Franchise Management For Dummies

Foreword xvIntroduction 1About This Book 1Foolish Assumptions 2Icons Used in This Book 3Beyond the Book 4Where to Go from Here 4Part 1: Wrapping Your Brain Around Franchising 5Chapter 1: The Power of the Brand 7Tracing the History of Franchising 7What Is a Franchise, Anyway? 9The effects of franchising on modern business 9The success of franchising for business owners 10What's the Big Deal with Brands? 11Franchise Siblings: Three Types of Franchising 12Traditional franchising 12Business-format franchising 12Social franchising 14The Roles and Goals of Franchisors and Franchisees 15Looking at the world through franchisor lenses 15The franchisee's end of the bargain 16Nuances of the Franchisor/Franchisee Relationship 18Chapter 2: Franchises Come in Different Sizes 21Getting Started with a Single Franchise 22Where to start: It's two in the morning and you can't sleep 22Sifting through the options 23Paying attention to what's hot 25Adding Franchises, One at a Time 27Flying solo: Single-unit franchises 27Growing a family one franchise at a time 28Developing a Territory on Your Own 29Becoming a Master Franchisee 32The Area Rep: Master Franchise Lite 34Sharing Risks and Rewards in a Joint Venture 35Councils, Associations, Cooperatives, and Buying Groups 36Buying Franchisor-Owned Locations 37Chapter 3: Mirror, Mirror, on the Wall 41Starting Your Own or Joining a Team 42Consider the Pros and Cons 43Advantages of making a franchise investment 43Disadvantages of making a franchise investment 45Being Realistic about Being a Franchisee 48Looking in the Mirror: A Self-Evaluation 49Are you willing and able to learn new skills? 49Would you rather give or take orders? 50Can you say goodbye to corporate perks? 51How is your health? 51Do you like people? 52How much can you dish out and take on? 53Consider your family and friends 53Chapter 4: The Legal Issues 55Franchise Regulation: A Little History 56The State Regulatory Landscape 57The Franchise Disclosure Document 58What you will find in the FDD 58The waiting period 59The FDD, Item by Item 60Calling out a few key items 71How much can I make? 73Additional information available when an FPR is provided 74Understanding a franchise agreement 75The franchisor's verbal promises 75Finding professional advisors 75Negotiating with a Franchisor 77Part 2: Buying a Franchise 79Chapter 5: Researching Franchise Opportunities 81Digging Up the Good Information 82The Internet is the place to start 83Print directories 84Publications to understand franchising 84Attending trade shows and expositions 85Hot and trendy, but does it have any legs? 86The Role, Risk, and Benefits of Brokers 87Do brokers work for you or the franchisor? 87Deciding Whether to Buy Old or New 88Sizing up an existing franchise 89Investigating new franchise opportunities 91Benchmarking Franchise Offerings 92Going Back Home and Eyeing Locations 96Chapter 6: Raising Capital: Wowing, Wrangling, and Winning 97Examining Your Current Finances 98Ask yourself some probing questions 98Seeing what you can afford 99Consider a "used" franchise 99Determining Franchise Investment 100What your startup costs may look like 101Initial expenses to set up shop 102Do Your Homework before Holding Out Your Cup 105Creating a business plan 105The SBA: What they want to see 109Projecting income and cash flow 112Raising Capital 114Avoiding debt 114Visiting the bank 115Finding an angel investor 116Seeking other financing strategies 117Social Franchising and Funding 117Part 3: Operating Like a Well-Oiled Machine 121Chapter 7: Choosing a Location 123Selecting a Site 124Considering common site options 124Working a franchise from home 126Opting for alternate or off-street sites 127Dual branding: Sharing your space 127Finding Your Franchise's Habitat 128Finding out what constitutes a good site 129Using the franchisor as your compass 130Using data to evaluate a site on your own 132Protected and Exclusive Areas 132Encroachment Policies 134Signing the Lease 135Meeting Your Franchise's Requirements 136Implementing a franchisor's designs 136Getting approvals, permits, and licenses 137Beginning construction 137Getting help with the opening 138Chapter 8: Getting the Goods 139The Basic Requirements 140Meeting Approved Standards and Specifications 141Making mandatory purchases 141The Role of Buying Groups and Purchasing Cooperatives 146Receiving merchandise 147Receiving deliveries 147Checking the goods after they are in your location 148Verifying invoices 149Maintaining Inventory 149Back of the house 149Front of the house 152Chapter 9: Training and Hiring 153Getting Good Training for Yourself and Your Management 154Getting good initial training 154Receiving effective ongoing training 156Understanding Joint Employment and Why It Spooks Franchisors 157Who is the employer anyway? 157The role of the franchisor in human resources policies 158Training Your Staff 160Taking responsibility for getting your gang in gear 161When English isn't an employee's first language 162Finding a method to the madness 163Building and Leading Your Team Effectively 164Recruiting the right team and rewarding them in the right ways 166Following equal opportunity guidelines 168Conducting Interviews 169Asking the right questions 171Continuing an interview 173Doing background checks and other post-interview diligence 173Retaining Good Employees with a Good Work Environment 174Fostering a good work environment 175Hiring good managers 176Thinning the herd: When terminations need to be done 176Ensuring workplace safety 177Chapter 10: Working with Franchisors and Fellow Franchisees 179Playing by the Rules 179Meeting franchise system standards 180Supporting and watching the system 182Attempting to change the system 184Building a Relationship with Your Franchisor 185Being a team player 186Getting what you need from the relationship 187Dealing with Change 191When the franchise system changes 191When conflicts occur 192Reaching Out to Your Fellow Franchisees 194Joining advisory councils and associations 195Being number one in a class of one 197Chapter 11: Attracting and Keeping Customers 199Creating an Effective Marketing Plan 200Evaluating National and Local Advertising Strategies 204The franchise system ad campaign: Collective marketing dollars at work 204Local marketing options 206All Hail Customer Service 210Knowing your customers 210Showing honesty and integrity 212Making sure customer experiences are positive (and fixing ones that aren't) 213Looking beyond your cash register 215Part 4: Expanding or Cashing Out 217Chapter 12: Acquiring Other Franchises 219Assessing the Advantages and Disadvantages of Multi-Unit Operation 220The advantages 220The disadvantages 221Checking Your Franchise Agreement: Can You Buy Another Franchise? 222Reviewing Your Resources 223Be honest: Are you really ready? 223Look at your business and finances 224Understanding Your Purchase Options 227Starting from scratch 227Investing in multiple units 228Buying a franchise from another franchisee in the system 229Measuring proximity to yours 230Retrofranchising: Buying a company-owned location 231Converting a competitor's location 231Acquiring an area 232Chapter 13: When the End Is Nigh 235Decisions, Decisions 236Going for Round Two (or Three or Four): The Successor Franchise 238Paying the successor fee (if there is one) 238The successor franchise agreement 239Changes that have sparked controversy 240Bowing Out at the Right Time 244Getting personal 244Examining your world 245Leaving It to Your Children 246Selling Out 247Sprucing up the joint: Getting the most return on your investment 248Figuring out how much it's worth 250Playing by the franchisor's rules 251Selecting a sales method 253Now That the Party's Over 254Reflecting on the experience 254Making the next move 255Part 5: Building Your Own Franchise 257Chapter 14: From Small Business Owner to Franchisor 259Turning Your Small Business into a Bigger Chain 260Deciding whether your business should be franchised 261Putting the preliminary legal requirements in context 261Criteria for Becoming a Franchisor 262Do you have an operating business? 265Will consumers need or want your products and services tomorrow? 265Are you committed to franchising? 266Do you have enough potential franchisees and do you know who they are? 268Do you have a system? 270Can you teach others how to operate your system? 271Are your products and services any good? 272Will the economics of the business support a franchise expansion strategy? 273Beginning Your Franchise Program: Who Should Take the Reins? 275Doing it yourself: Success or sure failure? 276Watching out for "franchise packagers," wolves in pros' clothing 277Finding professional advisors to guide your way 280Passing Go with Your Franchise Idea 282Brainstorming a strategic plan 283Fleshing out your strategies 284Creating a plan for action 284Developing the legal documents 285Chapter 15: Recruiting Franchisees 287The Essence of the Ideal Franchisee 287Focusing Your Market Strategy 289Reeling In Great Franchisees 291Defining the franchisee profile 291Doing it yourself or through third-parties 293Reaching out through the right media 294Developing the Recruitment Organization 301Contact management software 303Finding the right franchise recruiting professional 304Staffing your recruitment organization 304Ten Steps to Franchise Recruitment 308Steps 1-4: The introductory phase 309Step 5: Discovery Day 311Step 6: Follow up after Discovery Day 311Step 7: Follow up again 312Step 8: Make a decision 312Step 9: Close the deal 312Step 10: Complete the process 313Working the Validation Process 313The Franchise Sales Presentation 315Finalizing the Selection Process 318Chapter 16: Expanding Abroad: International Franchising 319Taking Your Franchise Abroad: Know What You're Getting Into 320Investing capital 325Working with third-party intermediaries 326Budgeting for capital investment 328Understanding the necessity of hiring an experienced attorney 331Considering the implications of language and culture 334Getting your money out 336Product sourcing 337Protecting trademarks, trade secrets, and other valuable brand assets 337Decisions, Decisions: Whether to Make the Leap 338If You Decide to Cross the Border 341Finding the right franchisee 341Entering a foreign market 342Negotiating the deal 344Bringing Foreign Franchises to the United States 346Chapter 17: A World of Good with Social Franchising 349BOP: The Base of the Pyramid 352The Challenges for Social Franchising 355CFWshops: An Example of a Social Franchise System 356How CFWshops got started 356Using the hub-and-spoke and other variations of commercial franchising 358Who Are the Franchisor and Franchisee in a Social Franchise? 360Financing and Developmental Benchmarks for Social Franchises 362Stage one: Developing and proving the concept 362Stage two: Proving the replicability of the concept 363Stage three: Developing the franchise system 364Stage four: Expanding locally and nationally 365Stage five: Expanding globally 365Delivering on the Brand Promise 366Resources for Social Franchising 367Government funding agencies for global development 367Private philanthropic foundations 368Corporate philanthropists 369Impact investors 370Part 6: The Part of Tens 373Chapter 18: Ten Keys to Franchisee Success 375Make Sure You Have Enough Money 375Follow the System 376Don't Neglect Your Loved Ones 376Be Enthusiastic 377Recruit the Best Talent and Treat Them with Respect 377Train Your Employees 378Give Customers Great Service 378Get Involved with the Community 378Stay in Touch with Your Franchisor and Fellow Franchisees 379Pay Attention to the Details 380Chapter 19: Ten Questions to Ask before Becoming a Franchisor 381How Good Is Your Product/Service? 382Can You Manage the System? 382Do You Have the Commitment? 383Can You Systemize Your Business? 383Can You Train Your Franchisees? 383Can You Localize if Needed? 384Do You Have the Necessary Capital? 384Are Enough Franchisees Out There? 385Do You Understand Franchising? 386Are You Willing to Hire Proper Franchise Professionals? 386Appendix: Glossary of Common Franchising Terms 389Index 397