FRANCHISING

HOW TO GROW YOUR BUSINESS

FAST?
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a better place.
WHAT IS FRANCHISING?
In simple terms, its an arrangement of where one party grants another party the rights to use
its trademarks/tradenames, as well as certain business systems and processes, to produce
and market certain goods/services in a designated territory according to certain terms and
conditions.

It involves:

Franchisor Franchisee Franchise

Here are 3 things that make your
business a Franchise

1. The Franchisee uses your name/brand identity

2. The Franchisee uses your systems of operations
3. The Franchisee pays you fees/royalties
Should you Franchise?
The Advantages and Disadvantages of Franchising…
Advantages
• Capital
• An alternative to typical choice of raising capital (debt/equity)

• Motivated Management
• Long-term commitment
• Better quality management
• Innovation

• Speed of Growth
• The franchisee preforms most of the tasks of opening and running the unit.

• Staffing Leverage and Ease of Supervision

Advantages
• Increased Profitability
• Can run lean and have multiple revenue streams

• Improved Valuation
• Faster growth + Increased profitability + Increased organizational leverage = Increased Value
• Average P/E ratio when compared with other businesses is almost double.

• Reduced Risk
• The risk is distributed.

• Penetration to Secondary and Tertiary Markets

Disadvantages
• Per Unit Contribution
• You get only a fraction of the total revenue generated in a unit.

• The Specter of Litigation

• Chances of complaints may be high if not legally prepared for it.

• Issue of Control Affecting Overall Quality

• If proper QC systems are not in place, it may affect the brand.

• Investments Required to Make it Franchiseable

But why a lot of capital to Make it
Franchiseable..??
• Create Strategies, Business Model, Franchise Model, Business Plans, etc.
• Develop legal structures, entities and documents.
• Design and develop operating systems, processes, supply chain designs, etc.
• Develop operating manuals, QC documents, and training materials.
• Strategically design and develop marketing plans, collaterals, and marketing materials.
• Build team.
• Marketing for the sale of franchise and brand building.
• Negotiating with third party vendors on behalf of franchisees.
• Technologies like ERP, POS, Mobile Apps, etc.
Never go into franchising
undercapitalized…

The amount of capital required will be directly related to your business goals and
desired rate of growth.

What does all these mean…???

Franchising is not for EVERYONE…
It embodies a basic philosophy that you are worth more for what you carry in
your head than what you can carry on your back.
It is about leveraging your intellectual property - your accumulated
knowledge/skills, systems, etc, - in a way that allows you to get
compensated when other people become successful by capitalizing it.
Having said these…
Franchising is the most successful,
most dynamic growth vehicle ever
invented…
Is your business franchiseable..??

In theory, any established business that can be expanded can be franchised.

But that’s not enough..

What else is needed…??
• Must have at least one viable Prototype to show that the concept works.
• The magic number is One.

• Must be a Marketable business opportunity.

• Branding is important.
• The business must be appealing and credible to the potential buyer.
• Make it unique. Differentiate from major competitors (unique product/service, reduced investment cost, an
exclusive marketing strategy, a different target market, etc).

• Must provide adequate ROI

• Ideally at least 15-25% after royalties.
What else is needed…??
• Must be Colenable.
• Not every successful concept can be duplicated.
• The business must be readily teachable in relatively short period of time (ideally 3 months or less).
• The degree to which concept can be adapted from one market to next. You concept must be able to travel
places.
• The systems. Design and develop it right. Document it well. Keep it simple.

• The Franchisee must be Supported.

• Have team to support.
• Training support is important.
The goal is to make the franchisee
succeed.. Because…

The success of the franchisee

dictates your success…
Type of Franchising and its
Business Models
Different types of Franchising

Product Distribution Franchising

Identity Franchising
Manufacturing Franchising
Investment Franchising
Business Format Franchising
Different Types of Franchise Business
Models
FOCO – Franchisee Owned Company Operated

FOFO – Franchisee Owned Franchisee Operated

FICO – Franchisee Invested Company Operated

COCO – Company Owned Company Operated

COFO – Company Owned Franchisee Operated

Now that you know a lot about
franchising, are you ready to start
a franchise business?

Here’s how to start…

Step 1: Strategy and Business Model
• Have clearly defined corporate strategies.
• Purpose, Vision, Values, Objectives and Goals

• Design your business model

• Who are the customers?
• What are the products and what are the unique value propositions?
• What is the cost structure?
• Distribution channels
• Revenue streams and revenue models.
• Key resources, associates, etc.
Step 2: Protect yourself Legally
• Legal structure and entities.
• Which organization does what and owns what?

• Prepare well written legal documents

• Franchise agreements
• Scope of Franchisee and Franchisor
• Incentives and Penalties
• Curable violations and non-curable violations
• Rights and limits.
Step 3: Operations
• Very well designed strategies and systems
• Supply chain
• Technology

• SOPs and Manuals

• Develop all SOPs and Operating Manuals
• Develop training materials
• Hiring and firing criteria
• People management strategies and frameworks
Step 4: Marketing
• Marketing Strategies
• Branding strategies
• Customer Acquisition and Retention
• Launch campaigns
• Team

• Marketing Materials
• Website
• Social Media
• Flyers and Brochures
Step 5: Strategies to Make Franchisee
Successful
• Marketing Support

• Training Support

• Hiring Support

• Mentoring/Guidance
Are you ready to Franchise?

Give your business wings

to fly high by making it
Franchiseable
Q&A
A little bit about this community..
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Learn
Gain knowledge, skills, capacities, and abilities to empower yourself and those around you.

Who should become part of this community?

Those who want to help each other selflessly and unconditionally.
Those who want to become better humans.

Why should you be a part of this?

Because together we will be creating a world where people are kind to one
another.
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