Category: Business Plans

SCALING YOUR FRANCHISE COMPANY SUCCESSFULLY

Posted on by Franchise Strategist

Photo by Randy Tarampi on Unsplash

One of the key franchise expansion strategies is to perfect your business model. Your business must be operationally sound, financially successful, and replicable in different markets. It must possess a unique selling proposition that can outshine the competition.

Scaling Your Franchise Business Successfully

Successful franchise expansion is the golden goose for every small business owner, offering an avenue to scale operations, reach new markets, and significantly increase profits. The dream of seeing your brand in multiple cities or countries is exciting, but the road to successful franchising is fraught with unique challenges. Thus, adopting strategic expansion techniques is paramount to ensuring sustainable growth.

One of the key franchise expansion strategies is to perfect your business model. Your business must be operationally sound, financially successful, and replicable in different markets. It must possess a unique selling proposition that can outshine the competition. A proof of concept is also crucial. This may involve operating one or more successful outlets before considering franchising.

Market research is another vital aspect of the expansion. It involves understanding consumer behavior, competitive landscapes, and the economic climate of potential locations. Studying market demographics and purchasing trends enables you to tailor your services to meet market demand, thus maximizing your franchise’s potential for success.
Invest in a comprehensive franchise disclosure document (FDD). An FDD provides potential franchisees with essential information about the franchisor’s business, including financial performance, legal issues, and operational procedures. This document is a legal requirement in many jurisdictions and aids franchisees in making informed decisions about investing in your franchise.

Pricing your franchise correctly is another critical strategy. The franchise fee should be competitive yet profitable, reflecting the value of your brand and the support you offer to franchisees. Carefully consider ongoing fees, such as royalty and marketing fees, as these will impact your franchisees’ profitability and, in turn, the attractiveness of your franchise.

The training and support you offer franchisees can significantly influence your franchise’s growth. Comprehensive training programs and ongoing support systems foster successful franchise units, enhancing your brand’s overall reputation. This includes offering operational training, marketing support, assistance in site selection, and ongoing business advice.

Lastly, your expansion should be strategic in its pace and location. Grow at a rate that your resources can handle to avoid overextension. Start in areas close to your original location, as this allows for easier management and support. Also, consider area development or master franchise agreements where one franchisee operates multiple units or an entire region. This can hasten your expansion while minimizing management complexities.

Franchise expansion is an exciting but challenging venture. The key lies in meticulous planning, diligent execution, and ongoing franchise support. By perfecting your business model, conducting rigorous market research, and providing comprehensive training, you can maximize the potential for success in your franchise expansion journey.
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Article written with the support of AI

Risk Mitigation in Franchising

Posted on by Franchise Strategist

To mitigate these risks, entrepreneurs must conduct comprehensive due diligence before entering into a franchise agreement. Research the chosen industry and understand its market trends. Engage with existing franchisees and ask about their experiences. Evaluate the franchisor’s track record of success

Risk Mitigation in Franchising

In the entrepreneurial landscape, franchising is often viewed as a more secure path to business ownership. The franchise model offers several advantages, such as established brand recognition, pre-existing business structures, and continuous support from the franchisor. However, like any business venture, it does come with its fair share of risks. Understanding and mitigating these risks is critical for entrepreneurs who seek to thrive in franchising.

Identifying Risks in Franchising
Foremost, entrepreneurs need to identify the potential risks involved in owning a franchise. A franchise is not an automatic ticket to success. It requires dedication, hard work, financial commitment, and operational expertise. Some primary risks associated with franchising include the potential for failure, unmet earnings projections, and disputes with the franchisor.
Other risks could stem from the franchisor’s performance, market saturation potential, and unforeseen business environment changes. For instance, the franchisor’s performance directly impacts the franchisee’s business. If the franchisor fails to provide adequate support or suffers from a poor reputation, it can negatively affect the franchisee.

Strategies for Risk Mitigation
To mitigate these risks, entrepreneurs must conduct comprehensive due diligence before entering into a franchise agreement. Research the chosen industry and understand its market trends. Engage with existing franchisees and ask about their experiences. Evaluate the franchisor’s track record of success, financial stability, and support system. Understanding these elements can give entrepreneurs insight into the level of risk involved.

Financial risk is another considerable concern. To mitigate this, entrepreneurs should assess their financial capabilities accurately and align them with the financial requirements of the franchise. This includes considering the initial investment, ongoing fees, and the cost of maintaining the business until it becomes profitable.

Legal risk is another potential pitfall in franchising. Franchise agreements are complex and can include various legal obligations. Therefore, entrepreneurs must seek professional legal advice before signing a contract. A franchise attorney can help understand the terms of the agreement, ensuring that they are fair and do not expose the franchisee to unnecessary risks.

Proactive Management for Long-term Success
Entrepreneurs should be proactive in managing their franchise operations to mitigate risks. Regularly monitor financial performance and identify areas for improvement. Regular training and upskilling are also beneficial for keeping up with industry standards and ensuring the business operates efficiently.

Maintaining open communication with the franchisor is vital. If challenges arise, discussing them with the franchisor and seeking their advice or support is essential. After all, the franchisor has a vested interest in the success of the franchisee’s business.

Franchising offers a relatively secure pathway to business ownership. However, like any business venture, it carries inherent risks. By identifying these risks, conducting diligent research, implementing strategic financial planning, seeking professional legal advice, and being proactive in operations management, entrepreneurs can effectively mitigate these risks and increase their chances of franchising success.

This approach will not only ensure a successful franchising journey. Still, it will also provide a sturdy foundation for future entrepreneurial ventures, thus making risk mitigation an essential skill in the entrepreneurial toolbox.

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Article written with the support of AI

EMBRACING THE POWER OF SWOT ANALYSIS

Posted on by Franchise Strategist

Photo Graphic by Gary O.

Through the lens of a SWOT Analysis, businesses can better understand their current situation, thus positioning themselves for future success. The more enterprises understand their internal strengths and weaknesses, as well as external opportunities and threats, the better equipped they are to plan for a sustainable future.

Embracing the Power of SWOT Analysis: A Comprehensive Guide to Business Success

The dynamic landscape of modern business requires decision-makers to adopt various strategic planning tools to navigate its complexities. One such essential tool, widely recognized for its simplicity yet insightful results, is the SWOT Analysis. This article provides a comprehensive understanding of the SWOT Analysis, its importance, and how it can revolutionize your business.

Understanding SWOT Analysis
SWOT Analysis is an acronym for Strengths, Weaknesses, Opportunities, and Threats. It is a strategic planning tool that helps businesses identify the internal and external factors influencing their operations, competitiveness, and market viability.
Strengths and weaknesses are considered internal factors intrinsic to the organization. Strengths represent the core competencies or advantages that give the business an edge over its competitors. Conversely, weaknesses refer to the areas where the company needs to improve compared to the competition or standards of the industry.
On the other hand, opportunities and threats are external factors that arise from the business environment. Opportunities point out the favorable situations or trends a business can exploit for growth. Threats indicate potential problems or risks caused by unfavorable external conditions that could harm the company’s profitability or survival.

The Importance of SWOT Analysis

1. Strategic Planning
A well-conducted SWOT Analysis acts as a compass, directing your business strategy in a turbulent business environment. It helps you leverage your strengths, improve weaknesses, capitalize on opportunities, and develop contingency plans for potential threats.

2. Problem-Solving
SWOT Analysis assists in identifying specific areas of concern within the business. Clearly outlining weaknesses and threats provides a framework for developing tactics to address these challenges.

3. Decision-Making
The insight from a SWOT Analysis contributes significantly to informed decision-making. It offers a holistic view of your business’s current state, aiding in making strategic choices regarding investments, market expansion, product development, and more.

4. Competitive Advantage
Understanding your strengths and opportunities helps internal growth and gives you a competitive edge. By providing insights into competitors’ weaknesses and potential threats in the market, a SWOT Analysis enables businesses to stay ahead of the competition.

5. Resource Optimization
A SWOT Analysis can reveal how to utilize resources best. By identifying strengths, you can strategically allocate resources to areas where you will most likely excel. It also highlights areas that require improvement so that you can make informed decisions about investments.

The importance of SWOT Analysis for your business lies in its capacity to offer valuable insights that enable strategic planning, efficient problem-solving, informed decision-making, gaining competitive advantage, and optimal resource utilization.

It’s worth noting that the real power of SWOT Analysis comes from the discussions and brainstorming it stimulates among key stakeholders. The process encourages collaboration and open conversation, making it a vital tool for fostering organizational growth.

Through the lens of a SWOT Analysis, businesses can better understand their current situation, thus positioning themselves for future success. The more enterprises understand their internal strengths and weaknesses, as well as external opportunities and threats, the better equipped they are to plan for a sustainable future.

CRAFTING THE IDEAL CORPORATE CULTURE: A COMPREHENSIVE BLUEPRINT FOR SUCCESS

Posted on by Franchise Strategist

Photo by Austin Distel on Unsplash

Cultivating an exceptional corporate culture is a marathon, not a sprint. It requires continual commitment, consistency, and effort from every organization member. But once you have laid down the foundation of a solid corporate culture, you’ll be well on your way to enjoying a prosperous and thriving business environment.

Crafting the Ideal Corporate Culture: A Comprehensive Blueprint for Success

What separates a good organization from a great one? Is it innovative products or services? Excellent customer service? While these are indeed critical elements, an underlying factor is the backbone of any successful enterprise: a robust corporate culture.

Corporate culture, the shared ethos, and values defining an organization aren’t about superficial elements like office decor or dress code. It’s about an ingrained identity that dictates how employees interact, collaborate, and work towards common goals. An influential corporate culture promotes productivity, nurtures engagement, and inspires loyalty, contributing significantly to overall business success.

To create a healthy and thriving corporate culture, there are six essential strategies any organization can adopt:

1. Define Your Core Values
Solid, well-articulated core values lie at the heart of every compelling corporate culture. These values form the bedrock of an organization’s ethical framework, shaping its employees’ beliefs, behaviors, and actions.
Whether these values emphasize innovation, integrity, customer service, or teamwork, they guide your organization’s decision-making processes. They engender employees’ shared sense of identity and purpose, fostering unity and commitment.
Defining core values, however, is just the first step. They must be thoroughly communicated, consistently upheld and continually integrated into every aspect of the business. From hiring and onboarding to performance evaluation and recognition, your core values should be the golden thread that ties together all business operations.

2. Lead by Example
The leadership team within an organization plays a pivotal role in shaping its culture. Leaders are not merely managers or decision-makers; they are culture carriers who can either make or break an organization’s cultural fabric.

Leaders’ behaviors, attitudes, and actions significantly influence the company’s cultural environment. They set the tone for the organization, demonstrating the values and behaviors they expect their team members to emulate.

Leaders need more than merely “talk” about core values; they must live them. When leaders consistently embody these values, they inspire trust, respect, and loyalty among their teams, fostering a culture where everyone feels committed and valued.

3. Promote Open Communication
An environment of open communication is crucial for a healthy corporate culture. Transparency and honesty should be the norms rather than exceptions. When employees feel comfortable expressing their thoughts, ideas, and concerns without fear of reprisal, it leads to a more engaged, productive, and satisfied workforce.
Regular feedback sessions, team meetings, and other communication channels encourage employees to voice their opinions, fostering a sense of belonging and value. Leadership transparency, where leaders openly discuss company goals, challenges, and changes, also builds trust and strengthens the cultural fabric of an organization.

4. Encourage Teamwork and Collaboration
Strong corporate cultures thrive on teamwork and collaboration. An organization that fosters cross-departmental collaborations and encourages diverse perspectives can unlock creativity, stimulate innovation, and enhance problem-solving abilities.
Creating an environment that encourages teamwork goes beyond merely assigning group projects. It involves building trust, nurturing relationships, acknowledging individual contributions, and promoting mutual respect among team members. Regular team-building activities, workshops, and retreats can be excellent strategies for cultivating a culture of collaboration and cohesion.

5. Invest in Employee Development
Organizations that prioritize employee growth and development foster a culture of continuous learning and improvement. Employees who see clear paths for growth within their organization are more likely to feel engaged, motivated, and loyal.

Professional development programs, mentoring schemes, skill-based training, and opportunities for internal career progression can significantly enhance employee satisfaction and retention. A culture that values learning boosts morale and drives performance, productivity, and innovation.

6. Demonstrate Corporate Social Responsibility
Corporate Social Responsibility is no longer a ‘nice-to-have.’ For today’s increasingly socially conscious employees, it’s a must. A strong commitment to social and environmental responsibilities can significantly enhance your organization’s reputation and attractiveness.

Incorporating these initiatives into your corporate culture shows that your company cares about more than just profit. Whether environmentally-friendly practices, community outreach programs, or charitable donations, CSR initiatives show your organization’s commitment to positively impacting society.

In conclusion, corporate culture is not a mere buzzword. It’s an essential business strategy that, when cultivated effectively, can drive organizational success. Building a strong corporate culture may require effort and consistency. Still, the resulting benefits – a more engaged workforce, increased productivity, and higher employee satisfaction, to name a few – are well worth the investment.

Cultivating an exceptional corporate culture is a marathon, not a sprint. It requires continual commitment, consistency, and effort from every organization member. But once you have laid down the foundation of a solid corporate culture, you’ll be well on your way to enjoying a prosperous and thriving business environment. It all starts with you and your team and the values you uphold and exemplify. So, start this journey today and watch your organization transform into a more productive, positive, and purposeful entity.

ADVANTAGES OF INVESTING IN A FRANCHISE VS. LAUNCHING A STARTUP

Posted on by Franchise Strategist

A franchise is an established business model with a proven track record. In simple terms, a franchise comes with a ready-to-go business plan that reduces the chances of failure. You can even access historical data on how other franchises under the brand performed. This may lower the financial risk.

Advantages of Investing in a Franchise Vs. Launching a Startup
By Gary Occhiogrosso – Founder FranGrow

The journey of starting a business is an exciting adventure filled with opportunities and challenges. In deciding to become an entrepreneur, one critical decision you will make is choosing between buying a franchise or launching a startup. Both paths have unique benefits, but today we’ll discuss the advantages of investing in a franchise.

First, the primary advantage of a franchise is the lower risk factor. Unlike a startup, where everything is built from scratch, a franchise is an established business model with a proven track record. In simple terms, a franchise comes with a ready-to-go business plan that reduces the chances of failure. You can even access historical data on how other franchises under the brand performed. This may lower the financial risk, making franchises a safer bet.

Secondly, buying a franchise comes with brand recognition. Unlike startups, franchises are backed by an established brand often recognized and trusted by consumers. This means you do not need to invest heavily in brand awareness or marketing to gain the trust of your customers, which is a significant challenge for startups.

Thirdly, franchises often offer support and training for new franchisees. This is not usually the case with startups, where you are alone. Training and support from franchisors can be invaluable, mainly if you are new to running a business. They provide a roadmap for running the business, reducing the learning curve of starting a new business.

Lastly, with a franchise, you get easier access to funding. Banks and financial institutions are more willing to lend money to franchises because they are perceived as less risky due to their proven business models. It is also easier to get supplier credit due to the strength of the franchisor.

In conclusion, while startups offer the thrill and total control, franchises offer an option combining the entrepreneurial spirit with a cushion of support. It’s crucial to conduct due diligence and consider your interests, business acumen, financial capacity, and lifestyle before deciding.

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HOW TO RECRUIT & RETAIN “GEN Z” EMPLOYEES

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It is essential to consider Gen Z key preferences and values. Gen Z employees prioritize meaningful work and a sense of purpose. They are often motivated by opportunities for personal growth, career advancement, and the ability to impact society positively. Providing clear career paths and development opportunities is crucial to engaging and retaining them.


HOW TO RECRUIT & RETAIN “GEN Z” EMPLOYEES
By Johnny Dey

Finding, hiring, and retaining Generation Z employees requires understanding their unique characteristics, preferences, and attitudes toward work. As the newest generation to enter the labor force, Gen Z comprises individuals born between 1997 and 2012. According to the U.S. Department of Labor, as of 2020, Gen Z accounted for around 9% of the labor force, which is projected to grow in the coming years.

To attract Gen Z workers, it is essential to consider their key preferences and values. Gen Z employees prioritize meaningful work and a sense of purpose. They are often motivated by opportunities for personal growth, career advancement, and the ability to impact society positively. Providing clear career paths and development opportunities is crucial to engaging and retaining them.

Gen Z employees also value work-life balance and flexibility. They seek workplaces that offer flexible schedules, remote work options, and healthy work-life integration. According to a study by Ernst & Young, 75% of Gen Z employees believe that a flexible work schedule is essential to achieve work-life balance. Emphasizing work-life balance and offering flexible arrangements can be attractive to Gen Z job seekers.

Gen Z workers are also tech-savvy and expect employers to leverage technology effectively. They are comfortable with digital communication tools, collaboration platforms, and automation. Companies prioritizing technological advancements and providing a digital-friendly work environment will likely appeal to Gen Z candidates.

Gen Z employees also value diversity and inclusivity. They seek companies that foster a diverse and inclusive culture where they can express their authentic selves. Organizations that demonstrate a commitment to diversity, equity, and inclusion through policies, initiatives, and representation are more likely to attract and retain Gen Z workers.

Moreover, Gen Z employees tend to have a robust entrepreneurial spirit. They are interested in opportunities for innovation, autonomy, and creativity in the workplace. Companies that offer a supportive environment for entrepreneurial endeavors and provide platforms for idea sharing and collaboration will likely appeal to Gen Z employees.

In conclusion, attracting, hiring, and retaining Gen Z employees involves recognizing their preferences for meaningful work, work-life balance, flexibility, technological integration, diversity and inclusion, and entrepreneurial opportunities. By aligning company values with these preferences, organizations can better position themselves to attract and retain Gen Z talent in a competitive labor market.

Please note that while the U.S. Department of Labor provides information about the labor force and various demographic trends, specific statistics on the exact number of Gen Z individuals in the labor force may not be available as of my knowledge cutoff in September 2021. It’s advisable to refer to the U.S. Department of Labor or other reliable sources for the most up-to-date statistics.

Franchising Strategy: Strategic Business Plan Development

Posted on by Franchise Strategist

Photo by Tima Miroshnichenko

As with any business, you must have a solid business plan. Do not think that you can start a franchise without a good plan. The plan is a roadmap to how you will operate, how you will reach new franchisees, how you will market your business and must have solid financials. A mistake of a single percentage point on a franchise royalty can easily cost you millions of dollars.


<strong>Franchising Strategy: Strategic Business Plan Development</strong>

Franchising Strategy: Strategic Business Plan Development
By David G Komatz

As with any business, you must have a solid business plan. Do not think that you can start a franchise without a good plan. The plan is a roadmap to how you will operate, how you will reach new franchisees, how you will market your business and must have solid financials. A mistake of a single percentage point on a franchise royalty can easily cost you millions of dollars. It does not seem like a big mistake, when you have a single franchisee. It simply means that the franchisor will make $5,000 less in royalty revenues. But in franchising, we are talking about continuing growth, and this mistake might be multiplied 100 times or more. Other business decisions that a new franchisor will make that could impact long-term profitability include:

• Advertising fees

• Technology fees

• Product margins

• Type of franchise offered (individual, area development, area representative, etc.)

• Organizational structure

• Compensation structure

• Geographic growth strategy

• Territorial rights provided to franchisees

• Reservations of rights for the franchisor

• Franchise Disclosure Documents

Conflicting or ambiguous communications when a franchise is first sold can form the basis for future franchise litigation. The cost of defending any franchise lawsuit, even an inconsequential one, can be enormous. The cost of prosecuting even a “small” franchise litigation lawsuit can easily exceed $100,000 to $200,000, or more.

You must have a solid, coherent Franchise Disclosure Document. An integrated Franchise Compliance Program that stipulates rules and expectations, manages Franchise Disclosure Documents and controls the publishing of all information is extremely important. It is also one of the best investments a franchise company will ever make.

Understanding a franchise agreement

A Franchise Agreement includes all of the key facets, requirements and principles of the franchise, including the privileges and commitments of both parties, the length of time the agreement will last, the territory (if any) granted to the franchisee, and the costs involved and how they are to be calculated.

A Franchise Agreement is the foundation of your business. You must be certain that you understand it clearly before you start to build on it. The following is an outline of some of the key aspects contained in Franchise Agreements.

Every Franchise Agreement needs to be carefully read and you should therefore have your attorney review the Agreement clause by clause with you, to make certain that you understand all of its terms. Franchisees also need to be aware that, while it can be relatively simple to enter into a Franchise Agreement, it may be far more difficult to remove yourself from one. A standard Franchise Agreement is a long-term commitment to a third party (often of six to ten years in length). The Agreement will include stringent requirements which have to be complied with for the full length of the term. Failure to conform to these requirements may in many situations allow the franchisor to terminate the Agreement.

While the strict stipulations of Franchise Agreements are there to protect the interests of all parties and particularly the franchise system, from time to time Franchise Agreements can include or exclude clauses which aim to protect the franchisor.

A provision that any costs involved in defending the use of the trademark should be paid by the franchisee

Immediate rights for the franchisor to cancel without notice if the franchisee misses or delays payment of royalties

Lack of clauses regarding ongoing support, training and development of the business by the franchisor

Limitation of the franchisor’s liability to the franchisee even if the franchisor breaches their requirements to the franchisee

Widely drafted clauses undermining a franchisee’s ‘exclusive’ territory in unwarranted circumstances.

The presence of these clauses will vary between Franchise Agreements. An experienced franchise lawyer will be able to highlight them for you. Some franchisors will not be willing to make any changes to their agreements especially when there are other franchisees already in operation.

Regardless of what you may dislike about some provisions in a Franchise Agreement, it is nevertheless essential that you understand it fully and the requirements it places on you as a franchisee. Careful attention should also be paid to supplementary documents, as these may contain provisions that, if breached, constitute a breach of the Franchise Agreement.

You should also be certain that any pre-contractual statements regarding turnover or other aspects of the business that may have attracted you to the franchise are carried over into the Franchise Agreement or in some other written form.

Grant of Rights

The Grant of Rights sets out the term of the franchise and its renewal provisions. It is important to make certain that the term of the franchise is adequate to allow you to achieve a realistic return on your investment. Renewal provisions need to be looked at carefully along with any renewal fees. They may contain some or all of the following:

Notice of renewal – this is usually required within strict timeframes. If the renewal notice is not given in time, the right to do so may be lost

Payment of renewal fee

Changes to terms of the Agreement by the franchisor upon renewal

Changes to the franchise territory size by the franchisor where the particular Agreement provides exclusive rights to the franchisee

Changes, alterations and improvements to operating practices to meet competitive and other challenges

First options or first rights of refusal for additional franchises.

It is important that the franchisee understands that, more often than not, the right of renewal may in fact be a right in favor of the franchisor. The franchisor often has the ability to reject the renewal if a franchisee has not been performing to set standards.

Ongoing costs and royalties

Many Franchise Agreements include ongoing payments to the franchisor such as:

• Royalties

• Advertising levies

• Mark-ups or margins on products supplied by the franchisors

• Training fees.

There may also be requirement to attend franchise conferences and other meetings. The Agreement should clearly set out the details of what has to be paid and when, including circumstances relating to any deposits payable before securing the franchise.

For advertising and promotion costs, the Agreement should specify when the payment is to be made and to whom, including details of any special banking arrangements. Back-up assistance and assistance are essential to the operation of a successful franchise. Details of the support and training to be provided by the franchisor should be stated in the Agreement, including both initial and ongoing assistance. As well as having your attorney review the Agreement for these provisions, talk to existing franchisees about the level of support they have received.

Initial costs

The Agreement, or often an ancillary document, should set out in full all beginning costs. These may include the initial franchise fee, equipment costs, working capital requirements, fit-out costs, initial training costs and the cost of opening stock.

Premises, leases and mobiles

Lease provisions usually allow the franchisor to take over the lease at the end of the term, and also if the franchisee defaults during the term

Often the franchisor will lease the property itself and grant a sub-lease to the franchisee. You are responsible for paying the rent, so you should ensure the amount negotiated is a fair market rent

Mobile franchises usually contain terms that set out the sign writing and other d�cor required by the vehicles from which the business is operated, and possibly for any major items of equipment

One issue that is often overlooked is the need to ensure that the length of the franchise term coincides with the length of the lease term.

Requirements

Every Agreement should contain clauses setting out the initial and continuing requirements of both franchisor and franchisee

• Examples of franchisee requirements include minimum operating hours, insurance, engagement of staff, and uniform requirements.

• Examples of franchisor’s requirements include maintaining the manuals, providing products, and training

• Records of accounting must be up-to-date, with regular reporting and auditing

• Intending franchisees should pay careful attention to the requirements since breach of any may entitle the franchisor to terminate the franchise.

Intellectual property

Intellectual property is a key element of most Franchise Agreements, specifying legal ownership rights by the franchisor concerning patents, copyright, trademarks, designs and even operating systems. Other relevant laws include the Fair Trading Act and common law rules prohibiting the copying of a business’s identity.

Sale of the franchise

Most Agreements will allow the franchise to be sold during its term, but you should note that as a franchisee your rights to sell the business may be restricted.

• The franchisee may have to give the franchisor the right to buy the business first known as right of first refusal, which in itself can destabilize the value of that business and the goodwill for a selling franchisee

• If the franchisor chooses not to purchase, they may rigorously control the sale process

• The incoming franchisee must be approved by the franchisor

There may be a transfer approval fee, which the franchisee will need to pay to the franchisor when a sale takes place. This is designed to cover the franchisor’s costs involved in training the incoming franchisee.

In some Franchise Agreements, the term of an existing franchise for sales purposes covers only its unexpired remainder, unless the Agreement provides for the franchisor to offer a new Agreement for a full new term.

Termination

Franchise Agreements provide for circumstances in which the Agreement may be terminated in advance of the original ending date. These include:

• Bankruptcy, company liquidation or criminal conviction of the franchisee

• Termination of leases to the franchise premises (where premises retention is important).

Termination provisions should be considered carefully as they are often points of disagreement. There are frequent misunderstandings by franchisees as to what happens at the end of a term and procedures vary from one franchise system to another. However, it should also be kept in mind that if the franchise is operating well and the franchise relationship is a good one, it is likely that both franchisee and franchisor will want to renew the Agreement.

Disputes

Although disagreements between franchisors and franchisees are usually solved through discussion and negotiation, mediation and arbitration are also effective methods for working out disputes and less damaging to franchise relationships than legal proceedings.

Other terms

The Entire Agreement clause is especially important as it usually states that what is contained in the Agreement overrides anything which may previously have been promised unless it is expressly referred to in the Agreement

As a franchisee, you should be certain that anything on which you have relied in selecting your franchise is included in the Agreement in some way

The Definitions section, usually close to the beginning of the Franchise Agreement, contains key definitions. One of the most important is Gross Sales, the figure on which the franchisor’s royalty is usually based. Usually this covers substantially every type of transaction carried out by the business and almost every payment received. Often it will include sales made, whether or not payment has actually been received.

David G Komatz is a seasoned leader and manager and has studied franchising extensively. He is versed in the many aspects of franchising including preparing the manuals and policies used in new franchises.

Be sure to obtain his book “Franchising” available at https://www.amazon.com/author/dgkomatz.

Article Source: https://EzineArticles.com/expert/David_G_Komatz/1543625

http://EzineArticles.com/?Franchising-Strategy:-Strategic-Business-Plan-Development&id=10541277


BEST TIME TO OPEN A PIZZA FRANCHISE: 7 THINGS PROSPECTIVE FRANCHISEES LOOK FOR

Posted on by Franchise Strategist

Franchise ownership gives you the financial freedom you’re looking for – but ONLY if you choose the right franchise. When you’re running your own Smokin’ Oak Pizza & Taproom location, you call the shots. Put the right team in place and you can have a flexible schedule that lets you work at your own pace

Best Time To Open a Pizza Franchise: 7 Things Prospective Franchisees Look For
Article supplied by Smokin’Oak Wood-Fired Pizza & Taproom

Your restaurant is the talk of the town. Business is steady and growing. The word-of-mouth brings in locals, business travelers, and vacationers. The goal you had of working for yourself has come true.

That’s the dream. And you’re ready to make it happen. But you’re wondering if now is the right time to open a franchise. It’s true that many business owners are hesitant during uncertain economic times. But research shows intrepid entrepreneurs can not only survive uncertain economic times but thrive.

But don’t just take our word for it… Hear from two of our successful franchises who opened during the 2020 pandemic and are continuing to serve authentic, artisan wood-fired pizza to their supportive communities today – with plans to expand!

With that in mind, no one knows exactly what the economy is going to do and how that will affect business. Evaluating the opportunity alongside the potential risk is imperative. That’s why we’re sharing seven things you should look for in a franchise before investing your savings.

Financial Security
Fast-casual restaurants are highly popular today. The ones that are franchises – a step up in quality and ambiance from the typical fast-food chain — have been opening new locations faster than any other dining category.

Their popularity could be due to profit margins, which are the highest among food franchises. Fast-casual restaurants enjoy a 6% profit margin, which is the same as full-service restaurants and nearly three times better than the typical fast-food eatery.

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TIP TO INCREASE FRANCHISE RECRUITMENT

Posted on by Franchise Strategist

It has been my experience that the franchisee territory does not receive enough analysis by some franchisors. While the type of territory, whether open, protected, or exclusive, is an important consideration for a prospective franchisee, the market potential is equally important.

A Strategy to Enhance Franchisee Recruitment
By Ed Teixeira
Franchise Consultant, Author, Franchise Executive and Former Franchisee with 40 years of Franchise Industry Experience.

To grow a franchise system a franchisor must have qualified franchise leads that can turn into viable franchise candidates. Whether a franchisor generates their own leads, uses Lead Gen portals, or receives franchisee prospects from other sources, acquiring franchise leads is only the start of the franchise development process. The franchisee prospect needs to be motivated by a franchise opportunity before proceeding to the next step in the process.
To achieve this objective the strategy employed by most franchisors is to cite the demand for the franchise’s products or services, in addition to franchisor training, support and a financial performance representation. However, these benefits exclude one of the most critical requirements of any franchise, the quality of the territory the franchisee will acquire as part of their franchise investment.

Not enough emerging and mid-sized franchisors emphasize in detail, how it analyzes, identifies, and determines the territory a franchisee will be granted. Although this subject is typically covered at the early stages of discussions between the franchisor and a franchisee prospect, it has been my experience that the franchisee territory does not receive enough analysis by some franchisors. While the type of territory whether open, protected, or exclusive is an important consideration for a prospective franchisee the market potential is equally important.

1. Franchisors should devote more resources and place more attention on how they identify and define a franchisee market and present this information at the earliest stages of the franchise process. This strategy may require a franchisor to invest additional resources into identifying and defining franchisee territories.

2. Franchisors should avoid utilizing surface metrics to define a market. For example, a home care franchisor may use the number of residents over 65 to define a market, yet that alone won’t indicate how many in this market segment can afford to pay for home care services? The same rationale relates to home restoration services. In addition to identifying the number of single family homes in a territory, the age, size and proximity of homes to potential environmental threats should be considered.

3. Invest in using an experienced market research firm to identify an ideal market profile to serve as the basis for identifying and defining franchisee territories. This approach will benefit the franchisor and its franchisees by maximizing opportunities for brand growth.

4. Some franchisees will request a territory based upon proximity to their residence and certain demographics. Franchisors should avoid accepting a franchisees choice of territory out of hand, without a detailed analysis of the territory. Otherwise, a franchisee that experiences poor sales may attribute the problem to their territory and place the responsibility on the franchisor.

In order to attract qualified franchise candidates franchisors should devote the necessary resources to defining franchisee territories and its market potential and present the franchisee territory as a major feature of the franchise opportunity. This feature of the franchise opportunity should be introduced at the beginning of the franchise presentation process.
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About the author:

Ed Teixeira has 40 years experience in the franchise industry as a franchise executive and franchisee. He is the co-author of the new textbook; Franchising Strategies The Entrepreneurs Guide to Success published by Rutledge. Ed’s franchise experience includes the retail, manufacturing, home health care, medical staffing and technology industries. Mr.Teixeira has franchised brands in Asia, Europe, and South America. He have lectures at Stony Brook University Business School on the subject of Franchising and been interviewed by the Wall Street Journal, Forbes, Bloomberg, Franchise Times, Franchise Update, New York Newsday and Long Island Business Review. Am available for Expert Witness testimony.

He has written and published The Franchise Buyers Manual a comprehensive guide for people considering buying a franchise. Ed is an Industry Partner of Stony Brook University and member of the Advisory Board Pace University Lubin School of Business and was qualified by the International Center for Dispute Resolution and The Business Broker Press as a franchise expert.

Tips For Employers & Employees – Effective Job Interviews

Posted on by Franchise Strategist

Photo by Clem Onojeghuo on Unsplash

Suppose you have not decided what to offer someone or are still negotiating with the candidate. In that case, it’s best to provide a range rather than an exact number. This gives candidates an idea of what they could make if hired and shows that you are flexible and willing to negotiate.

Tips For Employers & Employees – Effective Job Interviews
By Johnny Day

Introduction
As a business, you want to hire the best employees you can. You want people with the right skills who can help the company reach its goals and grow. But only some people will be a good fit for your organization. In fact, according to one study, about 25% of new hires fail within their first 18 months on the job. At that rate, hiring five employees who fail in their first 18 months at work with your company is like hiring only three people who succeed in that time!
Offer salary range, not a specific number.

Offer a salary range, not a specific number.
Suppose you have not decided what to offer someone or are still negotiating with the candidate. In that case, it’s best to provide a range rather than an exact number. This gives candidates an idea of what they could make if hired and shows that you are flexible and willing to negotiate.

Have a plan for the interview before you go in.
Before you go into an interview, you should plan what you want to ask and what kinds of questions the employer will ask you. You should also have your resume and a copy of the job description. Bring a list of references who are willing to be contacted.

When it comes time for your interview, follow these tips:

* Know what you want to ask. The employer may only tell you about some aspects of the job. Instead, they’ll give out one piece at a time during different parts of the interview process to see if candidates are interested in both the work itself and all other aspects related to working there (e.g., pay).

* Have your questions ready so that if something comes up during or after their presentation or tour—like whether there’s room for advancement—then feel free to ask these things without feeling like an outsider who doesn’t belong!
Explain the company culture to candidates.

* Recruiters, managers, and executives should explain the company culture to candidates. Because culture is a set of values, it’s essential to define them early in the process. The goal is to give candidates an understanding of how your organization approaches its work and what being part of that organization means. It may be helpful for recruiters and hiring managers to refer back to this definition when conducting interviews with prospective employees because it can provide a common understanding among team members if they all use the same language when describing their roles within the organization.

Make sure they know what their duties will be.
Clearly outlining the duties of a job is a must. As a manager, it’s your responsibility to ensure that employees know their position and how a manager will evaluate them. If you’re hiring someone who has been doing this type of work for years, you’ll want to take them through orientation so that they know what you expect. If someone just graduated from school with little or no experience in your field, then I recommend taking some time out of their first week on the job to explain things like:
What is expected of them in terms of output and output quality? (This is usually tracked in metrics.)
How do we measure performance? (These measurements may include customer satisfaction surveys.)

Don’t be afraid to ask them to elaborate on their experience and qualifications.
Asking candidates to elaborate on their experience and qualifications is part of the interview process. Still, it’s also an excellent opportunity to learn more about someone’s personality and character. For example, if a candidate has said they have experience in social media marketing, then ask them to describe the last project they worked on from start to finish. On the other hand, if their resume lists specific projects, ask them what kind of work they’ve done in that area before.
If someone has little professional experience (e.g., a high school student looking for a summer internship), then ask them how they’ve approached learning new skills or subjects outside of school-related activities. For example: “Tell me about a time when you had to teach someone else something.”

Give them time to think about it.
Before hiring, ensure the candidate has time to consider it. Suppose they’re ready to sign on right away. In that case, it might mean that they’ve already taken a job elsewhere and are just trying to be polite by pretending otherwise. It’s also crucial that you give them plenty of time so they can ask questions. They probably have some concerns or reservations about joining your company—perhaps even some reservations about working with you—and those issues need to be addressed before anything goes any further. Finally, once someone is hired, their start date must be pretty close to the future. You want them to feel secure and comfortable enough with their decision that they don’t leave for another position before their first day at work; this would lead directly to lousy employee retention rates later down the line!

Tell them about the benefits package.
Benefits are a big part of the job. Make sure you have a good benefits package and your employees know about it. That way, they’ll feel valued by the company and be more likely to stay with you for extended periods.
What kind of benefits do you offer? Do you offer a 401K? Paid time off? Health insurance? These things all play into how willing someone will be to commit their life to your company—so make sure you’re offering them everything they need!

Ask if they have any questions for you.
If you haven’t already, ask your new employee if they have any questions.
Asking what’s on their mind will ensure you can address any concerns they may have about the position.
This is also an excellent time to make sure they are comfortable with the role and explain more about what it entails so that you can determine if this is a good fit for them.

Use these tips to conduct a more effective job interview that will help your company find and retain the best employees it can find When interviewing candidates, it’s important to be prepared with a plan. An effective interview will help your company find and retain its best employees. It’s also important to explain the company culture to candidates during this preparation process. You should also make sure they know their duties for an effective job interview that will help your company find and retain the best employees it can find.

Conclusion
This is a recap of the tips we’ve given above. If you need to decide which ones to use, mix and match them as needed.