How to Franchise Your Business [7 Steps]

00:48:35
https://www.youtube.com/watch?v=MaOR1nbcTW4

Ringkasan

TLDRCharles Internicola discusses franchising for successful business owners, covering the steps involved, including preparing the Franchise Disclosure Document (FDD), protecting trademarks, and establishing operations manuals. He explains franchising as a model that allows business expansion through franchisees who replicate the brand and business model. The video highlights both advantages and disadvantages of franchising compared to organic growth, emphasizing shared risks and substantial capital from franchisees. He advises on the importance of a strategic sales plan, ongoing support for franchisees, and setting realistic growth expectations over the first five years of franchising to ensure long-term success.

Takeaways

  • 📈 Franchising allows you to grow your business exponentially.
  • 📝 The FDD must be provided to prospective franchisees 14 days prior to agreement.
  • 🏛️ Legal and state regulations govern the franchising process.
  • 💰 Franchisees invest their capital, reducing your financial risk.
  • 💡 A well-prepared operations manual ensures franchisee success.
  • 🤝 Ongoing support is crucial for franchisee profitability.
  • 🚀 Strategic planning is necessary for long-term growth.
  • 🔐 Protect your brand through trademark registration.

Garis waktu

  • 00:00:00 - 00:05:00

    The video begins with Charles Internicola from the Internicola Law Firm discussing franchising as a method for successful business owners to expand their ventures. He outlines key steps involved in franchising a business, including preparing necessary documents, registering trademarks, and creating a sales strategy.

  • 00:05:00 - 00:10:00

    Charles explains the basics of franchising, defining it as a legal and business model where franchisors grant licenses to franchisees to operate under their brand and system. This relationship allows both parties to benefit economically through fees and shared success.

  • 00:10:00 - 00:15:00

    While discussing the advantages of franchising over organic growth, Charles highlights the potential for exponential growth, shared risk, and access to managerial skills from franchisees, contrasting it with the heavier investment and risk associated with organic expansion.

  • 00:15:00 - 00:20:00

    He warns of the disadvantages of franchising, including ongoing legal costs, the need for continuous franchisee support, and the challenge of developing franchise systems as the network expands, emphasizing that legal assistance is critical.

  • 00:20:00 - 00:25:00

    Charles outlines a timeline, suggesting that preparing for franchising should take about 90 to 120 days, during which strategic sessions are conducted to position the brand and develop required legal documents like the Franchise Disclosure Document (FDD).

  • 00:25:00 - 00:30:00

    Winning in franchising requires a long-term strategy, focusing on initial franchise system development and achieving profitability amongst early franchisees, which lays a foundation for future growth between the first five years of operation.

  • 00:30:00 - 00:35:00

    An emphasis is placed on understanding financial streams and how new franchisors may initially face losses, transitioning to profits as more franchise fees come in and royalty revenues increase over time as the number of franchisees grows.

  • 00:35:00 - 00:40:00

    Charles provides insight into the complexities of the FDD, detailing its legal obligations, annual updates, registration in certain states, and the requirement to provide it to prospective franchisees 14 days before any monetary exchanges.

  • 00:40:00 - 00:48:35

    He elaborates on the FDD's structure, breaking down key items it includes, such as initial and ongoing fees, investment estimates, territory rights, intellectual property protections, and legal restrictions that franchisees must adhere to in their operations.

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Peta Pikiran

Video Tanya Jawab

  • What is franchising?

    Franchising is a business model that allows a franchisor to grant licenses to franchisees to duplicate their business and operate under the franchisor's brand.

  • What is a Franchise Disclosure Document (FDD)?

    The FDD is a legal document that franchisors must provide to prospective franchisees detailing the franchise offering, legal obligations, and business relationships.

  • How long does it take to franchise a business?

    Typically, it takes about 90 to 120 days to franchise a business.

  • What are the primary revenue streams for a franchisor?

    The primary revenue streams include initial franchise fees, ongoing royalty fees, and proprietary purchases or supplier rebates.

  • What are the benefits of franchising compared to organic growth?

    Franchising allows for faster, shared growth with less financial risk for the franchisor, as franchisees invest their own capital.

  • How do I protect my brand when franchising?

    You need to register your trademarks at the federal level and clearly communicate their status in the FDD.

  • What is the role of ongoing support for franchisees?

    Ongoing support includes training, operational guidance, and marketing assistance to help franchisees succeed.

  • What should be included in the operations manual?

    The operations manual should include all operational procedures, training schedules, marketing strategies, and approved suppliers.

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Gulir Otomatis:
  • 00:00:00
    today we're gonna talk about franchising
  • 00:00:02
    your business so if you're a successful
  • 00:00:04
    business owner you want to grow you're
  • 00:00:06
    considering franchising we're gonna go
  • 00:00:08
    through all the steps involved what
  • 00:00:10
    franchising is all about and the
  • 00:00:12
    information you're going to need to make
  • 00:00:13
    the right decision about franchising
  • 00:00:16
    your business the right way my name is
  • 00:00:18
    Charles internicola and one of the
  • 00:00:20
    partners at the internicola law firm
  • 00:00:22
    we're a national franchise law firm and
  • 00:00:24
    we represent emerging franchises
  • 00:00:27
    throughout the country so that means
  • 00:00:29
    business owners like you who are about
  • 00:00:30
    to franchise your business an existing
  • 00:00:33
    franchises that are growing across the
  • 00:00:34
    country so let's get into franchising
  • 00:00:37
    and what it's all about
  • 00:00:38
    and we're going to start with the steps
  • 00:00:40
    to franchising your business steps are
  • 00:00:43
    preparing your franchise disclosure
  • 00:00:44
    document preparing your operations
  • 00:00:47
    manual registering and protecting your
  • 00:00:49
    trademarks establishing your new
  • 00:00:51
    franchise company registering your
  • 00:00:54
    franchise offering creating a franchise
  • 00:00:56
    sales strategy and sending a plan of
  • 00:00:59
    action for the next 1 to 3 5 years and
  • 00:01:02
    we're going to talk about all of these
  • 00:01:04
    in detail today so let's get into the
  • 00:01:06
    basics right
  • 00:01:08
    what is franchising it's simple it's a
  • 00:01:11
    legal and business model that's gonna
  • 00:01:13
    allow you to grow your business as a
  • 00:01:16
    franchisor you're going to be granting a
  • 00:01:18
    license that allows others to duplicate
  • 00:01:22
    your business and expand your brand
  • 00:01:23
    right so you're granting a license to
  • 00:01:26
    other individuals that you're gonna call
  • 00:01:28
    your franchisees and that license is
  • 00:01:31
    gonna allow them to duplicate your
  • 00:01:33
    business operate under your brand name
  • 00:01:35
    and hopefully grow your franchise system
  • 00:01:38
    or help you achieve multi-unit growth as
  • 00:01:40
    a franchisee or you're gonna grant a
  • 00:01:43
    license to your franchisees right so now
  • 00:01:46
    they have the ability to operate and
  • 00:01:47
    duplicate your business you're gonna
  • 00:01:49
    provide them with initial training
  • 00:01:51
    you're gonna provide them with your
  • 00:01:53
    operations manual you're gonna provide
  • 00:01:55
    ongoing support ongoing brand protection
  • 00:01:58
    ongoing improvements to your system in
  • 00:02:01
    turn your franchisees are going to
  • 00:02:03
    invest they're gonna invest their own
  • 00:02:05
    time money managerial efforts they're
  • 00:02:09
    gonna pay you ongoing royalty fees
  • 00:02:11
    they're gonna pay you an upfront
  • 00:02:12
    franchisee
  • 00:02:13
    and there gonna be other fees that are
  • 00:02:16
    gonna help support the franchise system
  • 00:02:17
    you're building so if it's done
  • 00:02:21
    correctly franchising is really a
  • 00:02:24
    win-win business relationship for you as
  • 00:02:28
    a franchisor you're gonna receive an
  • 00:02:30
    initial franchise fee ongoing royalty
  • 00:02:34
    fees the opportunity to expand your
  • 00:02:36
    brand access to capital and managerial
  • 00:02:40
    skill that your franchisee is going to
  • 00:02:42
    provide your franchisees in turn are
  • 00:02:44
    gonna get the ability to tap into your
  • 00:02:46
    existing business model your brand your
  • 00:02:50
    training your systems your support from
  • 00:02:53
    an economic standpoint as a franchisor
  • 00:02:55
    the three primary revenue streams that
  • 00:02:58
    you're going to enjoy are the initial
  • 00:03:00
    franchise fee that the franchisee is
  • 00:03:03
    gonna pay to you when you sign an
  • 00:03:05
    agreement with them ongoing royalty fees
  • 00:03:08
    which is typically a percentage of their
  • 00:03:10
    ongoing weekly or monthly revenue and a
  • 00:03:14
    third stream which is proprietary
  • 00:03:16
    purchases supplier rebates so as your
  • 00:03:19
    franchisees buy products and services or
  • 00:03:22
    work with your vendors there's gonna be
  • 00:03:24
    another revenue stream there for you the
  • 00:03:26
    advantages of franchising well let's
  • 00:03:28
    compare it to organic growth organic
  • 00:03:31
    growth has its value it's very linear
  • 00:03:33
    you will put up multiple locations
  • 00:03:35
    you're investing your own time and more
  • 00:03:38
    money right you need more capital to
  • 00:03:40
    open up more locations organically you
  • 00:03:44
    need to hire set your own management
  • 00:03:45
    team and your infrastructure the
  • 00:03:48
    advantage of franchising is it's more
  • 00:03:51
    exponential and you enjoy more economies
  • 00:03:53
    of scale let's compare the two
  • 00:03:55
    side-by-side organic growth which is a
  • 00:03:57
    traditional growth model right you just
  • 00:04:00
    open up more locations versus
  • 00:04:02
    franchising well from capital standpoint
  • 00:04:06
    organically you're gonna contribute you
  • 00:04:08
    supply the capital whereas what
  • 00:04:11
    franchising your franchisees are gonna
  • 00:04:13
    invest their own capital their money to
  • 00:04:15
    open up their new locations from a
  • 00:04:18
    management standpoint your management
  • 00:04:21
    organically it's limited to your team
  • 00:04:23
    from a franchising perspective
  • 00:04:26
    your franchisees are gonna bring their
  • 00:04:28
    managerial skills right the franchisees
  • 00:04:30
    that open their locations hopefully
  • 00:04:32
    going to manage and run their locations
  • 00:04:34
    well risk organic growth well all the
  • 00:04:38
    risk is really on you from a franchise
  • 00:04:41
    perspective it's shared across the
  • 00:04:43
    franchise system with your franchisees
  • 00:04:44
    and then growth organically your growth
  • 00:04:49
    may be limited to your resources and
  • 00:04:51
    with franchising well you can achieve
  • 00:04:54
    rapid growth and accelerate the the
  • 00:04:57
    expansion of your business so those are
  • 00:04:59
    some of the advantages of franchising
  • 00:05:01
    over organic growth they don't come free
  • 00:05:06
    or without disadvantages right as a
  • 00:05:09
    franchisor you're gonna have to incur
  • 00:05:11
    legal fees for developing your franchise
  • 00:05:14
    offering maintaining it you're gonna
  • 00:05:16
    have to engage in franchise sales
  • 00:05:18
    marketing you're gonna have to support
  • 00:05:20
    your franchisees right so just because
  • 00:05:22
    you sell a franchise doesn't mean you're
  • 00:05:24
    done ongoing you need to provide your
  • 00:05:27
    franchisees which support ongoing
  • 00:05:29
    training value for them to succeed and
  • 00:05:32
    that gets to overall you're gonna keep
  • 00:05:34
    developing systems so initially when you
  • 00:05:37
    sell franchises you're going to provide
  • 00:05:38
    that support to the franchisees as your
  • 00:05:42
    franchise system grows you're gonna
  • 00:05:43
    build more training teams more support
  • 00:05:46
    teams marketing quality control so again
  • 00:05:50
    you have obligations also I'm gonna dive
  • 00:05:54
    into this because it may be a question
  • 00:05:55
    that you have but we're gonna go into
  • 00:05:57
    more detail how long should take you to
  • 00:05:59
    franchise your business it should take
  • 00:06:01
    you 90 days maybe 90 to 120 days as an
  • 00:06:05
    example this slide is an example of how
  • 00:06:08
    our team approaches franchise
  • 00:06:10
    development at the early stage we start
  • 00:06:13
    off with strategy sessions preparing a
  • 00:06:16
    competitive study and really positioning
  • 00:06:19
    your brand right what your franchise
  • 00:06:21
    offering is going to mean how you're
  • 00:06:23
    competitively positioned against other
  • 00:06:25
    franchises out there how to make your
  • 00:06:28
    franchise offering attractive not only
  • 00:06:32
    to prospective franchisees but also to
  • 00:06:35
    franchise brokers and other franchise
  • 00:06:37
    sales channels in that 90 day
  • 00:06:39
    we're going to be developing your FDD
  • 00:06:41
    protecting your trademarks setting up
  • 00:06:43
    your franchise company getting your
  • 00:06:46
    financial statements ready for your
  • 00:06:48
    franchise disclosure document I'm gonna
  • 00:06:50
    have your operations manual prepared and
  • 00:06:53
    steps that are critical having your
  • 00:06:56
    brand position so when you do start
  • 00:06:59
    offering and selling franchises you can
  • 00:07:01
    articulate your unique selling
  • 00:07:03
    proposition and why your franchise can
  • 00:07:06
    help transform the lives of your
  • 00:07:08
    franchisees so we'll talk about these
  • 00:07:10
    things as we go along the way what does
  • 00:07:13
    winning look like in franchising and I
  • 00:07:15
    think this is something that's not
  • 00:07:17
    discussed enough for business owners
  • 00:07:19
    like you who are looking to franchise
  • 00:07:21
    your business typically lawyers or
  • 00:07:24
    developers will focus on the now hey
  • 00:07:27
    we'll franchise your business and then
  • 00:07:29
    in 90 days you're just gonna start
  • 00:07:30
    selling franchises but it's not as
  • 00:07:33
    simple as that what you need to do right
  • 00:07:35
    now is understand that franchising is a
  • 00:07:38
    long term win and to win at it you need
  • 00:07:41
    to look at your goals over the next year
  • 00:07:44
    two years three years four years five
  • 00:07:46
    years what's that five-year goal right
  • 00:07:49
    five years from now one of the goals
  • 00:07:51
    that going to be to get to 50 units and
  • 00:07:54
    above and position yourself for
  • 00:07:57
    accelerated growth but in year one in
  • 00:08:00
    that initial 90-day period we're gonna
  • 00:08:02
    be focused on developing your franchise
  • 00:08:04
    system and most important doing it the
  • 00:08:06
    right way right your FDD your franchise
  • 00:08:09
    offering needs to be best-in-class you
  • 00:08:12
    need to be legally protected you need to
  • 00:08:15
    avoid pitfalls and wasted dollars and in
  • 00:08:18
    that first year my recommendation is to
  • 00:08:20
    focus on organic franchise sales that's
  • 00:08:24
    individuals that are could be qualified
  • 00:08:26
    franchisees that know your brand and
  • 00:08:29
    have expressed an interest so that first
  • 00:08:31
    year is to start getting everything
  • 00:08:33
    right in that first 90 days we're gonna
  • 00:08:35
    franchise your business you'll be able
  • 00:08:37
    to legally sell franchises but I don't
  • 00:08:40
    want you to just start spending money
  • 00:08:42
    right then and there let's focus on
  • 00:08:44
    positioning your brand let's focus on
  • 00:08:46
    organic contacts and then let's focus on
  • 00:08:49
    selling a couple of franchises in that
  • 00:08:51
    first year
  • 00:08:52
    now just know this your first 10
  • 00:08:55
    franchisees are going to be critical to
  • 00:08:57
    the success of your franchise system
  • 00:08:59
    long term why because they're gonna be
  • 00:09:02
    the individuals who validate if they do
  • 00:09:04
    well they're gonna be telling other
  • 00:09:06
    franchisees how well they're doing if
  • 00:09:08
    they don't do well you're gonna face
  • 00:09:10
    resistance and difficulty in selling
  • 00:09:13
    franchises so that's year 1 year 2
  • 00:09:16
    you're gonna focus on selling some more
  • 00:09:18
    supporting your franchisees making sure
  • 00:09:21
    they're super profitable so here's two
  • 00:09:24
    to four slow growth or sustainable
  • 00:09:27
    growth I should stay right if we want to
  • 00:09:29
    sell 10 franchises make sure we could
  • 00:09:31
    support all 10 make sure they're
  • 00:09:33
    successful but we're gonna build up to
  • 00:09:36
    years three four and five if we can
  • 00:09:39
    validate well meaning your existing
  • 00:09:41
    franchisees are doing really well that's
  • 00:09:44
    when you could really accelerate the
  • 00:09:46
    growth of your franchise system so
  • 00:09:48
    winning it's a strategy and you have to
  • 00:09:51
    look at it from year 1 through year 5
  • 00:09:53
    and it now's a great time to start
  • 00:09:56
    focusing on that again getting a little
  • 00:09:58
    ahead over time what you're gonna see is
  • 00:10:01
    your revenue streams your won you know
  • 00:10:04
    initially you're gonna be negative
  • 00:10:05
    because you've spent money to franchise
  • 00:10:08
    your business over time you're gonna
  • 00:10:11
    sell franchises so you're gonna receive
  • 00:10:13
    that initial franchise fee revenue your
  • 00:10:17
    royalty stream will be low because your
  • 00:10:19
    franchisees may not be open yet
  • 00:10:21
    the long term goal when you get to year
  • 00:10:23
    five you're gonna want your royalty
  • 00:10:25
    revenues going up sustainably and your
  • 00:10:29
    franchise fee revenues following may be
  • 00:10:31
    a little lower and we'll talk about that
  • 00:10:33
    let's get into the specifics about
  • 00:10:35
    franchising yourself and now you're
  • 00:10:38
    gonna hear about the franchise
  • 00:10:39
    disclosure document so often right
  • 00:10:41
    people call it the franchise disclosure
  • 00:10:43
    document they call it the FDD and it's
  • 00:10:48
    going to be one of the most critical
  • 00:10:50
    documents for your whole franchise
  • 00:10:52
    infrastructure the FDD it's a legal
  • 00:10:56
    document that you as a franchisor are
  • 00:10:59
    going to be required to disclose to a
  • 00:11:01
    prospective franchisee before you could
  • 00:11:04
    take any money from them or before you
  • 00:11:06
    could
  • 00:11:07
    in agreement with them the FDD and
  • 00:11:09
    franchise law right before you could
  • 00:11:12
    offer or sell a franchise what's
  • 00:11:13
    happened is at the federal level the
  • 00:11:16
    government through the Federal Trade
  • 00:11:18
    Commission has said we need to protect
  • 00:11:20
    prospective franchisees and before you
  • 00:11:22
    could sell a franchise you need to give
  • 00:11:25
    a prospective franchisee the FDD
  • 00:11:27
    it's designed as a disclosure document
  • 00:11:30
    we want you to give this prospective
  • 00:11:33
    franchisee information that they could
  • 00:11:35
    use to make a decision about whether or
  • 00:11:37
    not they want to invest in your
  • 00:11:38
    franchise and the government is said
  • 00:11:41
    before you sell a franchise or take any
  • 00:11:44
    money from them a franchisee you need to
  • 00:11:46
    give them a copy of your FDD 14 days
  • 00:11:49
    earlier so just keep in mind and again
  • 00:11:53
    this is all things that a good franchise
  • 00:11:56
    lawyer is going to be able to take care
  • 00:11:58
    of for you but I want you to know what's
  • 00:12:00
    involved franchising is regulated at the
  • 00:12:03
    federal level and at the state level so
  • 00:12:05
    at the federal level the federal
  • 00:12:08
    franchise laws say you need to give a
  • 00:12:10
    perspective franchisee your FDD and this
  • 00:12:13
    applies in every state however certain
  • 00:12:17
    states have also supplemented these laws
  • 00:12:19
    in some states they're called the
  • 00:12:22
    franchise registration states have said
  • 00:12:24
    you know that FDD that the federal
  • 00:12:27
    government wants you to disclose we also
  • 00:12:29
    want you to register it with us and you
  • 00:12:32
    can't sell in our state until we give
  • 00:12:33
    you approval so there's federal law
  • 00:12:35
    there's state laws and these are things
  • 00:12:37
    your attorney is going to be speaking to
  • 00:12:39
    you about and working toward as you go
  • 00:12:41
    franchise your business so let's
  • 00:12:43
    summarize a little about the FDD and
  • 00:12:45
    really franchise law one franchising is
  • 00:12:50
    regulated at the federal and state level
  • 00:12:52
    - before you offer a sell a franchise
  • 00:12:55
    you need to disclose your FDD to your
  • 00:12:57
    prospective franchisee 3 you're going to
  • 00:13:01
    need to update your FDD every year and
  • 00:13:04
    possibly earlier if there's a material
  • 00:13:05
    change in the information you're
  • 00:13:08
    disclosing for your FDD must be
  • 00:13:11
    registered in the franchise registration
  • 00:13:14
    States 5 there's a disclosure period so
  • 00:13:18
    before you sign an agreement
  • 00:13:20
    take any money you need to disclose your
  • 00:13:22
    FDD 14 days earlier six your FDD not
  • 00:13:27
    only tells the franchisee about your
  • 00:13:29
    franchise offering but also contains all
  • 00:13:32
    of the legal agreements of franchisees
  • 00:13:34
    going to be required to sign and seven
  • 00:13:37
    licensing is not an alternative to
  • 00:13:39
    franchising and we have great
  • 00:13:41
    information about that but if someone is
  • 00:13:43
    telling you that it is what I could tell
  • 00:13:45
    you it's not franchising and licensing
  • 00:13:48
    are almost one in the same and when you
  • 00:13:51
    sell a franchise you're granting a
  • 00:13:52
    license so you can't avoid the franchise
  • 00:13:55
    laws and the regulation by calling a
  • 00:13:58
    relationship a license summarizing what
  • 00:14:00
    the FDD is the FDD summarizes the
  • 00:14:04
    franchise opportunity that you're
  • 00:14:05
    offering to your franchisees it's a
  • 00:14:08
    prospectus document that's required by
  • 00:14:10
    federal and state law it must be pre
  • 00:14:13
    disclosed to your franchisees it must be
  • 00:14:16
    registered in certain registration
  • 00:14:18
    states it's going to summarize your
  • 00:14:20
    legal and business relationship with
  • 00:14:23
    your franchisees and needs to include
  • 00:14:25
    copies of all of your franchise
  • 00:14:27
    agreements the FDD itself
  • 00:14:31
    it contains 23 sections each sections
  • 00:14:34
    recalled an item and the federal and
  • 00:14:37
    state laws create requirements as to the
  • 00:14:39
    information you need to disclose within
  • 00:14:42
    each item let's get into the FDD in some
  • 00:14:44
    more detail we have some examples of an
  • 00:14:47
    FTD and we just chose five guys as a
  • 00:14:50
    sample just so you have a visual our
  • 00:14:52
    clients don't prepare the FTD we do but
  • 00:14:55
    right now as you're learning about
  • 00:14:57
    franchising your business I want you to
  • 00:14:59
    know about the information that's in the
  • 00:15:00
    FTD because they have business
  • 00:15:03
    implications and legal and these are all
  • 00:15:07
    of the things we discussed what our
  • 00:15:08
    client says we're developing a franchise
  • 00:15:10
    offering so you'll see in this example
  • 00:15:12
    here's the FTD there's a cover page it
  • 00:15:15
    has a image of your logo in this case
  • 00:15:18
    five guys and gives a summary of how
  • 00:15:22
    much and a prospective franchisee should
  • 00:15:25
    be expected to invest in starting their
  • 00:15:27
    own franchise business that gets to the
  • 00:15:29
    heart of everything the FD DS
  • 00:15:31
    about it's about giving franchisees
  • 00:15:33
    information what they're gonna spend to
  • 00:15:36
    start up the business after they're
  • 00:15:38
    operating the business and the
  • 00:15:41
    obligations they're gonna have along the
  • 00:15:42
    way why this is important for you now is
  • 00:15:45
    because as we're developing your FDD we
  • 00:15:49
    really need to position what's going to
  • 00:15:51
    make you competitive we need to position
  • 00:15:53
    how to protect you legally today but
  • 00:15:57
    also legally in the future because
  • 00:15:59
    things you disclosed in your FDD today
  • 00:16:01
    will have impact on your franchise
  • 00:16:03
    system five and ten years from now and
  • 00:16:06
    so we need to get it right this time as
  • 00:16:08
    you're first developing your franchise
  • 00:16:10
    system so what we're gonna do is we're
  • 00:16:12
    gonna go through each item there's
  • 00:16:14
    twenty three some of them are much more
  • 00:16:16
    important than others the purpose of
  • 00:16:19
    this presentation tazed not to go into
  • 00:16:22
    too much detail but i want to expose you
  • 00:16:24
    so item one that's about you the
  • 00:16:27
    franchisee or any predecessor companies
  • 00:16:30
    you have and now when I see you as the
  • 00:16:31
    franchisor we're gonna talk about it
  • 00:16:33
    that's gonna be a brand new company that
  • 00:16:35
    you set up it's gonna be your new
  • 00:16:37
    franchising company and we're gonna talk
  • 00:16:39
    about when it was set up and what the
  • 00:16:42
    company is all about that's item one
  • 00:16:43
    item two it's about business experience
  • 00:16:46
    item two is your personal bio who you
  • 00:16:50
    are as the founder of the business what
  • 00:16:53
    your experience is and if you have other
  • 00:16:55
    people on your management team that your
  • 00:16:58
    franchisees are gonna interact with we
  • 00:17:00
    need to include their five years of
  • 00:17:01
    experience why does that matter because
  • 00:17:05
    the prospective franchisee wants to know
  • 00:17:06
    who they're dealing with item 3 is about
  • 00:17:09
    litigation if you have very serious
  • 00:17:12
    litigation in your past that involves
  • 00:17:14
    issues of securities fraud or fraud or
  • 00:17:17
    we may need to disclose that now
  • 00:17:20
    bankruptcies same thing if you anyone on
  • 00:17:23
    your management team have a bankruptcy
  • 00:17:25
    in your past we may have to disclose
  • 00:17:26
    that why the government believes that
  • 00:17:29
    that may be relevant information and if
  • 00:17:32
    if you are someone who has a bankruptcy
  • 00:17:35
    in your past just know that it's not an
  • 00:17:38
    uncommon occurrence right successful
  • 00:17:41
    business owners successful entrepreneurs
  • 00:17:43
    you know sometimes I
  • 00:17:44
    issues where bankruptcy is an option
  • 00:17:47
    item five this is where it gets
  • 00:17:50
    important as a franchisor you're gonna
  • 00:17:52
    disclose to your franchisees what your
  • 00:17:55
    initial fees are what are the fees we
  • 00:17:57
    charge to a franchisee before they open
  • 00:18:00
    well the most common fee is the initial
  • 00:18:02
    franchise fee that initial franchise fee
  • 00:18:05
    is basically the entrance fee when if
  • 00:18:09
    you sign a franchise agreement with your
  • 00:18:11
    franchisee they pay an initial franchise
  • 00:18:13
    fee hypothetically let's say it's thirty
  • 00:18:15
    five thousand dollars that is the fee
  • 00:18:19
    for allowing the franchisee into your
  • 00:18:21
    system and allow them to become a part
  • 00:18:24
    of your network other initial fees may
  • 00:18:27
    include fees we charge for initial
  • 00:18:30
    inventory purchases or any initial item
  • 00:18:34
    that a franchisee has to buy from you
  • 00:18:35
    before they open up but the biggest one
  • 00:18:37
    is the initial franchise fee itself item
  • 00:18:41
    six well in item six we have to describe
  • 00:18:43
    other fees that we charge along the way
  • 00:18:46
    these are the fees that relate to our
  • 00:18:48
    relationship long term so we know the
  • 00:18:51
    initial fee is that initial franchise
  • 00:18:53
    fee long term what's the financial
  • 00:18:56
    relationship between you and your
  • 00:18:58
    franchisees well the most common fee is
  • 00:19:01
    going to be your royalty fee royalty
  • 00:19:04
    fees the ongoing fee the franchisee pays
  • 00:19:06
    to you to remain in your franchise
  • 00:19:08
    system it's typically collected weekly
  • 00:19:11
    or monthly
  • 00:19:12
    the most common royalty fee structure is
  • 00:19:15
    a percentage of gross sales for example
  • 00:19:18
    in the Five Guys example they charge six
  • 00:19:21
    percent of the franchisees weekly gross
  • 00:19:24
    sales however depending on your business
  • 00:19:27
    that could vary we have clients where
  • 00:19:29
    the royalty fees a percentage of gross
  • 00:19:32
    sales or it's just a fixed weekly or
  • 00:19:35
    monthly amount or it's a combination
  • 00:19:37
    right it's not higher of a fixed
  • 00:19:40
    percentage or sales or fixed dollar
  • 00:19:43
    amount there's other ongoing fees for
  • 00:19:46
    example as a franchisor you may want to
  • 00:19:48
    have a brand development fund which is a
  • 00:19:51
    collective pool of funds that you
  • 00:19:53
    collect from all your franchisees for
  • 00:19:55
    you to use on PR and
  • 00:19:58
    certain types of marketing and
  • 00:20:00
    development that benefits everyone
  • 00:20:03
    equally there's other fee obligations
  • 00:20:06
    we're going to be disclosing such as
  • 00:20:08
    obligations of franchisee has on local
  • 00:20:11
    advertising and ongoing training or
  • 00:20:14
    supplemental training what fees a
  • 00:20:17
    transfer fee if the franchisee sells the
  • 00:20:19
    business so there's fees along the way
  • 00:20:22
    that's what item six is about item five
  • 00:20:24
    is what are the fees they're paying to
  • 00:20:26
    you before they open item six is hey
  • 00:20:29
    over the course of our ten-year
  • 00:20:31
    franchise agreement what are the ongoing
  • 00:20:33
    fees or that are going to be paid item
  • 00:20:36
    seven is your estimated initial
  • 00:20:38
    investment so within item seven we have
  • 00:20:40
    to communicate to the franchisee what
  • 00:20:43
    they should estimate is the total
  • 00:20:46
    capital they're gonna need to open up
  • 00:20:48
    the business so these expenses include
  • 00:20:51
    estimates for build-out cost equipment
  • 00:20:55
    signage initial inventory paying legal
  • 00:20:59
    fees architect fees everything that we
  • 00:21:02
    would expect for our experienced a
  • 00:21:04
    franchisee will incur to open up the
  • 00:21:07
    business within item eight we discuss
  • 00:21:09
    what restrictions we put on our
  • 00:21:11
    franchisees so if we're in a restaurant
  • 00:21:14
    there may be particular products or
  • 00:21:16
    supplies that franchisee can only buy
  • 00:21:18
    from us or from our vendors our
  • 00:21:20
    suppliers we need to disclose that for a
  • 00:21:23
    service based business
  • 00:21:24
    well resources and other materials we
  • 00:21:27
    use if we designate them as source
  • 00:21:29
    restricted we need to communicate that
  • 00:21:32
    in the FDD and that's going to be
  • 00:21:34
    important when we're franchising a
  • 00:21:36
    business we're going to be talking about
  • 00:21:37
    your supply chain and not only what it
  • 00:21:40
    looks like today but what its gonna look
  • 00:21:42
    like five years from now and what we
  • 00:21:44
    need to communicate your future
  • 00:21:46
    franchisees about our restrictions we're
  • 00:21:49
    going to place on where they could buy
  • 00:21:51
    products and services and there's a
  • 00:21:53
    couple of reasons for this the most
  • 00:21:54
    important is to maintain quality control
  • 00:21:57
    the other is we generate economies of
  • 00:22:00
    scale if we're using designated vendors
  • 00:22:02
    we're gonna receive revenue in the form
  • 00:22:05
    of rebates item nine is is going to be a
  • 00:22:09
    legal disclosure
  • 00:22:11
    of what the franchisees obligations are
  • 00:22:14
    to you is the franchisor it's going to
  • 00:22:16
    be operating the franchise business
  • 00:22:18
    maintaining your systems and quality
  • 00:22:20
    standards following the requirements in
  • 00:22:23
    your operations manual all of those
  • 00:22:25
    things
  • 00:22:26
    item 10 discusses whether or not we
  • 00:22:28
    provide financing to our franchisees 11
  • 00:22:32
    talks about the assistance we provide
  • 00:22:34
    franchisees advertising requirements
  • 00:22:37
    computer system requirements and the
  • 00:22:40
    initial training that the franchisee
  • 00:22:43
    needs to participate in before they open
  • 00:22:45
    and in this slide that we're showing now
  • 00:22:47
    that's an example of an initial training
  • 00:22:49
    schedule and I think this example comes
  • 00:22:52
    from the five guys FTD which is a public
  • 00:22:54
    document so what you'll see here is
  • 00:22:56
    they're telling prospective franchisees
  • 00:22:58
    these are the sub training subjects
  • 00:23:01
    we're going to cover during training
  • 00:23:03
    that you need to complete before you
  • 00:23:05
    open the business and as we franchise
  • 00:23:07
    your business we're going to talk about
  • 00:23:09
    that does a franchisee have to come to
  • 00:23:11
    one of your corporate locations for a
  • 00:23:13
    week for two weeks what are the topics
  • 00:23:15
    we're going to cover in our training do
  • 00:23:17
    you provide supplemental training at
  • 00:23:19
    their location when they open all things
  • 00:23:21
    we're gonna discuss item 12 of the FTD
  • 00:23:24
    tells the franchisee about the territory
  • 00:23:26
    so if it's a retail based business when
  • 00:23:30
    a franchisee opens and locates their
  • 00:23:32
    franchise are we gonna create a radius
  • 00:23:34
    around that of protection where we agree
  • 00:23:37
    not to sell other franchises or allow
  • 00:23:40
    anyone else to open also how do we deal
  • 00:23:43
    with unique markets whether it's a
  • 00:23:46
    stadium or an amusement park or captive
  • 00:23:49
    market accounts if we're a service based
  • 00:23:51
    business all things we're gonna discuss
  • 00:23:53
    which are territorial rights of your
  • 00:23:55
    franchisees item 13 is about your
  • 00:23:58
    trademarks we need to tell franchisees
  • 00:24:00
    are our trademarks registered with the
  • 00:24:03
    United States Patent and Trademark
  • 00:24:05
    Office are they protected do you have
  • 00:24:08
    noticed that someone else is infringing
  • 00:24:09
    on them why well because when you sell a
  • 00:24:14
    franchise you're giving a franchisee the
  • 00:24:16
    right to use your trademark and so
  • 00:24:18
    they're going to need to know the level
  • 00:24:20
    of protection that your marks are being
  • 00:24:22
    afford
  • 00:24:23
    item 14 similar to trademarks we need to
  • 00:24:26
    disclose whether or not we have patents
  • 00:24:28
    and copyrights again all things that
  • 00:24:30
    your legal team should be leading you on
  • 00:24:32
    but these will be discussions within
  • 00:24:35
    item 15 we need to tell the franchisee
  • 00:24:37
    whether or not we require them to
  • 00:24:40
    participate in the operation of the
  • 00:24:41
    business meaning is your franchise
  • 00:24:44
    offering an absentee owner offering
  • 00:24:46
    which it could be or is it one where the
  • 00:24:50
    individuals that are buying the
  • 00:24:51
    franchise you're gonna expect that they
  • 00:24:53
    go run and manage day-to-day operations
  • 00:24:55
    right those are important distinctions
  • 00:24:57
    item 16 it talks about restrictions on
  • 00:25:02
    what the franchisee can sell naturally
  • 00:25:04
    they can only sell what you tell them
  • 00:25:06
    they could sell right products and
  • 00:25:08
    services that you approve and they're
  • 00:25:10
    consistent with your business model item
  • 00:25:13
    17 provides a legal summary how long is
  • 00:25:18
    your franchise agreement for is it for
  • 00:25:20
    five years or ten
  • 00:25:21
    what are your franchisees renewal rights
  • 00:25:23
    can they renew once or can they renew
  • 00:25:25
    multiple times
  • 00:25:26
    what are situations where you as the
  • 00:25:28
    franchisee are allowed to terminate
  • 00:25:30
    their franchise what restrictions do we
  • 00:25:33
    put on franchisees about their ability
  • 00:25:35
    to transfer their business sell it and
  • 00:25:38
    also how do we resolve disputes do we
  • 00:25:41
    require your arbitration do we require
  • 00:25:43
    litigation again this is just a legal
  • 00:25:45
    summary item 18 if you're a celebrity or
  • 00:25:50
    celebrity endorses your business then we
  • 00:25:53
    need to disclose that item 19 so this is
  • 00:25:56
    a big factor here and this is a concept
  • 00:25:58
    that a lot of entrepreneurs have a hard
  • 00:26:00
    time understanding because a smart
  • 00:26:02
    businessperson before you invest in a
  • 00:26:04
    business you're gonna want to know what
  • 00:26:05
    it earned or what it makes in the
  • 00:26:07
    franchising world as a franchisor you're
  • 00:26:10
    not allowed to tell a franchisee how
  • 00:26:14
    much they could potentially earn or make
  • 00:26:16
    if they buy your business now there's an
  • 00:26:19
    exception here consider a franchisee
  • 00:26:22
    would typically ask you well in your
  • 00:26:24
    existing location what are your gross
  • 00:26:27
    sales like what's your net profit if
  • 00:26:30
    you're a restaurant it may be what are
  • 00:26:32
    your gross sales
  • 00:26:33
    what's your food cost if you're a retail
  • 00:26:37
    this what are your gross sales you know
  • 00:26:39
    what's your rent factor these are all
  • 00:26:42
    normal questions the answer is you
  • 00:26:45
    cannot disclose any of that information
  • 00:26:47
    unless you disclose it in item 19 of
  • 00:26:52
    your FDD it's called the financial
  • 00:26:54
    performance representation and the only
  • 00:26:57
    financial information you could give a
  • 00:26:59
    prospective franchisee is what you
  • 00:27:01
    disclose in item 19 and we spend a
  • 00:27:04
    significant amount of time with our
  • 00:27:05
    clients on this what you need to know is
  • 00:27:08
    it with in item 19 we're gonna include
  • 00:27:11
    historical data about your existing
  • 00:27:15
    company owns locations we're gonna look
  • 00:27:18
    at the most recent calendar year and we
  • 00:27:23
    need to go through the data what was the
  • 00:27:25
    gross sales of your locations are there
  • 00:27:27
    other factors we could reliably report
  • 00:27:30
    to your prospective franchisees such as
  • 00:27:33
    operating costs and gross profit rent
  • 00:27:37
    factors that would help them make an
  • 00:27:39
    informed decision that would be
  • 00:27:41
    disclosed in item 19 now the information
  • 00:27:43
    we report doesn't need to be audited it
  • 00:27:46
    just needs to be information from your
  • 00:27:48
    existing outlets your existing locations
  • 00:27:50
    that you have backup data for the backup
  • 00:27:54
    date is not published but the
  • 00:27:55
    information is and we need to get it
  • 00:27:57
    right if you have good numbers I
  • 00:27:59
    strongly recommend in item 19 and I
  • 00:28:01
    recommend spending significant time with
  • 00:28:04
    your franchise attorney in developing
  • 00:28:06
    this because it's a key factor in the
  • 00:28:08
    franchise sales process if you work with
  • 00:28:11
    franchise brokers they're gonna be very
  • 00:28:12
    interested in these numbers item 20 just
  • 00:28:16
    gives a summary of your existing
  • 00:28:18
    locations any locations that have closed
  • 00:28:21
    or recently opened right so within this
  • 00:28:24
    section we're gonna give a summary of
  • 00:28:25
    your locations item 21 we need to attach
  • 00:28:29
    a copy or financial statements now the
  • 00:28:32
    typical question would come up is what
  • 00:28:34
    financial statements am i referring to
  • 00:28:36
    is it the financial statements of your
  • 00:28:39
    existing business and the answer is no
  • 00:28:42
    when we franchise your business we're
  • 00:28:44
    gonna be setting up a brand new company
  • 00:28:46
    it'll be your franchising Corp or your
  • 00:28:49
    franchising LLC
  • 00:28:51
    it's brand-new it's gonna have very
  • 00:28:52
    limited to no activity you we're gonna
  • 00:28:55
    set up your company you're gonna open up
  • 00:28:56
    a bank account depending on the state's
  • 00:28:59
    we're selling in we may need to get an
  • 00:29:01
    audited opening balance sheet the data
  • 00:29:04
    in that financial statement that bounce
  • 00:29:06
    she's gonna be very limited it's gonna
  • 00:29:08
    show you set up a new company you
  • 00:29:09
    deposit some money but those are
  • 00:29:11
    financial statements we need to include
  • 00:29:13
    in your initial FTD and that's item 21
  • 00:29:16
    item 22 it's a big one we need to attach
  • 00:29:19
    a copy of all the agreements that your
  • 00:29:22
    franchisee could be expected to enter
  • 00:29:23
    into with you the most important one is
  • 00:29:26
    your franchise agreement so the FDD
  • 00:29:28
    discloses your franchise offering and
  • 00:29:31
    summarizes what the legal relationship
  • 00:29:33
    is your franchise agreement is your
  • 00:29:36
    binding legal agreement with your
  • 00:29:38
    franchisee where you give them the right
  • 00:29:41
    to open up the business the franchise
  • 00:29:43
    business and they in turn agree to pay
  • 00:29:45
    royalties and other fees along the way
  • 00:29:47
    and within that contract will designate
  • 00:29:49
    where they can operate and other
  • 00:29:51
    restrictions item 23 is an important
  • 00:29:54
    factor it may not make complete sense
  • 00:29:57
    right now
  • 00:29:57
    it's an FDD receipt under the federal
  • 00:30:02
    and state law again we talked about you
  • 00:30:04
    have to give your FDD to a franchisee
  • 00:30:06
    not less than 14 days prior to them
  • 00:30:09
    signing a franchise agreement or paying
  • 00:30:11
    any money to you well just giving them
  • 00:30:14
    the FDD is not enough you need them to
  • 00:30:17
    sign a specific receipt what a date that
  • 00:30:20
    confirms their date of receipt of the
  • 00:30:22
    FDD
  • 00:30:23
    and of course this is all done
  • 00:30:24
    electronically now but in item 23 of the
  • 00:30:27
    FDD what you need to know is there's a
  • 00:30:29
    single sheet of paper it says receipt
  • 00:30:32
    and that's what the franchisee is going
  • 00:30:33
    to sign what we did is just summarize
  • 00:30:35
    the FDD itself and to keep on track of
  • 00:30:38
    what we're discussing overall is the
  • 00:30:40
    steps to franchising your business so
  • 00:30:42
    that first step or a critical step is
  • 00:30:45
    preparation of your franchise disclosure
  • 00:30:47
    document itself and the franchise
  • 00:30:50
    disclosure document as we discussed
  • 00:30:52
    combines legal with business that is it
  • 00:30:57
    advises franchisees of the legal
  • 00:30:59
    obligations that they could expected
  • 00:31:02
    when they enter into a relationship with
  • 00:31:03
    you
  • 00:31:04
    but also discusses the business
  • 00:31:06
    relationship what the initial fees and
  • 00:31:09
    economic terms are gonna be when they
  • 00:31:10
    sign up what are the ongoing fees the
  • 00:31:13
    franchisee is gonna pay to you what the
  • 00:31:15
    franchisee should be expecting us to
  • 00:31:17
    estimated startup costs now within your
  • 00:31:19
    franchise agreement many times you're
  • 00:31:21
    gonna tell franchisees that they need to
  • 00:31:24
    follow your system standards and
  • 00:31:26
    procedures question becomes how do they
  • 00:31:29
    know your system standards and
  • 00:31:31
    procedures well we could tell that to
  • 00:31:33
    them can we put all of them in a
  • 00:31:35
    franchise agreement we can because
  • 00:31:38
    they're going to be extensive from
  • 00:31:40
    building out and starting up the
  • 00:31:42
    business to running the business to
  • 00:31:44
    prove suppliers to ordering to marketing
  • 00:31:47
    right we can't put all those
  • 00:31:49
    requirements in a franchise agreement so
  • 00:31:52
    where do they go they go in the
  • 00:31:53
    confidential operations manual so during
  • 00:31:57
    this franchising process in addition to
  • 00:31:59
    preparing your franchise disclosure
  • 00:32:00
    document which includes your legal
  • 00:32:03
    agreements you're also going to be
  • 00:32:04
    preparing your operations manual now
  • 00:32:07
    this operations manual is not made
  • 00:32:09
    available to the public because it's
  • 00:32:10
    confidential it's gonna include
  • 00:32:12
    everything about the business from who
  • 00:32:14
    you are
  • 00:32:15
    to the philosophy behind the business to
  • 00:32:18
    how a franchisee built out the business
  • 00:32:20
    runs and operates it that's the
  • 00:32:22
    operations manual and that needs to be
  • 00:32:24
    done during this 90 to 120 day period is
  • 00:32:27
    its preparation and I alluded to some of
  • 00:32:30
    them write your operations manual it's
  • 00:32:33
    the how-to guide for your franchisees
  • 00:32:35
    it's going to include things like your
  • 00:32:38
    initial training schedule pre opening
  • 00:32:40
    requirements operational requirements
  • 00:32:43
    approved suppliers systems and processes
  • 00:32:46
    marketing requirements social media
  • 00:32:49
    policies it's confidential and it's
  • 00:32:52
    given to your franchisees after they
  • 00:32:54
    sign a franchise agreement what's
  • 00:32:57
    important to know is that things are
  • 00:32:59
    going to change over time right what you
  • 00:33:02
    do today may be different two years from
  • 00:33:04
    now or even 12 months your operations
  • 00:33:07
    manuals intended to be upgraded and
  • 00:33:09
    updated periodically over time as you
  • 00:33:13
    your system evolves as you change
  • 00:33:15
    suppliers you're going to also be
  • 00:33:17
    updating your
  • 00:33:17
    patience manual I mention that because
  • 00:33:20
    sure you need it when you start
  • 00:33:21
    franchising and we need in that 90 to
  • 00:33:24
    120 day window but just know it's gonna
  • 00:33:27
    evolve it's never going to be perfect
  • 00:33:29
    and something you're always going to be
  • 00:33:31
    improving on people ask what topics or
  • 00:33:34
    what information would be included in it
  • 00:33:36
    and and we've reviewed a couple of them
  • 00:33:39
    some things that I like to focus on also
  • 00:33:41
    is in your operations manual just
  • 00:33:44
    consider your franchisee just invested
  • 00:33:46
    money and not only made an investment
  • 00:33:49
    but made a decision of trust with you
  • 00:33:52
    and and backing your brand so things
  • 00:33:55
    you're gonna want to discuss and you're
  • 00:33:57
    gonna discuss in training is your story
  • 00:33:59
    your mission what your brand is about
  • 00:34:02
    what you mean to your customers and the
  • 00:34:04
    philosophy of your organization right
  • 00:34:07
    because you want your franchisees to
  • 00:34:09
    adopt it you're going to tell
  • 00:34:10
    franchisees about you as a founder and
  • 00:34:13
    your management team you're gonna tell
  • 00:34:15
    them about who your customers are and
  • 00:34:17
    how you know together you're gonna
  • 00:34:20
    deliver value you're gonna go through
  • 00:34:22
    the services and products you offer
  • 00:34:24
    you're going to go through approve
  • 00:34:27
    marketing strategies you're gonna go
  • 00:34:29
    through your customer relationship
  • 00:34:31
    management systems your point-of-sale
  • 00:34:33
    systems build-out requirements improve
  • 00:34:35
    suppliers and anything that's going to
  • 00:34:38
    help them you know marketing templates
  • 00:34:40
    marketing forms now traditionally
  • 00:34:44
    operations manuals were printed today
  • 00:34:46
    they've become digital and they're more
  • 00:34:48
    than just a little book there's
  • 00:34:50
    something that should be evolving for
  • 00:34:53
    example if a particular how-to topic
  • 00:34:56
    comes up often you know along the way as
  • 00:34:58
    a franchisor you may produce videos and
  • 00:35:00
    have video modules and training modules
  • 00:35:03
    anything that's gonna that's going to
  • 00:35:05
    help you leverage time and improve the
  • 00:35:07
    operations of your franchisees so those
  • 00:35:11
    are important element we know we're
  • 00:35:12
    preparing your franchise disclosure
  • 00:35:14
    document we're preparing your operations
  • 00:35:17
    manual at the same time right in this 90
  • 00:35:21
    120 day window we're evaluating your
  • 00:35:23
    trademarks now remember one of the
  • 00:35:26
    biggest assets you're giving a
  • 00:35:28
    franchisee is a license to use your
  • 00:35:31
    Mark's to use your name so we need to
  • 00:35:34
    make sure it's legally protected and to
  • 00:35:37
    protect a trademark in the United States
  • 00:35:38
    it needs to be registered at the federal
  • 00:35:41
    level with the United States Patent and
  • 00:35:42
    Trademark Office so during your
  • 00:35:44
    franchising process we're going to be
  • 00:35:47
    evaluating your marks if you have
  • 00:35:48
    registrations we're gonna evaluate those
  • 00:35:50
    if you don't we're gonna file
  • 00:35:51
    registrations right away if we conduct
  • 00:35:55
    an evaluation and we identify a conflict
  • 00:35:58
    we're gonna have a heart-to-heart
  • 00:35:59
    conversation about potentially modifying
  • 00:36:02
    your trademarks it's a very sensitive
  • 00:36:04
    subject with many founders and
  • 00:36:06
    entrepreneurs but we need to make sure
  • 00:36:08
    if we're gonna sell a franchise we could
  • 00:36:10
    protect the brand otherwise there's
  • 00:36:12
    gonna be legal exposure and liability so
  • 00:36:15
    now during the franchising process we're
  • 00:36:17
    gonna be reviewing these trademarks and
  • 00:36:19
    protecting them just keep in mind for
  • 00:36:21
    your trademarks we have to disclose in
  • 00:36:23
    item 13 what's their status are they
  • 00:36:26
    registered are they not registered is an
  • 00:36:28
    application pending do you have any
  • 00:36:30
    notice of any other company that's
  • 00:36:32
    infringing or using the same name we
  • 00:36:35
    need to conduct trademark searches early
  • 00:36:36
    on in the franchising process ultimately
  • 00:36:39
    we need to make sure they're registered
  • 00:36:41
    with the United States Patent and
  • 00:36:42
    Trademark Office they may not be
  • 00:36:43
    registered when we start selling
  • 00:36:45
    franchises but at least we need to make
  • 00:36:47
    sure the trademark applications are in
  • 00:36:49
    and they look favorable over time as a
  • 00:36:51
    franchisor you're gonna need to police
  • 00:36:53
    and protect your mark right you don't
  • 00:36:55
    want a franchisee in Nebraska Texas
  • 00:36:58
    California and then locally someone
  • 00:37:00
    opens up and uses a name that's very
  • 00:37:02
    similar and if they do we need to have
  • 00:37:04
    the ability to send them a cease and
  • 00:37:06
    desist notice and to stop them and the
  • 00:37:08
    way we do that is through federal
  • 00:37:10
    registration so FTD is being developed
  • 00:37:12
    operations manuals being developed we're
  • 00:37:15
    working on the trademarks we're
  • 00:37:17
    protecting them we need to set up a new
  • 00:37:20
    franchise company right
  • 00:37:21
    the company that owns your existing
  • 00:37:23
    business is not going to be the
  • 00:37:24
    franchisor
  • 00:37:25
    why well we don't want to expose that
  • 00:37:27
    company to franchise liability plus we
  • 00:37:30
    want a clean fresh new company that's
  • 00:37:33
    going to have a very simple financial
  • 00:37:35
    statement to prepare when it launches so
  • 00:37:37
    we're going to set up your new
  • 00:37:38
    franchising company and during this time
  • 00:37:41
    we're going to speak to your internal
  • 00:37:42
    team we're gonna speak to your
  • 00:37:44
    accountant we're gonna
  • 00:37:45
    side if it should be a limited liability
  • 00:37:46
    company a c-corp and a scorp and the
  • 00:37:50
    state of formation so during this 90 to
  • 00:37:54
    120 day period we're going to be setting
  • 00:37:56
    up this new corporate entity most
  • 00:37:58
    important we're going to be coordinating
  • 00:38:00
    it with your accountants or accounting
  • 00:38:02
    team why do we want to set up your new
  • 00:38:04
    company well we want to protect from
  • 00:38:06
    liability right your as a franchisor
  • 00:38:09
    you're gonna be selling franchises so we
  • 00:38:11
    want to isolate that activity in a
  • 00:38:13
    brand-new company we're also going to
  • 00:38:16
    then give that new company the legal
  • 00:38:19
    ability to use your brand and sell
  • 00:38:22
    franchises and the way we do that is you
  • 00:38:25
    remember earlier we said we're gonna
  • 00:38:27
    protect your trademarks we're gonna
  • 00:38:28
    obtain USPTO trademark registration well
  • 00:38:32
    we're going to give a license to that
  • 00:38:33
    new franchise company and that licenses
  • 00:38:36
    are going to allow that new company to
  • 00:38:37
    use your trademarks and to grant
  • 00:38:39
    licenses to franchisees so as we go
  • 00:38:42
    through the process we prepared your
  • 00:38:45
    franchise disclosure document your
  • 00:38:47
    operations manual is complete or about
  • 00:38:49
    to be complete your trademark
  • 00:38:52
    applications are pending and we feel
  • 00:38:54
    good that it's gonna be protected we set
  • 00:38:56
    up a brand new franchise company for you
  • 00:38:59
    what happens next well under the federal
  • 00:39:02
    laws once we issue your FDD and I use
  • 00:39:05
    the word issue all that really means is
  • 00:39:07
    together as a team we believe the
  • 00:39:10
    information is complete and as your
  • 00:39:11
    franchise lawyers we say it's ready to
  • 00:39:13
    go in it's in compliance we issue your
  • 00:39:16
    FDD at that point you're legally a
  • 00:39:20
    franchisor and you're able to start
  • 00:39:22
    offering and selling franchises and
  • 00:39:24
    that's in the vast majority of the
  • 00:39:26
    states
  • 00:39:27
    however there are 13 franchise
  • 00:39:30
    registration states these states have
  • 00:39:32
    said you know what even though you
  • 00:39:34
    complied with the federal law as a
  • 00:39:36
    franchisor we wouldn't want to provide
  • 00:39:38
    additional scrutiny we want to protect
  • 00:39:41
    our local franchisees and before you use
  • 00:39:44
    that FDD we want you to file it with us
  • 00:39:47
    and register it with us and we're going
  • 00:39:49
    to review it and after we review it will
  • 00:39:51
    grant you registration or deny it and if
  • 00:39:54
    we're working together it's gonna be
  • 00:39:55
    granted and
  • 00:39:56
    only after you've register with us will
  • 00:39:58
    we allow you to sell franchises in our
  • 00:40:00
    state so this step is about registering
  • 00:40:03
    your FDD in the franchise registration
  • 00:40:04
    states and you may not register it in
  • 00:40:07
    all of them we're gonna focus on where
  • 00:40:09
    you want to sell these states include
  • 00:40:11
    California Washington North Dakota
  • 00:40:15
    Minnesota Wisconsin Illinois Virginia
  • 00:40:18
    New York Maryland right so in this slide
  • 00:40:21
    were identifying these franchise
  • 00:40:23
    registration states these are the states
  • 00:40:25
    that we can't sell a franchise in until
  • 00:40:28
    we register our FDD do you see all that
  • 00:40:31
    white space outside of it those states
  • 00:40:33
    don't require franchise registration we
  • 00:40:36
    could start selling right away in those
  • 00:40:37
    states now when I say right away it may
  • 00:40:41
    mean immediately for some states or it
  • 00:40:43
    may mean within a week for others
  • 00:40:45
    certain state they're not registration
  • 00:40:47
    but we have to file a notice with the
  • 00:40:50
    state which happens very quickly and
  • 00:40:52
    gets approved very quickly so we have
  • 00:40:53
    franchise registration states and with
  • 00:40:56
    franchise filing states what you need to
  • 00:40:57
    know when we issue the FDD we're good to
  • 00:41:00
    sell in the vast majority of the country
  • 00:41:02
    except we need to in the franchise
  • 00:41:05
    registration states first obtain
  • 00:41:07
    registration what comes next and what
  • 00:41:09
    should we be doing during this 90 to 120
  • 00:41:12
    day period and even beyond it's a step
  • 00:41:15
    that I think so many startup franchise
  • 00:41:17
    ORS ignore or developers don't tell them
  • 00:41:20
    about which is let's develop a franchise
  • 00:41:23
    sales strategy too many people jump into
  • 00:41:26
    franchise sales without doing the hard
  • 00:41:29
    work rolling up their sleeves and
  • 00:41:33
    determining what's the unique value
  • 00:41:36
    proposition of what they're offering how
  • 00:41:39
    their franchise offering is going to
  • 00:41:42
    help transform the lives of their
  • 00:41:43
    franchisees and you may see this in a
  • 00:41:46
    ton of marketing if you look at
  • 00:41:48
    franchisor marketing you may notice a
  • 00:41:50
    problem which is it all sounds the same
  • 00:41:53
    you know be in business for yourself not
  • 00:41:56
    by yourself or they may say we provide
  • 00:41:58
    training and we provide support but
  • 00:42:01
    those are all generic things you need to
  • 00:42:03
    take a step back and really evaluate
  • 00:42:06
    what is the transformation you're
  • 00:42:08
    jazzy's are going to experience when
  • 00:42:11
    they sign on with you when they become
  • 00:42:14
    part of your team what is the unique
  • 00:42:17
    selling proposition of your franchise
  • 00:42:19
    offering what makes you different from
  • 00:42:22
    all the other franchise ORS that's a
  • 00:42:25
    serious question and you really need to
  • 00:42:27
    develop it and we discuss this with our
  • 00:42:30
    clients from day one and in fact part of
  • 00:42:33
    its embedded in your franchise
  • 00:42:35
    disclosure document so if we have some
  • 00:42:37
    core values or a unique value
  • 00:42:41
    proposition we need to make sure it's
  • 00:42:44
    reflected in the legal and business
  • 00:42:46
    infrastructure disclosed in your FDD for
  • 00:42:49
    example do you have an exclusive supply
  • 00:42:53
    chain do you have certain exclusive
  • 00:42:56
    technology do we have a very favorable
  • 00:42:58
    royalty structure that rewards
  • 00:43:01
    franchisees for more sales are we more
  • 00:43:03
    competitive with franchise fees do we
  • 00:43:06
    give better territories or territory
  • 00:43:07
    protection does our item 19 our
  • 00:43:10
    financial performance representation
  • 00:43:12
    tell a very compelling story about
  • 00:43:14
    profitability or growth but these are
  • 00:43:17
    all things that we need to be discussing
  • 00:43:19
    and evaluating in terms of a franchise
  • 00:43:22
    sales strategy also what I find for
  • 00:43:26
    start-up franchisors
  • 00:43:27
    is they sometimes are too trusting I can
  • 00:43:34
    tell you if you have a million dollars
  • 00:43:35
    to spend on marketing and you spend it
  • 00:43:38
    in year one you're gonna be wasting your
  • 00:43:40
    money and why do I say that I say
  • 00:43:42
    because you need to season your brand
  • 00:43:44
    you need to learn what you don't know
  • 00:43:47
    and you need to get your brand out there
  • 00:43:49
    your franchise offering out there and
  • 00:43:51
    see how the market reacts to it and then
  • 00:43:54
    adapt along the way you're one I
  • 00:43:57
    recommend as a sales strategy as we're
  • 00:43:59
    developing your FDD and your operations
  • 00:44:02
    manual your management team is something
  • 00:44:05
    we'll talk about focus on your brand
  • 00:44:07
    your uniques your unique selling
  • 00:44:09
    proposition your franchisee
  • 00:44:11
    transformation even during this stage
  • 00:44:13
    you we typically recommend and you'll
  • 00:44:16
    see in some of our webinars some great
  • 00:44:19
    great vendors we're experts in franchise
  • 00:44:22
    I'm not saying engage them for a big
  • 00:44:24
    project but let's do a deep dive into
  • 00:44:26
    what our brand means and how are we
  • 00:44:29
    compare the positions against our
  • 00:44:31
    competition develop those points and
  • 00:44:34
    have them reflected in a franchise sales
  • 00:44:37
    landing page then in that first year
  • 00:44:39
    let's build out some mild PR some
  • 00:44:42
    third-party storytelling that helps
  • 00:44:44
    seasoned your brand let's focus on your
  • 00:44:46
    organic contacts let's not just jump
  • 00:44:50
    into spending money on pay-per-click ads
  • 00:44:52
    where we're not gonna find
  • 00:44:54
    cost-effectiveness let's not jump into
  • 00:44:56
    paying for mass PR when we don't have
  • 00:44:59
    the right follow-up systems
  • 00:45:01
    so let's slowly ease into it let's
  • 00:45:04
    create a sales strategy that works and
  • 00:45:06
    that's for year one remember we launched
  • 00:45:09
    your franchise in the first 90 to 120
  • 00:45:11
    days then we're gonna have registration
  • 00:45:13
    applications pending let's slowly build
  • 00:45:17
    our reach out let's qualify existing
  • 00:45:19
    contacts and let's slowly expand and
  • 00:45:23
    that expansion is also going to involve
  • 00:45:24
    a sales strategy that starts introducing
  • 00:45:28
    your brand to broker organizations right
  • 00:45:30
    again you're not going to get results
  • 00:45:32
    overnight we need to season the brand
  • 00:45:34
    your to is when we're gonna start
  • 00:45:36
    turning that notch and spending some
  • 00:45:38
    more money but let's get the sales
  • 00:45:39
    strategy down because I see too many
  • 00:45:42
    brands come to us two three years later
  • 00:45:43
    and they just spent the money but the
  • 00:45:46
    plan wasn't there and it was wasted
  • 00:45:48
    which gets into the next step or which
  • 00:45:52
    is setting a realistic plan and budget
  • 00:45:54
    and I've discussed this a little let's
  • 00:45:56
    look at the next 1 to 5 years what's our
  • 00:45:59
    planning year 1 right we're gonna launch
  • 00:46:01
    that franchise in 90 to 120 days we're
  • 00:46:04
    gonna focus on our organic contacts
  • 00:46:06
    we're gonna make sure our brand
  • 00:46:08
    positioning is right we're gonna make
  • 00:46:10
    sure our franchise sales page is right
  • 00:46:12
    we're gonna look to create some
  • 00:46:14
    third-party validation we're gonna start
  • 00:46:17
    to get involved with broker
  • 00:46:18
    organizations also as a founder we're
  • 00:46:21
    gonna really keep learning franchising
  • 00:46:23
    and I'm proud to say our firm we have a
  • 00:46:26
    continuous learn franchising platform of
  • 00:46:29
    webinars online masterminds and
  • 00:46:32
    and an in person mastermind events and
  • 00:46:35
    if you'd like to find out about them
  • 00:46:37
    just let us know but our clients are
  • 00:46:38
    always invited to it so we need a
  • 00:46:40
    realistic budget again just spending
  • 00:46:43
    money in year one doesn't produce
  • 00:46:44
    results so we need to be strategic and
  • 00:46:47
    I'm bringing this up now so franchising
  • 00:46:50
    just doesn't mean we're a franchisor and
  • 00:46:51
    we spend money part of the franchising
  • 00:46:54
    process in this step also means let's
  • 00:46:56
    plan out the next five years if you are
  • 00:46:59
    considering franchising your business we
  • 00:47:01
    have a great team we have our franchise
  • 00:47:03
    launch program which is fixed fee
  • 00:47:06
    franchise development and we go through
  • 00:47:08
    the entire process
  • 00:47:10
    our unique value is our franchise
  • 00:47:14
    development involves legal
  • 00:47:16
    representation
  • 00:47:17
    with franchise development no house so
  • 00:47:20
    we're doing this for over 20 years our
  • 00:47:22
    team has taken over a franchise company
  • 00:47:24
    and we've resold it so what we're going
  • 00:47:26
    to do is we combine legal with franchise
  • 00:47:30
    development creates a very good
  • 00:47:31
    proposition very good value for you most
  • 00:47:34
    important is our community and our
  • 00:47:36
    resources see if we're not working
  • 00:47:38
    together go to our website go to learn
  • 00:47:41
    franchising we have industry-leading
  • 00:47:44
    webinars they're all designed to expose
  • 00:47:47
    you to what comes next and that's really
  • 00:47:50
    important for us and we have a great
  • 00:47:52
    community you know I'd love for you to
  • 00:47:54
    be a part of it learn more about our
  • 00:47:56
    franchise launch program more
  • 00:47:58
    importantly take a look at our learn
  • 00:48:00
    franchising resources there's free
  • 00:48:02
    webinars there's free guides most
  • 00:48:05
    important guide is our ultimate guide to
  • 00:48:06
    franchising we have some great checklist
  • 00:48:09
    so definitely check it out if you have
  • 00:48:10
    any questions I appreciate you spending
  • 00:48:12
    the time with us today
  • 00:48:14
    reach out to our team and we'd be glad
  • 00:48:16
    to discuss how franchising could
  • 00:48:19
    potentially work for you is it right for
  • 00:48:21
    you should you franchise and what's the
  • 00:48:23
    right strategy most importantly to win
  • 00:48:25
    at franchising thank you
  • 00:48:34
    you
Tags
  • franchising
  • business growth
  • franchise disclosure document
  • FDD
  • trademark protection
  • operations manual
  • franchise sales strategy
  • ongoing support
  • business model
  • success in franchising