-unit franchise owner. This franchise offering is someone who has much more capital and experience. In this franchise sale, the buyer purchases the franchise rights to a much larger territory with a larger responsibility. They then are put on a performance schedule by the franchisor who establishes how many units the multi unit franchisee will be opening. This franchise sale is a different sale than the individual franchise. This buyer is highly sophisticated and has most likely been in franchise development before. They look over the financials and make an investment decision based on the ROI and how quickly they will see a return on the investment. In order to make this franchise sale the franchise system probably needs to be somewhat mature and have a really professional package to offer the franchisee, they are typically being courted by many franchise systems. The offering needs to make sense, in many cases the only realistic way to attract this buyer is to present earnings claims and business plans, these people are making an investment when they buy into the franchise, not buying into a lifestyle.
When approaching the process of franchise sales, it is critical to have people, consultants and a system in place. The first step is planning out the stages and carefully preparing for how to manage the influx of leads and responsibilities that come with franchise sales. The beauty and excitement of franchising is that with each franchise sale a company is expanded into a new market, the franchisor gains the valuable work ethic and commitment of a vested owner operator and the franchisee gets the training and support needed for them to become their own business owner.
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Tuesday, March 31, 2009
Thursday, March 26, 2009
Franchising Your Business in a Recession Might Be Your Best Move
Franchising a business in a recession may make sense for several good reasons, first and foremost of which is this: You can use other people's money to expand your business nationally, even internationally! At a time when it's difficult to borrow money from banks, or to raise money privately or publicly, using other people's money to expand your business may very well be the best reason to franchise your business today. But it can't be the only reason. If it is, you'll likely fail as a franchisor.
Franchisees pay upfront fees when they acquire a franchise business, and those fees help franchisors expand, along with other money that's invested to start up the business, i.e. to lease a property, to buy equipment, to secure inventory, etc. Franchise fees generally range from a few thousand dollars to $50,000 or more. International master license fees typically start at about $75,000 and may be $500,000 or more. These are serious sums of money, for which a franchisee expects to receive an opportunity to build a thriving, satisfying enterprise.
So how do you know if you can franchise your business and deliver a thriving, satisfying enterprise opportunity? Here are six points to help you decide:
1. Your existing business must be successful, that is, profitable. Franchising an "idea" isn't such a good idea. That's not to say it hasn't been done successfully, but today's franchise buyers expect to "see it" and "experience it" before they invest in it. If your business isn't profitable, you should first work on making it profitable and franchise it later.
2. Your business must be replicable. In other words, if it's an exclusive, one-of-a-kind enterprise, you probably can't franchise it. If you're the only person in the world who can make the business work, it's probably not going to work as a franchise. Most businesses, however, are replicable.
3. Your business must operate by a system. And the system needs to be documented. If your business operates one way today and another way next week, and without rhyme or reason, you're not likely to succeed as a franchisor. Franchisees need to know what to do, day by day, step by step, and the system lays that out for them. You may not currently have a documented system for your business, but you will need one before you accept a fee from a franchisee.
4. You must be able to transfer the system to franchisees and do so quickly and efficiently. As a franchisor, you'll create a training program for your new franchisees. The trainer/s will teach franchisees how to implement the operating system for the business. Generally, franchise training programs last from five days to six weeks. Training is usually conducted at the franchisor's corporate offices, in a hotel, or at the franchisee's location. The upfront fee generally covers the cost of training.
5. If an owner/operator needs special education, training or a license to operate your business, that may be problematic, but it doesn't mean you can't franchise. Realtors are licensed and some of their businesses are franchised. Accountants require special education and training and some of their businesses are franchised. Many franchised businesses require the operator to earn a special license or certificate. The requirement may shrink your marketing pool, but it may also make it easier to sell franchises. For example, plumbing franchises must be sold to licensed plumbers, in most instances, and there are several major, thriving plumbing franchises today.
6. Are you ready to switch gears and become a franchisor? You've been working your business for possibly several or many years. But now you've got to stop operating the business and start recruiting, training and supporting franchisees. Are you ready to make that change? If not, then someone on your team must be willing and able to do so. You can also hire professional help to franchise.
Those six points are enough to get you started. Many business owners dream about expanding their enterprises nationally, even internationally. More than 2,500 businesses currently use the franchising model in North America. Perhaps you can, too.
Franchisees pay upfront fees when they acquire a franchise business, and those fees help franchisors expand, along with other money that's invested to start up the business, i.e. to lease a property, to buy equipment, to secure inventory, etc. Franchise fees generally range from a few thousand dollars to $50,000 or more. International master license fees typically start at about $75,000 and may be $500,000 or more. These are serious sums of money, for which a franchisee expects to receive an opportunity to build a thriving, satisfying enterprise.
So how do you know if you can franchise your business and deliver a thriving, satisfying enterprise opportunity? Here are six points to help you decide:
1. Your existing business must be successful, that is, profitable. Franchising an "idea" isn't such a good idea. That's not to say it hasn't been done successfully, but today's franchise buyers expect to "see it" and "experience it" before they invest in it. If your business isn't profitable, you should first work on making it profitable and franchise it later.
2. Your business must be replicable. In other words, if it's an exclusive, one-of-a-kind enterprise, you probably can't franchise it. If you're the only person in the world who can make the business work, it's probably not going to work as a franchise. Most businesses, however, are replicable.
3. Your business must operate by a system. And the system needs to be documented. If your business operates one way today and another way next week, and without rhyme or reason, you're not likely to succeed as a franchisor. Franchisees need to know what to do, day by day, step by step, and the system lays that out for them. You may not currently have a documented system for your business, but you will need one before you accept a fee from a franchisee.
4. You must be able to transfer the system to franchisees and do so quickly and efficiently. As a franchisor, you'll create a training program for your new franchisees. The trainer/s will teach franchisees how to implement the operating system for the business. Generally, franchise training programs last from five days to six weeks. Training is usually conducted at the franchisor's corporate offices, in a hotel, or at the franchisee's location. The upfront fee generally covers the cost of training.
5. If an owner/operator needs special education, training or a license to operate your business, that may be problematic, but it doesn't mean you can't franchise. Realtors are licensed and some of their businesses are franchised. Accountants require special education and training and some of their businesses are franchised. Many franchised businesses require the operator to earn a special license or certificate. The requirement may shrink your marketing pool, but it may also make it easier to sell franchises. For example, plumbing franchises must be sold to licensed plumbers, in most instances, and there are several major, thriving plumbing franchises today.
6. Are you ready to switch gears and become a franchisor? You've been working your business for possibly several or many years. But now you've got to stop operating the business and start recruiting, training and supporting franchisees. Are you ready to make that change? If not, then someone on your team must be willing and able to do so. You can also hire professional help to franchise.
Those six points are enough to get you started. Many business owners dream about expanding their enterprises nationally, even internationally. More than 2,500 businesses currently use the franchising model in North America. Perhaps you can, too.
Friday, March 20, 2009
Franchisors Generally Have a Hard Time Collecting Royalties During Recessions
When you go online and search topics on modern day franchising you get a mixed bag of results. There are tons of websites and millions of pages on advice for franchisees, franchise buyers and links to endless sites for Franchise Attorneys, Franchising Regulators, and Consultants in the field of franchised businesses. Still, for a franchisor just starting out, there are only a few sites with information. Most of these websites have just a little bit of information in the form of articles, which are free and then a link to a Franchise Consultant that charges a good chunk of change. There are a couple of Franchisor Associations, but they are quite costly to join and to really get into the thick of the information they really need they must sign up for classes or pay someone to assist them. The biggest problem for new franchisors is cash-flow and that makes collecting their royalties paramount. Of course, new franchisors often have trouble getting their royalties on time or during recessions at all. Without this income the new franchisor can only stay in business if they continue to grow, which is not so easy during stressful economic times, even if there are more franchise buyers than usual. All Franchisors must stay up on their collection of franchise royalties from their franchisees and it is absolutely critical and paramount during hard economic times. A franchising company may assume that they are helping their franchisees by forgoing or lowering royalties during economic crisis, but if they do not make enough money or maintain a strong cash-flow then they are of no value anyway. And if the franchisor files for bankruptcy, as many have in the last decade, those franchisees often fail also and the entire system implodes. Franchisees may want a break when sales are down and that makes sense, but the system also needs the money to implement is plan and to capitalize on its economies of scale to make it through the recession. Think on this.
Monday, March 16, 2009
Master Franchise Strategy For the Expanding Franchisor
There are almost as many expansion strategies for franchising companies as there are franchisors in the market place. Some franchisors start on a shoe-string and build local and regional domination, while others start offering franchises in all 50 states from the get-go. Still others only offer franchises in non-registration states and notification states. Indeed, there are reasons, good ones for each of those or any combination thereof. Still, there are some that work to set up a couple of foreign franchisees to show they are global and national. It's amazing really to watch how various franchisors execute their expansion strategy. Another very popular strategy is for the franchisor to set up some local franchisees and create a business model like a master franchise, then copy that model by selling master franchises in other markets. Some franchisors sell master franchises in foreign markets or areas they do not wish to franchise themselves. Because of all the various strategies and mixing of these, you can see why there are almost as many strategies as there are franchising companies. What typically happens is a franchisor attempts to execute their franchise business plan, but then has folks and investors contact them. The franchisor then makes deals that are worth their while and at a rapid rate. Call it controlled chaos if you will. Now from the outside looking in, it might looked normal, but believe me it isn't, no franchisor ever expands exactly how they planned from the beginning, franchising just doesn't work that way. It's like holding on to a rocket ship, it ain't easy, but believe me when I tell you, it's worth doing if you have a good concept. Think on this.
Friday, March 13, 2009
How to Franchise - Training Franchisees
Franchising a business is about the Art of Reproduction. Franchising teaches someone who doesn't know anything about the business how to run the operation. The keys to success lie with the system of operation, the structure and integrity of the business model and in the training system for replicating this business model.
What constitutes a great training system in a franchise model is the depth and breadth of what is being trained. When a franchisee comes on board with a particular franchise company, they do not accept a managerial role with the company, or a sales role, or a HR position with the firm.....they take on them ALL. The franchisee becomes the business and runs every element of the operation. Once a franchisee leaves the corporate office from their initial training sessions, they are essentially running the show. They have to not only grasp and understand all of the intricacies of running and operating a new business at that point, but they also must be able and willing to teach their employees how to do every job within the business itself.
The most effective training systems in the franchise world are like Boot Camp. They are flexible in nature and address the responsibilities of running the business by job duty. The franchisee is put through a step by step process that works with the new franchise buyer on each part of running the operation. Franchisees will get their hands dirty and their feelings hurt during this process. Franchisees in many instances are very wealthy individuals, but when they buy a franchise for a food operation, they have to know how to run the grill, the fryer and how to clean the restrooms. They need to understand the P.O.S. system and how to maximize the efficiencies and benefits that the required technology offers to them. The franchisee will need to understand the financial side of running the business and how to manage the finances. All of these responsibilities fall on the head of the franchisee once this training is completed.
The great franchise companies have really solid training models. McDonald's has Hamburger University, Dominoes Pizza requires its franchisees to be a manager in a location for two years before they can be considered for a franchise location, Jimmy Johns puts their franchisees through an extremely elaborate and exhausting training program. The one commonality, that when a franchisee is sent out into the field to operate their location, they get it. They understand how to operate and how to make money at the unit level. This relieves the franchisor of the responsibilities, costs and problems that come with franchisees who need excessive amounts of hand holding when they begin operating their locations.
Franchisors have many tools and different technologies at their fingertips now that can make the training process much simpler today. Things like franchise training videos should be put together, Webcasts and Podcasts can be utilized in today's market to help train franchisees without having a human teacher doing the talking. Intranets and web-based platforms can be utilized to quickly and efficiently get updates and new information out to franchisees in the field and in remote locations. The franchise training process should typically be at least a month in length. This could be a combination of time spent at the corporate headquarters of the franchisor and time spent with the franchisee in the field. It is a big mistake to assume that in almost ANY business model that a franchisee could realistically be trained effectively in two weeks how to run the business and manage it profitably.
What constitutes a great training system in a franchise model is the depth and breadth of what is being trained. When a franchisee comes on board with a particular franchise company, they do not accept a managerial role with the company, or a sales role, or a HR position with the firm.....they take on them ALL. The franchisee becomes the business and runs every element of the operation. Once a franchisee leaves the corporate office from their initial training sessions, they are essentially running the show. They have to not only grasp and understand all of the intricacies of running and operating a new business at that point, but they also must be able and willing to teach their employees how to do every job within the business itself.
The most effective training systems in the franchise world are like Boot Camp. They are flexible in nature and address the responsibilities of running the business by job duty. The franchisee is put through a step by step process that works with the new franchise buyer on each part of running the operation. Franchisees will get their hands dirty and their feelings hurt during this process. Franchisees in many instances are very wealthy individuals, but when they buy a franchise for a food operation, they have to know how to run the grill, the fryer and how to clean the restrooms. They need to understand the P.O.S. system and how to maximize the efficiencies and benefits that the required technology offers to them. The franchisee will need to understand the financial side of running the business and how to manage the finances. All of these responsibilities fall on the head of the franchisee once this training is completed.
The great franchise companies have really solid training models. McDonald's has Hamburger University, Dominoes Pizza requires its franchisees to be a manager in a location for two years before they can be considered for a franchise location, Jimmy Johns puts their franchisees through an extremely elaborate and exhausting training program. The one commonality, that when a franchisee is sent out into the field to operate their location, they get it. They understand how to operate and how to make money at the unit level. This relieves the franchisor of the responsibilities, costs and problems that come with franchisees who need excessive amounts of hand holding when they begin operating their locations.
Franchisors have many tools and different technologies at their fingertips now that can make the training process much simpler today. Things like franchise training videos should be put together, Webcasts and Podcasts can be utilized in today's market to help train franchisees without having a human teacher doing the talking. Intranets and web-based platforms can be utilized to quickly and efficiently get updates and new information out to franchisees in the field and in remote locations. The franchise training process should typically be at least a month in length. This could be a combination of time spent at the corporate headquarters of the franchisor and time spent with the franchisee in the field. It is a big mistake to assume that in almost ANY business model that a franchisee could realistically be trained effectively in two weeks how to run the business and manage it profitably.
Thursday, March 12, 2009
Essential Things to Know Before You Buy a Franchise
If you're looking to start your own home business, be it from home or otherwise, then one concept that you are going to keep coming across is the Franchise. There are a wealth of home business franchises from chocolate wrappers, signing courses for babies to divorce advice but are they for you?
Franchises can offer great benefits to those who want to be business owners but who just don't have an idea of what they want to do or haven't run businesses before and need some help and guidance.
The concept of a franchise is simple. You are provided with the blueprint of how the business is to be run, the equipment that you need, the training you should provide for any employees and how you should market the business. In return, you pay an investment fee and usually a monthly fee and/ or a share of the profits you make. This is all great news for those who need a helping hand.
Franchises have come complete circle. It is not too many years ago when they were viewed with suspicion. Many franchisors were only interested in making the sale to the new business owners and were not interested in the success of their franchisees. Lots of new business owners found themselves in trouble and went under, accruing great debts. Times have now changed and franchisers recognize that they have a vested interest in the ongoing success of their franchisees.
So what is the downside of buying a franchise? The cons are actually the same as the pros! Franchises work because not only do the franchisees get support and training but they also get the goodwill of the business. If you were to buy a McDonald's franchise for example, you wouldn't have to spend a lot of time marketing and getting your customers used to the concept of a fast food restaurant! Whenever you go there as a customer, you know exactly what will be sold, the packaging it will come in, what it will taste like and what uniforms the staff will be wearing!
For the franchisee, this is also the downside. How you operate your business is strictly prescribed and regulated. This is for obvious reasons; the franchiser did not work to create a valuable brand for rogue franchisees to ruin it! But the question is how much control do you want over your own business?
Franchises these days can be very expensive and if they are not, ask yourself why. Beware the franchises that do not have a proven business model. The whole point of what you are doing is to buy into something that already works and is capable of being duplicated. If the venture you are looking at is brand new, look with extra care.
It is also essential that you have the franchise agreement looked at by a lawyer. Even if you hate lawyers. Franchise law is a very grey area and if you find yourself having problems, you may end up paying your monthly franchise fee whether your business is making money or not. Speak to an expert about your obligations and exit strategies. Protect yourself because you will be treated as a business owner and ignorance of what you are signing will not get you out of trouble.
If you consider all of the above and can find a business for which you have the required skills and an absolute passion for, then go for it but consider your other home business options too. Remember, you should own your business, do not let your business (or your franchiser) own you.
Franchises can offer great benefits to those who want to be business owners but who just don't have an idea of what they want to do or haven't run businesses before and need some help and guidance.
The concept of a franchise is simple. You are provided with the blueprint of how the business is to be run, the equipment that you need, the training you should provide for any employees and how you should market the business. In return, you pay an investment fee and usually a monthly fee and/ or a share of the profits you make. This is all great news for those who need a helping hand.
Franchises have come complete circle. It is not too many years ago when they were viewed with suspicion. Many franchisors were only interested in making the sale to the new business owners and were not interested in the success of their franchisees. Lots of new business owners found themselves in trouble and went under, accruing great debts. Times have now changed and franchisers recognize that they have a vested interest in the ongoing success of their franchisees.
So what is the downside of buying a franchise? The cons are actually the same as the pros! Franchises work because not only do the franchisees get support and training but they also get the goodwill of the business. If you were to buy a McDonald's franchise for example, you wouldn't have to spend a lot of time marketing and getting your customers used to the concept of a fast food restaurant! Whenever you go there as a customer, you know exactly what will be sold, the packaging it will come in, what it will taste like and what uniforms the staff will be wearing!
For the franchisee, this is also the downside. How you operate your business is strictly prescribed and regulated. This is for obvious reasons; the franchiser did not work to create a valuable brand for rogue franchisees to ruin it! But the question is how much control do you want over your own business?
Franchises these days can be very expensive and if they are not, ask yourself why. Beware the franchises that do not have a proven business model. The whole point of what you are doing is to buy into something that already works and is capable of being duplicated. If the venture you are looking at is brand new, look with extra care.
It is also essential that you have the franchise agreement looked at by a lawyer. Even if you hate lawyers. Franchise law is a very grey area and if you find yourself having problems, you may end up paying your monthly franchise fee whether your business is making money or not. Speak to an expert about your obligations and exit strategies. Protect yourself because you will be treated as a business owner and ignorance of what you are signing will not get you out of trouble.
If you consider all of the above and can find a business for which you have the required skills and an absolute passion for, then go for it but consider your other home business options too. Remember, you should own your business, do not let your business (or your franchiser) own you.
Tuesday, March 10, 2009
How to Increase Your Chances of Owning a Successful Franchise
According to much of the research regarding the success rate of businesses, it is more likely that a business owner will achieve better results by purchasing a franchise rather than creating a brand new business. Although most franchise companies are developed based on initial business success, a potential franchisee should perform a preliminary investigation before joining so that the chances for success are higher.
What type of information to obtain? It is important to determine how strong the business model is that is in place within the organization. You will have a better chance of success if the support system is solid, which is much more likely if they are further along in the expansion of the franchise.
If they are at least on the second stage of growth (past the first 25 units), they should have built a solid infrastructure that will provide decent support for you to operate your franchise.
Talk with other franchisees In order to help you finalize your franchise choice, you should interview at least two or three other franchisees within the organization. It is best to talk with franchisees that have been with the company for a minimum of one year so that you can obtain adequate feedback.
Find out if they have achieved their financial goals. Also, you will want to hear from them to determine how satisfied they have been with the support they have received from the franchisor.
Talk with the franchiser The franchiser and his or her support team should be willing to communicate openly with you about the business. Some questions to ask include:
What is the history of the franchise?
How long have they been in business?
What stage of expansion is the franchise in: the initial 10-25 units or beyond?
Be certain that you are comfortable with their method of communication.
Check outside sources It is always wise to check with the Better Business Bureau to see if any complaints have been lodged against the business before investing.
Lastly, although you may locate a solid franchise to partake in, your success will also rely on what you bring to the business with regard to skill level and dedication.
What type of information to obtain? It is important to determine how strong the business model is that is in place within the organization. You will have a better chance of success if the support system is solid, which is much more likely if they are further along in the expansion of the franchise.
If they are at least on the second stage of growth (past the first 25 units), they should have built a solid infrastructure that will provide decent support for you to operate your franchise.
Talk with other franchisees In order to help you finalize your franchise choice, you should interview at least two or three other franchisees within the organization. It is best to talk with franchisees that have been with the company for a minimum of one year so that you can obtain adequate feedback.
Find out if they have achieved their financial goals. Also, you will want to hear from them to determine how satisfied they have been with the support they have received from the franchisor.
Talk with the franchiser The franchiser and his or her support team should be willing to communicate openly with you about the business. Some questions to ask include:
What is the history of the franchise?
How long have they been in business?
What stage of expansion is the franchise in: the initial 10-25 units or beyond?
Be certain that you are comfortable with their method of communication.
Check outside sources It is always wise to check with the Better Business Bureau to see if any complaints have been lodged against the business before investing.
Lastly, although you may locate a solid franchise to partake in, your success will also rely on what you bring to the business with regard to skill level and dedication.
Friday, March 6, 2009
The History of Franchising
The Beginning of Franchising Franchising is identified as the holding of a specific privilege or right. The concept had its earliest beginning way back in the middle ages.
During this timeframe, Church expansion was considered a type of franchising. Also, leaders granted certain privileges such as the right to run fairs and operate markets and ferries. The franchising concept continued as Kings designated rights to partake in such activities as beer brewing and the building of roads.
Franchising in the 1800's and 1900's The type of franchising that most of us recognize began in the 1840's as German ale brewers designated rights to certain taverns to sell their ale. Subsequently, franchising made its way into the United States as peddlers marketed their wares between towns.
Additionally you could find licenses that were granted to the military giving them the right to sell items in their general stores in particular territories.
The first recognizable name associated with franchising is Albert Singer. In the early 1850's as he was looking for an efficient method of marketing his sewing machines across the United States, he began to grant others the right to sell his sewing machines.
Going forward into the late 1800's and early 1900's, franchising took on many other forms. As companies began to realize the significance of selling their products and services over larger geographical areas, they adapted the franchising practice as well. Many utility companies and auto manufacturers found success with the practice.
Also as transportation avenues increased, the more mobile Americans began to establish restaurant chains and franchises including such well-known outfits as Dunkin Donuts, Burger King, and McDonald's.
Current Franchising Business format franchising, as we know franchising today, became common after World War II. As those who served in the war returned home with their want for a variety of products and services, franchising appeared to be the way to go. Going forward, the baby boomers began to direct the economy along this path and continue to do so currently.
However, franchising has not been without its issues. During the 1960's and 1970's, along with the quick growth of franchises, came some unsettling activities. Various businesses found themselves not only poorly funded but also lacking solid leadership. These adverse circumstances led to a number of bankruptcies.
Also, mixed in with the lucrative legitimate franchises were some companies portraying themselves as franchises, but in actuality were involved in fraudulent activities. Some people found themselves in a loss situation rather than the beneficial one that they thought they were investing in.
Franchise Regulations In 1960, the International Franchise Association (IFA) was established in order to protect and promote the franchising industry. The IFA partners with Congress and the Federal Trade Commission (FTC) to streamline and update franchising regulations in order to ensure fairness within the industry.
The FTC developed the Uniform Offering Circular (UFOC) in the late 1970's making it necessary for franchisors to provide specified information to potential franchisees in order to ensure that the prospect receives all necessary information before investing. The document was later revised to the Franchise Disclosure Document (FDD) used today.
As the franchising industry continues to comprise a good portion of the business within the United States, it is expected that it will be necessary to review and update regulations regularly in order to promote healthy activity within the marketplace.
During this timeframe, Church expansion was considered a type of franchising. Also, leaders granted certain privileges such as the right to run fairs and operate markets and ferries. The franchising concept continued as Kings designated rights to partake in such activities as beer brewing and the building of roads.
Franchising in the 1800's and 1900's The type of franchising that most of us recognize began in the 1840's as German ale brewers designated rights to certain taverns to sell their ale. Subsequently, franchising made its way into the United States as peddlers marketed their wares between towns.
Additionally you could find licenses that were granted to the military giving them the right to sell items in their general stores in particular territories.
The first recognizable name associated with franchising is Albert Singer. In the early 1850's as he was looking for an efficient method of marketing his sewing machines across the United States, he began to grant others the right to sell his sewing machines.
Going forward into the late 1800's and early 1900's, franchising took on many other forms. As companies began to realize the significance of selling their products and services over larger geographical areas, they adapted the franchising practice as well. Many utility companies and auto manufacturers found success with the practice.
Also as transportation avenues increased, the more mobile Americans began to establish restaurant chains and franchises including such well-known outfits as Dunkin Donuts, Burger King, and McDonald's.
Current Franchising Business format franchising, as we know franchising today, became common after World War II. As those who served in the war returned home with their want for a variety of products and services, franchising appeared to be the way to go. Going forward, the baby boomers began to direct the economy along this path and continue to do so currently.
However, franchising has not been without its issues. During the 1960's and 1970's, along with the quick growth of franchises, came some unsettling activities. Various businesses found themselves not only poorly funded but also lacking solid leadership. These adverse circumstances led to a number of bankruptcies.
Also, mixed in with the lucrative legitimate franchises were some companies portraying themselves as franchises, but in actuality were involved in fraudulent activities. Some people found themselves in a loss situation rather than the beneficial one that they thought they were investing in.
Franchise Regulations In 1960, the International Franchise Association (IFA) was established in order to protect and promote the franchising industry. The IFA partners with Congress and the Federal Trade Commission (FTC) to streamline and update franchising regulations in order to ensure fairness within the industry.
The FTC developed the Uniform Offering Circular (UFOC) in the late 1970's making it necessary for franchisors to provide specified information to potential franchisees in order to ensure that the prospect receives all necessary information before investing. The document was later revised to the Franchise Disclosure Document (FDD) used today.
As the franchising industry continues to comprise a good portion of the business within the United States, it is expected that it will be necessary to review and update regulations regularly in order to promote healthy activity within the marketplace.
Thursday, March 5, 2009
2008 New Tax Preparation Franchise Opportunities to Consider
Each year a few new franchisors enter the stage to begin offering their franchise concepts. Generally, a Franchisor has an existing store or several that have become successful over a long period of time. During this time they have like any business been through their share of hard knocks, thus, they are able to build all the mistakes out of their business models. During recessionary times it is generally a time when franchising flourishes because folks that would have normally been gainfully employed seek new employment as their own boss. A franchised business therefore makes a lot of sense. One good business model that never seems to go out of style and always seems to do well during downturns in the business cycle is a tax preparation business. If you have been considering getting into the tax preparing business look no further, as there is a new kid on the block; 1-800 Tax Preparation - I guess that name says it all, and such a name puts you at the top of the Yellow Pages in that category too. 1-800 Tax Preparation is based out of Texas and has been around since 1995, so I bet they have worked out all the bugs. After reading through one of the Franchise Directories looking at all the new concepts, and having been a former Franchisor Founder myself, this one sure piqued my curiosity. And since they are relatively new, new to Franchising that is, it sounds like an opportunity that would allow a new franchisee buyer to get in on the ground floor. Plus, with a franchise fee of $35,000 it surely comes with some decent training on how to run the business and market it as well. This Franchise also had another benefit, they have financing available for qualified franchise applicants that are approved by the Franchisor. Definitely on new franchisor that is worth taking a look at.
Wednesday, March 4, 2009
The History of Franchising
The Beginning of Franchising Franchising is identified as the holding of a specific privilege or right. The concept had its earliest beginning way back in the middle ages.
During this timeframe, Church expansion was considered a type of franchising. Also, leaders granted certain privileges such as the right to run fairs and operate markets and ferries. The franchising concept continued as Kings designated rights to partake in such activities as beer brewing and the building of roads.
Franchising in the 1800's and 1900's The type of franchising that most of us recognize began in the 1840's as German ale brewers designated rights to certain taverns to sell their ale. Subsequently, franchising made its way into the United States as peddlers marketed their wares between towns.
Additionally you could find licenses that were granted to the military giving them the right to sell items in their general stores in particular territories.
The first recognizable name associated with franchising is Albert Singer. In the early 1850's as he was looking for an efficient method of marketing his sewing machines across the United States, he began to grant others the right to sell his sewing machines.
Going forward into the late 1800's and early 1900's, franchising took on many other forms. As companies began to realize the significance of selling their products and services over larger geographical areas, they adapted the franchising practice as well. Many utility companies and auto manufacturers found success with the practice.
Also as transportation avenues increased, the more mobile Americans began to establish restaurant chains and franchises including such well-known outfits as Dunkin Donuts, Burger King, and McDonald's.
Current Franchising Business format franchising, as we know franchising today, became common after World War II. As those who served in the war returned home with their want for a variety of products and services, franchising appeared to be the way to go. Going forward, the baby boomers began to direct the economy along this path and continue to do so currently.
However, franchising has not been without its issues. During the 1960's and 1970's, along with the quick growth of franchises, came some unsettling activities. Various businesses found themselves not only poorly funded but also lacking solid leadership. These adverse circumstances led to a number of bankruptcies.
Also, mixed in with the lucrative legitimate franchises were some companies portraying themselves as franchises, but in actuality were involved in fraudulent activities. Some people found themselves in a loss situation rather than the beneficial one that they thought they were investing in.
Franchise Regulations In 1960, the International Franchise Association (IFA) was established in order to protect and promote the franchising industry. The IFA partners with Congress and the Federal Trade Commission (FTC) to streamline and update franchising regulations in order to ensure fairness within the industry.
The FTC developed the Uniform Offering Circular (UFOC) in the late 1970's making it necessary for franchisors to provide specified information to potential franchisees in order to ensure that the prospect receives all necessary information before investing. The document was later revised to the Franchise Disclosure Document (FDD) used today.
As the franchising industry continues to comprise a good portion of the business within the United States, it is expected that it will be necessary to review and update regulations regularly in order to promote healthy activity within the marketplace.
During this timeframe, Church expansion was considered a type of franchising. Also, leaders granted certain privileges such as the right to run fairs and operate markets and ferries. The franchising concept continued as Kings designated rights to partake in such activities as beer brewing and the building of roads.
Franchising in the 1800's and 1900's The type of franchising that most of us recognize began in the 1840's as German ale brewers designated rights to certain taverns to sell their ale. Subsequently, franchising made its way into the United States as peddlers marketed their wares between towns.
Additionally you could find licenses that were granted to the military giving them the right to sell items in their general stores in particular territories.
The first recognizable name associated with franchising is Albert Singer. In the early 1850's as he was looking for an efficient method of marketing his sewing machines across the United States, he began to grant others the right to sell his sewing machines.
Going forward into the late 1800's and early 1900's, franchising took on many other forms. As companies began to realize the significance of selling their products and services over larger geographical areas, they adapted the franchising practice as well. Many utility companies and auto manufacturers found success with the practice.
Also as transportation avenues increased, the more mobile Americans began to establish restaurant chains and franchises including such well-known outfits as Dunkin Donuts, Burger King, and McDonald's.
Current Franchising Business format franchising, as we know franchising today, became common after World War II. As those who served in the war returned home with their want for a variety of products and services, franchising appeared to be the way to go. Going forward, the baby boomers began to direct the economy along this path and continue to do so currently.
However, franchising has not been without its issues. During the 1960's and 1970's, along with the quick growth of franchises, came some unsettling activities. Various businesses found themselves not only poorly funded but also lacking solid leadership. These adverse circumstances led to a number of bankruptcies.
Also, mixed in with the lucrative legitimate franchises were some companies portraying themselves as franchises, but in actuality were involved in fraudulent activities. Some people found themselves in a loss situation rather than the beneficial one that they thought they were investing in.
Franchise Regulations In 1960, the International Franchise Association (IFA) was established in order to protect and promote the franchising industry. The IFA partners with Congress and the Federal Trade Commission (FTC) to streamline and update franchising regulations in order to ensure fairness within the industry.
The FTC developed the Uniform Offering Circular (UFOC) in the late 1970's making it necessary for franchisors to provide specified information to potential franchisees in order to ensure that the prospect receives all necessary information before investing. The document was later revised to the Franchise Disclosure Document (FDD) used today.
As the franchising industry continues to comprise a good portion of the business within the United States, it is expected that it will be necessary to review and update regulations regularly in order to promote healthy activity within the marketplace.
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