By John Henning at OpenAFranchise.com
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What is a Franchise?
Franchising refers to the methods of practicing and using a specific business philosophy or system. The Franchisor, or Home Office, grants the franchise operator, the franchisee, the right to distribute its products, services, techniques, and trademarks for a percentage of sales, commonly called a royalty fee.
Various services are provided by the franchisor, such as: advertising, training, startup assistance and other ongoing support. A Franchise License is awarded by the franchisor to the franchisee. This written agreement forms the foundation for the relationship between the 2 parties and clearly outlines their responsibilities to each other. The Franchise License usually lasts between 5 & 25 years.
What is the best Franchise?
As a Franchise Consultant I get asked this question on a daily basis. I work with clients to help them find the right franchise and through those conversations they almost always as me: “What is the Best Franchise?”. There is no single answer for this question as the answer truly depends on the criteria you set as a perspective franchise owner. Meaning, maybe you want a retail location with 5 employees that makes $50k/yr, or maybe you want a home based business that has zero employees and makes $150k/yr. Either way, the word “best” becomes relative to what is important to you.
I realized quite some time ago that I could never “sell” a franchise to anyone. The only way someone will buy a franchise is if it makes sense for them & their family. Performing the proper due diligence is key to finding the best franchise for you.
How much does a Franchise Cost?
The total up front cost for a Franchise will vary between $30k & $100k. This is cash you must have prior to any financing options. You should also have a credit score of at least 700.
Most of the up front cost for a Franchise is the Franchise License Fee. This fee will vary between $20k & $50k. The Franchise License Fee covers your training, startup assistance and usually your protected territory.
The total cost of a Franchise will usually vary between $30k & $500k with the average total investment being around $250k. Financing is available for the balance of the Franchise cost depending on your credit score and the Franchise Company’s rate of success. A good rule of thumb is to have at least 30% of the total investment in cash.
For example, for a Franchise with a total investment of $250k, you would need approximately $60k in cash prior to any financing. This cash can come from savings, home equity, 401k, Retirement, Partners etc…
Some common factors that influence the startup costs are;
- Age of the franchise
- Number of franchises
- Responsibilities of each party
- Name brand recognition
- The service
- The product
- Length of term
- Finance Terms
- Real Estate Costs
- Many other factors
Why buy a Franchise?
Most people purchase a Franchise for one of two reasons.
#1. Reduce their risk. Quicker startup times, faster break even points & ongoing help after startup. All of these things help reduce the risk of starting a business.
#2. They don’t want to create a system, they want to use someone else’s program, not reinvent the wheel. The Franchise’s System is the main component of what you are buying when you buy a Franchise.
How much can I make with a Franchise?
Another one of the many questions I get asked on a regular basis is: “How Much Can I Make?”. This is an important question regardless of the type of Franchise you are exploring. The simple answer is: I can’t tell you.
Franchising is regulated by the FTC. The FTC does not allow a Franchise Company or Franchise Consultant to make an earnings claim unless those earnings are published in their Franchise Disclosure Documents or FDD. Most companies don’t post those numbers for legal liability reasons.
However, this is still a very important question that you need to know the answer to prior to buying a Franchise. The real answer is: No one can tell you how much YOU are going to make, because the biggest determining factor in that equation is YOU. However, you are able to get a feel for what the potential of a particular franchise might be by talking to existing franchise owners that already own that same franchise in another area. This is part of the due diligence process that we help our clients through.
What should I look for in a Franchise?
When researching any Franchise, you should look for some key factors. This list is by no means an exhaustive list. There are many more things you could look for too, depending on what is important to you.
- How long have they been in business?
- How many franchises do they have?
- What are my responsibilities as a franchise owner?
- What are the franchisor’s responsibilities?
- Where is the industry now? Where was it 5 yrs ago? Where will it be in 5 yrs?
- How many franchises have failed? And why?
- Do they make an earnings claim in their FDD?
- How many home office employees are there?
- Is the franchise organization expanding, stagnant or shrinking?
- Do I get a protected territory or name brand to use?
- How often do you hold training & where is it held?
- What are the average gross revenues per unit nationwide?
- Did they start as a Franchise or as a business and expand through franchising?
These are just a few of the questions to talk about when researching a Franchise. There is a free eBook on franchising that is published by the FTC: A Consumer Guide to Buying A Franchise, you can download it for free here: EbookOnFranchising.com
Summary/Closing
As you start your entrepreneurial search for a franchise, make sure to perform the proper due diligence, talk to existing franchise owners, visit the home office, talk to a lawyer, and work with an experienced franchise consultant. A good franchise consultant can help you find the right franchise by making sure you get the information you need on each franchise.
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John Henning is a Franchise Consultant based in Pottstown, Pa. John’s company: OpenAFranchise.com helps people find the right franchise by helping them through the discovery & research process. With over 5000 Franchises & business opportunities out there, John & his team help guide clients to the right information on each company.
Thursday, December 10, 2009
Announcing the launch of the Rohan franchise opportunity
Specialist outdoor clothing manufacturer and retailer Rohan has announced the launch of a franchise expansion programme. The company, which is established in over 40 locations nationwide and has piloted its franchise in selected stores, is preparing to roll out its franchise store concept with a franchise owner recruitment campaign starting in the January 2010 edition of The Franchise Magazine.
Rohan has designed and manufactured its own range of outdoor clothing since its foundation in 1972 and from a mail order background it expanded into retailing in the early 1980s. The company has identified up to 30 priority target areas in which it is seeking to establish franchise locations over the next three years and is seeking enthusiastic franchise owner candidates nationwide.
"Our move into franchising signals a new focus at Rohan on developing and improving our retail operations," said Retail Director Ian Palmer. "We have developed an extensive merchandising operation which restocks sold items in every shop within 48 hours and will provide the franchise owner with a retail opportunity in which there is no capital tied up in stock.
"We have engaged professional consultancy from Franchise Development Services to assist us in creating a superbly supported franchise package, which includes a bespoke IT system that minimises admin and staff related costs. We're looking for franchise owner candidates with enthusiasm and passion for the Rohan brand and its associated products, high standards of professionalism and a commitment to building good customer relationships through excellent service standards. In return we will provide comprehensive training in running our retail operation and ongoing support from a long-established, well-known and much-loved high street retail brand." FDS Southern Consultants Gordon Patterson and Gary Rigby, who are assisting Rohan in its franchise development programme, added: "The Rohan brand has developed an outstanding reputation for the design and quality of outdoor clothing. Its management is now committed to significantly supplementing its existing 40 outlets with franchised shops. Great care has been taken to structure a franchise package that is attractive and provides the franchise owner with all the ingredients necessary to build a successful business. The Rohan retail clothing franchise offering is highly distinctive and backed by very impressive franchisor ongoing support services."
source: http://www.thefranchisemagazine.net/franchise/rohan/announcing-launch-of-rohan-franchise-opportuni/5542
Rohan has designed and manufactured its own range of outdoor clothing since its foundation in 1972 and from a mail order background it expanded into retailing in the early 1980s. The company has identified up to 30 priority target areas in which it is seeking to establish franchise locations over the next three years and is seeking enthusiastic franchise owner candidates nationwide.
"Our move into franchising signals a new focus at Rohan on developing and improving our retail operations," said Retail Director Ian Palmer. "We have developed an extensive merchandising operation which restocks sold items in every shop within 48 hours and will provide the franchise owner with a retail opportunity in which there is no capital tied up in stock.
"We have engaged professional consultancy from Franchise Development Services to assist us in creating a superbly supported franchise package, which includes a bespoke IT system that minimises admin and staff related costs. We're looking for franchise owner candidates with enthusiasm and passion for the Rohan brand and its associated products, high standards of professionalism and a commitment to building good customer relationships through excellent service standards. In return we will provide comprehensive training in running our retail operation and ongoing support from a long-established, well-known and much-loved high street retail brand." FDS Southern Consultants Gordon Patterson and Gary Rigby, who are assisting Rohan in its franchise development programme, added: "The Rohan brand has developed an outstanding reputation for the design and quality of outdoor clothing. Its management is now committed to significantly supplementing its existing 40 outlets with franchised shops. Great care has been taken to structure a franchise package that is attractive and provides the franchise owner with all the ingredients necessary to build a successful business. The Rohan retail clothing franchise offering is highly distinctive and backed by very impressive franchisor ongoing support services."
source: http://www.thefranchisemagazine.net/franchise/rohan/announcing-launch-of-rohan-franchise-opportuni/5542
Indian retail sector to be $410-bn by fiscal-end: Assocham
NEW DELHI: The Indian retail market is expected to reach $410 billion by the end of the current fiscal, according to the Associated Chambers of Commerce and Industry of India (Assocham).
Another report on India’s retail market released here late last month had made similar projections, saying the sector was expected to reach $535 billion by 2013.
“With anticipated $30 billion fresh investment over the next five years, modern retail will show impressive compound annual growth rate of 40 percent,” said the Fashion and Lifestyle Franchise Report 2009-10.
“With this growth rate, the market is expected to reach $535 billion by 2013,” added the report compiled by Franchise India Holding Ltd, a franchise solutions provider.
As per the Assocham study released on Monday, the retail sector is estimated to grow 5.5 per cent to become $410 billion market by April 2010, registering growths of more than 22 per cent and 30 per cent in the third and fourth quarters this fiscal.
The study noted that the share of retail trade in the country’s gross domestic product (GDP) was between 8-10 per cent in 2007.
With strides of development in the organized retail segment, its share has now risen to 12 per cent, Assocham said.
Also, organised retail, which currently accounts for nearly five per cent of the retail market, is pegged at around $9.23 billion and was expected to grow at 2.3 per cent to touch $13 billion by the end of this financial year.
“Retail sector is witnessing exponential growth with development taking place not only in major cities and metros but even in tier-II and tier-III cities in India,” said Assocham president Swati Piramal in a statement.
Source: http://retail-guru.com/indian-retail-sector-to-be-410-bn-by-fiscal-end-assocham/
Another report on India’s retail market released here late last month had made similar projections, saying the sector was expected to reach $535 billion by 2013.
“With anticipated $30 billion fresh investment over the next five years, modern retail will show impressive compound annual growth rate of 40 percent,” said the Fashion and Lifestyle Franchise Report 2009-10.
“With this growth rate, the market is expected to reach $535 billion by 2013,” added the report compiled by Franchise India Holding Ltd, a franchise solutions provider.
As per the Assocham study released on Monday, the retail sector is estimated to grow 5.5 per cent to become $410 billion market by April 2010, registering growths of more than 22 per cent and 30 per cent in the third and fourth quarters this fiscal.
The study noted that the share of retail trade in the country’s gross domestic product (GDP) was between 8-10 per cent in 2007.
With strides of development in the organized retail segment, its share has now risen to 12 per cent, Assocham said.
Also, organised retail, which currently accounts for nearly five per cent of the retail market, is pegged at around $9.23 billion and was expected to grow at 2.3 per cent to touch $13 billion by the end of this financial year.
“Retail sector is witnessing exponential growth with development taking place not only in major cities and metros but even in tier-II and tier-III cities in India,” said Assocham president Swati Piramal in a statement.
Source: http://retail-guru.com/indian-retail-sector-to-be-410-bn-by-fiscal-end-assocham/
Tuesday, December 8, 2009
Kit Kat biscuits to go Fairtrade in the new year
Source: BBC News
Kit Kat, Britain's biggest-selling chocolate biscuit, will bear the Fairtrade logo from mid-January.
The biscuits, made by Nestle in York, have been Fairtrade certified, with more than 6,000 farmers in west Africa, set to get a better price for cocoa.
About one billion Kits Kats are sold in the UK every year and Nestle said it was committed to helping cocoa farmers.
The Fairtrade mark already appears on more than 4,500 products in the UK but campaigners hope more will follow.
'Tip the balance'
Harriet Lamb, of the Fairtrade Foundation, estimated the Ivory Coast farmers would receive hundreds of thousands of pounds more next year.
“ UK consumers are increasingly interested in how we source and manufacture their favourite products ”
David Rennie Nestle
"The significant volumes of cocoa that go into making Kit Kat will open whole new possibilities for these farmers, giving them a more sustainable livelihood and the chance to plan for a better future," she said.
Cadbury's Dairy Milk, the UK's best-selling chocolate bar, was Fairtrade certified in March this year, and Ms Lamb hopes the move by Nestle will start to "tip the balance" in cocoa trade.
Eileen Maybin, also of the Fairtrade Foundation, said it hoped other companies would follow the example of both Cadbury's and Nestle.
She said: "This will challenge other companies to follow suit.
"Nestle are one of the biggest food and drink companies in the world. Companies watch what each other is doing and we would expect other companies to be monitoring what a company like Nestle does.
"If Nestle thinks Fairtrade is a viable option then hopefully other companies will see it as something they should be getting involved with themselves."
'Better opportunities'
David Rennie, managing director of Nestle Confectionery, said the company sold more Kit Kats in the UK than anywhere else.
"UK consumers are increasingly interested in how we source and manufacture their favourite products and certifying our largest and most iconic brand is one of the ways in which we are committing to improving the lives of as many cocoa farming families as possible," he said.
Trade and Development Minister Gareth Thomas said: "This will give thousands of Ivorian cocoa farmers better opportunities to trade their way out of poverty."
Launched in the UK 15 years ago, the Fairtrade campaign offers farmers in developing countries a better price for their produce.
Under the terms, farmers receive a guaranteed minimum price plus a premium of more than £100 a tonne, which is used for business or social development products.
Last year more than £700m was spent on Fairtrade goods in the UK, an increase of more than £200m on 2007.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/uk_news/8397870.stm
Published: 2009/12/07 15:09:13 GMT
Kit Kat, Britain's biggest-selling chocolate biscuit, will bear the Fairtrade logo from mid-January.
The biscuits, made by Nestle in York, have been Fairtrade certified, with more than 6,000 farmers in west Africa, set to get a better price for cocoa.
About one billion Kits Kats are sold in the UK every year and Nestle said it was committed to helping cocoa farmers.
The Fairtrade mark already appears on more than 4,500 products in the UK but campaigners hope more will follow.
'Tip the balance'
Harriet Lamb, of the Fairtrade Foundation, estimated the Ivory Coast farmers would receive hundreds of thousands of pounds more next year.
“ UK consumers are increasingly interested in how we source and manufacture their favourite products ”
David Rennie Nestle
"The significant volumes of cocoa that go into making Kit Kat will open whole new possibilities for these farmers, giving them a more sustainable livelihood and the chance to plan for a better future," she said.
Cadbury's Dairy Milk, the UK's best-selling chocolate bar, was Fairtrade certified in March this year, and Ms Lamb hopes the move by Nestle will start to "tip the balance" in cocoa trade.
Eileen Maybin, also of the Fairtrade Foundation, said it hoped other companies would follow the example of both Cadbury's and Nestle.
She said: "This will challenge other companies to follow suit.
"Nestle are one of the biggest food and drink companies in the world. Companies watch what each other is doing and we would expect other companies to be monitoring what a company like Nestle does.
"If Nestle thinks Fairtrade is a viable option then hopefully other companies will see it as something they should be getting involved with themselves."
'Better opportunities'
David Rennie, managing director of Nestle Confectionery, said the company sold more Kit Kats in the UK than anywhere else.
"UK consumers are increasingly interested in how we source and manufacture their favourite products and certifying our largest and most iconic brand is one of the ways in which we are committing to improving the lives of as many cocoa farming families as possible," he said.
Trade and Development Minister Gareth Thomas said: "This will give thousands of Ivorian cocoa farmers better opportunities to trade their way out of poverty."
Launched in the UK 15 years ago, the Fairtrade campaign offers farmers in developing countries a better price for their produce.
Under the terms, farmers receive a guaranteed minimum price plus a premium of more than £100 a tonne, which is used for business or social development products.
Last year more than £700m was spent on Fairtrade goods in the UK, an increase of more than £200m on 2007.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/uk_news/8397870.stm
Published: 2009/12/07 15:09:13 GMT
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