Buying a Franchise – Knowing What You Are Buying

Christopher Conner Buying a FranchiseMy consulting firm, Franchise Marketing Systems helps businesses become franchise models. Over the past several years, I have purchased franchises as part of my work in the industry. It has been interesting to say the least to see the other side of the relationship as a franchisee. Buying a franchise can be a confusing, scary and enormously time consuming process. All of this many times leads to bad decision making as people skip steps and tend to jump into something that maybe wasn’t the best business decision to begin with. The irony of it all is that franchising is by nature a business model that helps entrepreneurs and investors avoid unnecessary risk and skip the learning curve through a proven and validated business model. The buying process provides many of the same benefits just by the simple fact that the franchise legal process requires certain disclosures and information to be presented to a franchisee prior to their making a buying decision. So what can you do in researching your franchise investment to help avoid the pitfalls of a bad investment and find the shining star of an investment you’ve been looking for?

First, do your research. Good business people take their time. Haven’t you heard the saying that Warren Buffett had about his investing strategies, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” It’s always nice to read things that rich people have said and sound so obvious when you hear them, but the idea here is to look at your franchise investment process as a long term decision. This needs to be planned out, thought through and really understood before you should take action. Do market research, search the industry detail and information to know who is out there and what the consumer market looks like for your potential product or service. If you are going into Tax Preparation as a potential franchise, understand the major players and who is good at what so you know where your brand will fit and what your value proposition would be to the market.

Second, know your rights as a franchisee. The beauty of the franchise investment is that the information is all there for you. Franchise investment law is overseen by the Federal Trade Commission and other state governing bodies, California is the Department of Business Oversight, New York is the New York Department of Law and etc. These governing bodies require that certain information is available to you as a buyer through a Franchise Disclosure Document and that the FDD is reviewed by that particular state’s administrators before the franchise may be offered to people in that market. This means in some cases that the franchise documentation is available through several of the state regulator’s websites and also that the FDD should have been reviewed by the state agency where the franchise is being considered for purchase.

Third, take the FDD to a qualified franchise consultant or franchise attorney to review the document with you and actually provide feedback as to what the franchise offering means to you. Knowing the business and how to read the franchise literature will help you do your analysis. The FDD contains information that relates to other franchisees who are both in the system and who have failed as franchisees. It also will contain information related to the fee structure, initial investment and background on the organizations behind the franchise model.

Fourth, make calls to people who are both in the franchise system and who have failed in the franchise system. There is no excuse! Having conversations….or even meetings with people who have already walked in your footsteps will provide you with the most accurate picture of this franchise investment possible. With the information you have now, you should be able to map out a business model and create a picture of what this franchise is capable of.

For more information on how to buy a franchise, contact Christopher Conner with Franchise Marketing Systems
Chris.Conner@FMSFranchise.com

Atlanta Franchise Tradeshow 2016

Franchise Marketing Systems, Atlanta Franchise Show, Christopher ConnerFranchise Marketing Systems will be sponsoring the September 2016 Franchise Expo held in Atlanta on 9/24 and 9/25.  The Atlanta franchise show is one of the countries strongest small market shows and will be this fall’s largest franchise marketing event.  The Atlanta franchise show consistently draws a large volume of franchise buyers to the event primarily from the Southeastern United States.  In developing effective franchise marketing campaigns, Tradeshows have always been a key aspect to any franchise development model and in today’s technology driven marketplace maybe even more so than ever before.

Tradeshows are the epitome of a solid marketing opportunity from the standpoint that most of the franchise lead generation options and used are web-based, electronic and not conducive to strong relationship building.  The franchise Trade show can be a powerful marketing tool where the franchisor is able to meet the franchise buyer face to face, shake hands, discuss the business and make a complete presentation of the franchise’s value proposition.  Tradeshows create energy and offer excitement to both the franchise buyer and the franchisor exhibiting at the event.  This energy can be leveraged to drive a meeting to a next serious discussion with a higher percentage of the franchise leads and ultimately a higher percentage of closed franchise sales.

The Atlanta franchise show creates a unique opportunity in that the Atlanta market has been a lynchpin in the Southeastern Franchise Market and drives much of the industry trends and growth patterns throughout the region.  Despite this being a significant marketing event, the Franchise Marketing Systems pavilion allows franchisors to exhibit at the show for the low investment of $1,700 for a (1/2) booth combined with additional benefits associated with the pavilion arrangement.  Franchisors marketing at the show will generally leave the show with 100-150 leads per booth exhibitor providing for a average cost per lead of under $15 making this one of the most economical and impactful franchise marketing events possible.

For more information on the Atlanta Franchise Show or how to take part in the Franchise Marketing Systems Pavilion, contact us.   info@FranchiseMarketingSystems.com

Christopher Conner will be presenting at the show on how to make the transition from employee to franchisee in addition to conducting a workshop on how to franchise your business.

Show Details:

Atlanta, GA

Cobb Galleria

September 24th and 25th, 2016

 

 

How to Grow Your Small Business

Hiring-for-Small-BusinessI am a small business owner, Conner and Associates, LLC, DBA Franchise Marketing Systems, based in Atlanta, GA.   I fight the same fight you do every day of every week of every month.  Sometimes it seems like all odds are against you being successful and you just can’t do anything right.  Government regulations don’t seem to help the small business owner much, more so they favor the big corporations with money for lobbyists.  Money is tough to come by as lenders look at small businesses as being higher risk in most cases.  All that being said, I wouldn’t change a thing and love every minute of being a small business owner.  My business, Franchise Marketing Systems has been fortunate to experience growth every year we’ve been in business.  We have definitely had our set backs and trip ups along the way, but in the end, it has been exciting and is exciting to see your hard work come to fruition.

So how do you grow your small business and what can you do to experience the thrill of building something for yourself?  First, you need to have a marketing plan.  In most businesses it’s pretty simple math to start the process, figure out how much money it costs you to generate new business, what increases in customers do you see when you spend more money on marketing?  If you are a service business you can probably come up with a number using math such as, “last year I spent $10,000 on marketing and obtained 10 new clients.  Therefore, my cost of new client acquisition is $1000.”  Once you’ve determined this number you can come up with a budget depending on how much you would like to grow your business revenues by.  As might seem obvious, this is a critical peice of your small business growth strategy.

Now that you have a budget, you need to determine where you are getting your return.  Say you spent $10,000, $5,000 on Internet, $3,000 on tradeshows and $2,000 on direct mail, and your clients all came through Internet marketing, your growth strategy should probably focus on web marketing moving forward. By defining your marketing mix, you should be able to generate more business per dollar spent on marketing and see an increase in overall marketing spend efficiency. The marketing mix should always be reviewed on a regular basis to continually analyze where the dollars should be spent and how best to drive customer traffic into your business. If you are wondering, yes, this might require a new job position for someone who could manage the marketing spend and oversee this constantly evolving advertising strategy. One way you can continually track results on this is to assign unique numbers and emails to each campaign in order to find out where the calls/leads are coming from in any given marketing campaign.

When you have the marketing mix somewhat defined, then it’s time to understand how well you are converting these leads and whether your sales people, sales process and overall value proposition are doing the trick. Sales closing rates can vary greatly depending on the industry segment, the price point you sell at and other variables, but you should be able to define what these numbers should look like with a small amount of research. The person who answers the phone, the greeter who meets new customers at the door, the opening introduction given to each customer all will have an impact on how successful the rate of conversion from lead to customer might be. At my company, Franchise Marketing Systems, we have several people who answer the phones, a franchise specialist, a franchise associate, The closer you review these processes and analyze how these portions of your sales process are working, the better you will understand how to effectively grow your small business.

When it “clicks”, you will realize that the ability to grow your business in most cases is directly in your hands and in your control. Only you as the business owner have the ability to make these decisions as to what your budget should be and where you want to allocate your marketing dollars. When you are able to grasp how much in control of this aspect of your business you really are, the opportunities for upward expansion will seem endless and business ownership can be fun again!

Christopher Conner

Franchise Marketing Systems

www.FranchiseMarketingSystems.com

Are you Ready to Franchise Your Business?

Chris Conner Franchise Marketing Systems, LawsuitI have spent the past 15 years working with brands who want to franchise their business and grow a brand through the franchise expansion model.  Our firm, Franchise Marketing Systems works primarily with start up franchisors and brands who have not offered or sold a franchise in the past, sometimes with mid-sized or mature brands who are in need of additional support for growth.  In the several hundred times that I have supported a company going through this process, there are some similar traits to the businesses that really make it in the franchise model and those that don’t.

In a franchise consultation, the first questions that I will ask start with financial viability of a model.  How ready are you to present your business as a potential investment opportunity to a buyer?  Will someone be impressed with the numbers and the concept and the opportunity for themselves to see a strong ROI on their investment?  Obviously, the good models can show a stronger financial record than the weak franchise concepts.

Questions come up such as, “Mr. Conner, I haven’t generated any revenue yet, but look at this market and how much it is growing, is my business ready for franchising?” The answer is probably not, a franchisee needs to see that their is an opportunity for them realize a return and believe that you as a franchisor have the tools and experience to get them there.

The Franchise Marketing Systems consultation then goes into detail surrounding the business model, operating platform and technology that is infused into the business.  The tighter the operating model, procedures and structure of the business, the easier it is to replicate.

Again, Questions like, “Chris, what is a CRM and why do I need any technology, I just write it down, won’t the that work?”  And again, well, probably not.  If you are doing everything on your own as a one man show, this works, but when you start to scale the business through franchising it generally doesn’t work.  How can you support someone hundreds of miles away if you don’t have technology which provides information needed to tell you how that franchisee is performing?

The franchise interview then focuses on competition, market opportunity and what the consumer market looks like.  Obviously, the better mousetrap you have the stronger the franchise opportunity.  The market for consumer demand needs to be expanding as well in order to validate a franchisee investing in the business.  The increasing demand and market potential for your product or service should be at the root of why you are franchising your business.  If statements are made during the consultation such as, “Mr. Conner, the market has shrunk a lot since people started going to Amazon to buy my products, it’s getting harder to compete when there’s less pie to go around,” it’s obviously going to make for a less compelling franchise offering.

Franchising isn’t for every business, it requires a carefully planned strategy, marketing approach and business model to be successful.  Take the time to review the model, market and franchise industry before you step into the market.  There are many free consultations available with companies such as mine, Franchise Marketing Systems, do interviews, talk with other franchisors and get a clear understanding as to whether your business is ready to be franchised.

For more information, email me!

Chris.Conner@FMSFranchise.com 

Leveraging Technology to Franchise Your Business

banner-technologyBusinesses that turn to franchising as a way to expand their brand into new markets generally have a significant learning curve they must overcome as they learn how to manage the responsibilities of franchising and franchise expansion.  A new franchisor is like a new business owner who is learning the ways, processes and steps they must take to deal with customers, overcome obstacles and effectively grow the business.  What’s new about franchising to most business owners is the responsibility that comes with scaled growth and opening new locations in new markets with the addition of Franchisees in the fold.  With the never-ending expansion of technology in all aspects of business and life, franchising certainly has seen it’s reliance on technology and systems increase exponentially as well.  Perhaps in franchising more than most businesses, technology has taken on a new meaning as to how critical good tech is to the successful growth of a franchise.

Technology is a broad term, it could mean mobile technology, web marketing, operating systems, sales management systems or financial management systems, so where does it fit into franchising?  The truth is everywhere, but there are some key categories that every franchise system should be acutely aware of in order to best take advantage and scale more efficiently.

  1. Sales and marketing technology – every good franchise system needs to have a solid franchise sales CRM in order to manage the large influx of leads and effectively oversee the development of these leads into franchise sales. Typical franchise sales take in excess of 150 leads to convert, a good technology platform is critical to the success of this model. We like Leadmaster, which Franchise Marketing Systems worked together to create a franchise specific CRM (http://www.franchisemarketingsystems.com/services/franchise-crm/).
  2. Loyalty marketing and franchisee lead management systems – every good franchisor has a lead development and loyalty marketing platform that is inherent to the franchise brand. This should be leveraged and provided to franchisees in order to help them grow and develop their customer base. We like Scorpion’s franchise platform (https://www.scorpion.co/franchise-marketing/)
  3. Operations and logistics management software – a good system needs a management tool to operate the day to day business efficiently.   A technology platform that allows franchisees to manage the day to day schedule, oversee territory management and facilitate the logistics of inventory and supply management. Different systems work for different industry segments, but Franchise Marketing Systems likes ServiceCEO for service platforms (www.ServiceCEO.com) and for retail operations, Revel (www.RevelSystems.com)

For more information on how to incorporate technology into your franchise model and more effectively franchise your business, contact us:

Christopher Conner

Chris.Conner@FMSFranchise.com

Franchise Marketing Systems – Dallas Franchise Show

Dallas Franchise Show Franchise Marketing Systems Chris ConnerFranchise Marketing Systems will be exhibiting at the Dallas, TX franchise exposition on 5/14 and 5/15/2016.  The Dallas franchise show is expected to be a strong showing as the Dallas market is considered to be one of the strongest in the U.S. for franchise industry growth and expansion across a variety of franchise fields.  The show is put on by the National Franchise and Business Opportunities Show group who conducts 15-20 shows per year throughout the U.S. and Canada.

Franchise Marketing Systems exhibits at 32 shows per year in most major markets (http://www.franchisemarketingsystems.com/contact/franchise-events/)

The Dallas show will be held at the following venue:

Dallas Market Hall

North Hall

2200 Stemmons Freeway

Dallas, Texas, 75207

For free tickets to the event, email us:  info@franchisemarketingsystems.com

Christopher Conner with Franchise Marketing Systems will be presenting at the show on how to make the transition from employee to business owner:

http://www.franchiseshowinfo.com/dallas/visitor/show-features/seminar-schedule/

 

Chris Conner-Presenting the FDD

Chris Conner Franchise marketing SystemsThe Franchise Disclosure Document is a relatively complex document for most people.  Sometimes being in franchising for some period of time, it can be easy to overlook this and begin to forget that most buyers haven’t seen an FDD before and certainly the presentation of a 150 page franchise agreement isn’t helping your cause as part of presenting the value proposition to a potential franchise buyer.  In franchise sales, the FDD can either be a hindrance to the recruitment process or you can choose to use the FDD as part of your value proposition and know how to effectively present the content.

First, the Franchise Disclosure Document should be drafted according to NASAA Guidelines (http://www.nasaa.org/industry-resources/investment-advisers/franchise-registration-and-disclosure-guidelines/) and should be put together by a franchise attorney in order to present the FDD.  Once you present an FDD to a candidate, this constitutes an offer of the franchise, so it is important to make sure that you have registered in the necessary registration states prior to any presentation to a potential franchisee.  (http://www.franchiseexpo.com/resources/franchise-articles/feb-2016/franchise-sales-while-managing-the-franchise-state-requirements)

Second, get to know your FDD, the disclosure document and the details included therein.  The document offers a great deal of pertinent value to the franchise opportunity.  In particular, get to know your Item 6, Item 7 and Item 19 thoroughly in order to be able to present these items in detail.  One of the worst mistakes a franchise sales person can make during the franchise presentation is to not know the details and misquote specifics of the franchise offering or have the buyers attorney tell you what is in YOUR franchise offering.  Be fluid and detailed when presenting the FDD and able to explain each of the fees, structure and particulars included in the franchise offering.

Third, the Franchise Disclosure Document can be scary to most franchise buyers, make sure that you present this carefully before sending the agreement, otherwise you run the risk of getting a buyer who never picks up the phone again or just decides that you aren’t the right fit for them and says no to the offer entirely.  Franchise Marketing Systems has had success presenting a FDD Info Sheet along with the FDD when a client sends the document to a prospective buyer and before the FDD is sent, have a call with the candidate and explain what is being presented and how the document is laid out, make sure that they understand that the document is structured according to FTC guidelines and that there are a wide variety of required disclosures, that although important, are not necessarily specific to your franchise.  Walk the franchise candidate through the document and explain each Item enclosed in the agreement so they understand which items to focus on and how to understand what is pertinent to the agreement.  Schedule a follow-up call to review the agreement in detail and address all questions they might have.  Don’t skim through details, make sure to spend the necessary time on the agreement and make sure that you collect your receipt page from every buyer who is presented the FDD.

Finally, walk the franchise buyer through the close and help them understand how to actually execute the agreement.  With Franchise Marketing Systems, we see a significant amount of young franchisors who expect a new franchise buyer to understand what pages to sign and how to execute the agreement without any guidance.  Either load your FDD into DocuSign or another electronic signature module, or make notations on the pages that need to be executed.  Whatever route you take, make sure to make the process as easy as possible!

Franchise your business.

Motivating Franchisees to Succeed without Driving them into Failure.

NervousIf you have started a business before that has failed, you certainly know what the feeling is like. Your rent payment seems like it comes every week and your customer’s payments get smaller in amounts and longer to collect every month. When a business is at that teetering point and will either fall into oblivion or rise through it to success, it’s easy to lose your nerve as a business owner and maybe throw in the towel on your business venture entirely. Franchisees go through this learning curve when they are working in their franchise business during the first several months of operation. Many franchisees purchased a franchise due to the fact they had never operated a business before and they wanted coaching, support and guidance that can come through a franchise model, so this sense of anxiety may be at all time highs for many new franchisees during these initial months of business.

As a franchisor, sometimes this is easy to forget and hard to relate to when coaching and mentoring new franchises to success. In fact, many franchisors make very poor coaches simply for the fact that they are wired differently than a franchisee and don’t understand the idea of being unnerved by risk. Herein lies one of the most significant issues related to new franchise growth is the franchisor’s ability to coach new franchisees through this initial ramp up phase and get them to maturity. So as a new franchisor, where the initial franchises are critical to the long term success of the franchise system, what can you do to support franchisees being more successful while maintaining that relationship?

  1. Put yourself in their shoes. They have probably not started a business before and this early venture for them can become overwhelming quickly. If you were a new entrepreneur, you’d want someone to work with you, respect your position and speak with you out of respect and concern for your success. I have found that good franchisors look to their franchisees as they would customers and they make sure they are happy and have a good experience in as many ways as possible within the franchise network.
  2. Focus on what is important to the Franchisee. Don’t spend time talking through operational, strategic or high level topics with an early franchisee who is consumed with generating revenue to cover their expenses and survive in their new business. It would be like speaking with a drowning person and explaining to them that after several years of swimming lessons, they will be able to deal with this scenario without any difficulty. The swimmer doesn’t care, they feel like they need to be saved from going under. Work with early stage franchisees with a keen eye for prioritizing elements of your discussion to focus on their concerns first. If a franchisee is having trouble generating leads, focus your support on lead generation, ask whether your recommendations worked, assess and continue.
  3. Relationships matter. So much of the early stage franchisee’s reason for investing in your franchise model was because they believed in YOU as the founder or leader of the company. If it weren’t for you, they most likely would have invested in a larger brand. They saw qualities in you that they were attracted to and pushed them to invest in your franchise. I have seen times where a franchisor who is great in pursuing the franchisee and then not so great at maintaining the relationship after the sale which really puts off the franchisee with a sense of “now you don’t care about me?” Take the extra step, put in the extra effort and spend the time on the phone, in dinners, getting to know people’s families and lives so that you can show franchisees that you care about them and their success.
  4. Know the numbers. Understand when the business should begin to cash flow and how to reference your corporate numbers and experience. Know what the benchmarks should be for ROI for the business and be able to reference your experience accurately and with specifics. A Franchisee wants facts, details and analysis of where they are as a business and what can be done to help move the business forward. Using generalities or statements like, “You need to spend about a thousand dollars a month on marketing, that should be good for your market” doesn’t help the franchisee’s confidence in themselves or the system. Come to franchisees with a detailed plan that is validated based on your experience. A good way to instill confidence in your franchisees is to use accurate numbers and detailed recommendations.

For more information on how to franchise your business, contact Franchise Marketing Systems:

info@FranchiseMarketingSystems.com

Senior Care Franchise Market Segment

seniors-playing-cards-purchasedWe’ve all heard the continued praise for senior care and the market segment that seems to grow with no limit to it’s potential.  It makes sense after all with the explosive baby boomer population entering their late 60’s and 70’s who will all be needing some form of care in the next 10 years.  With longer lifespans, that means a customer for 10,20 or 30 years and an infrastructure that is racing to keep up with the coming demand.

What does the market look like today?

To put simply, the market is big and getting bigger.  Over $13 billion in annual revenues to be exact with a significant growth percentage in excess of 6% per year.  (http://www.ibisworld.com/industry/in-home-senior-care-franchises.html)  The Franchise industry, as it typically does, is a great litmus test for where an industry segment is headed and what is happening in that particular market category.  One not need look any further than the in-home senior care market segment to realize that there are a large number of businesses that have spawned out of this growing market segment:

http://www.entrepreneur.com/franchises/category/perssenior

The market shifted in the last ten years to a significant focus on in-home care versus care provided in a licensed facility.  This shift was caused by several factors, one that the typical customer who could still be at home, typically was choosing to stay at home and receive care that came to their house as opposed to going to a facility.  Another factor driving this transition was the low capital barrier required to open an in-home senior care business as opposed to a fully licensed senior care facility operated from a fixed location.  This lower cost of entry gave rise to hundreds and thousands of “mom and pop” in home senior care service providers across the country in addition to successful franchise networks.

Some favorites in the space:

www.CaringMattersHomeCare.com

www.VisitingAngels.com

In the past several years there has been a renewed growth in the market to fixed location care facilities which has been driven by several factors.  First, the labor market is tight, it is difficult to find good caregivers and fixed location facilities can typically get more from their staff than an in-home care business model.  Second, the senior home concept has changed drastically.  Large fixed location facilities now have lavish, high-end décor and amenities that would make the Ritz Carlton proud.  There also is a segment in senior care franchising that has come to rise with this return to fixed location facilities, a smaller, more cozy senior facility.  The Haven Franchise is a good example of this:

http://thehavenfchs.com/

Regardless of your choice, the senior market continues to be filled with opportunity and seems to be full of growth opportunities for the coming years.  Choose the model that makes the most sense for you and your financial scenario and make sure you are comfortable and driven to take care of people.

For more information on Senior Care Franchises, Contact Us:

www.FranchiseMarketingSystems.com

IFA Conference 2016

The IFA Conference 2016 – San Antonio, TX

San Antonio IFA, Christopher Conner, Franchise Marketing Systems, Franchise Exposition

The conference yet again attracted large crowds of enthusiastic franchise professionals and industry experts from around the world.  The convention was held at the Henry B. Gonzalez Convention Center and attracted many of the world’s best in franchising.  Last year in Las Vegas, attendance numbered 3,880 and over 330 booths, this year in San Antonio was expected to be significantly larger.  Some of the shows premium sponsors included PepsiCo, Berlitz, Franconnect, Menchie’s, BDO and other industry advocates.

https://higherlogicdownload.s3.amazonaws.com/FRANCHISE/4ea56050-5ed6-4b77-8200-af13b46f4919/UploadedFiles/ConvFacts_2016.pdf

The conference kicked off with an amazing presentation by Stanley McChrystal, the Former U.S. General.  Stan McChrystal commenced the general session with a presentation focused on leadership, team development and our evolving business landscape.   Sheryl Connely with Ford Motor Company presented on business trends, the globalization of today’s business environment and overall consumer trends. 

Speakers: http://convention.franchise.org/scheduleprogram/keynotespeakers

The Conference offered a wide variety of mini-super sessions which were full of valuable content and great speakers.  One presenter which left a strong impression  was  Walter Bond who as a former NBA player, presented on Franchise Harmony:  Keys to Building A Strong System Positioned For Explosive Growth, his relating business and franchising to his sports career was entertaining and relevant.

FranPAC (Franchising’s Political Action Committee) was involved in the conference and their presence was felt throughout the meetings and convention hall.  All involved in the franchise industry are aware and interested in the ongoing joint employer negotiations taking place in Washington.  (http://www.franchise.org/franpac)

The franchise round tables were as always a hit and seem to provide some of the most immediate value for franchisors and franchise professionals in attendance.  Tables seat 10-12 people and are lead by panelists to keep the discussion open and productive.  Topics included sales, operations, strategy, training and other core elements of franchise management.  Franchise brands with hundreds of locations shared ideas from a mature brand’s perspective and newer franchisors discussed pertinent issues for start up brands.  All together, the feedback for roundtable sessions was again over the top.