When you begin the franchise development process, you are building a new company and must make major decisions at the outset of this project. You must decide many issues that are the foundation of your franchise program. You should work with someone who has created many franchise companies that have proven to be successful in the past.
The first step in creating a franchise program is to establish the franchise legal documents. Federal laws (known as the FTC Rule on Franchising) require all Franchisors to prepare a Franchise Disclosure Document (FDD) and a Standard Franchise Agreement. These documents must be prepared in a very precise manner. There are 23 separate Items that are required in the FDD.
The FDD must be given to the potential Franchisee at least 14 calendar days before the franchise prospect is eligible to sign the Franchise Agreement or pay to the Franchisor any monies relating to the purchase of the Franchise.
Having an experienced franchise consultant help you determine the many issues that must be disclosed in the FDD is of paramount importance. Choosing a franchise consultant to work with you is a very important part of the franchise development process.
You must get the best advice possible to determine issues such as describing the background of the franchise company and its affiliated companies; determining the Initial Franchise Fee, the weekly or monthly Service Fee or Royalty, the monthly requirements for local marketing expenditures and a monthly Brand Fee payable to the franchise company; and describing certain types of litigation against the franchise company or its officers and directors and bankruptcies filed by the franchise company and its officers and directors.
Other issues to be described in the FDD are the computer system used in the franchised business, required purchases of various products and services, the size of the franchise territory, the trademarks and service marks of the franchise company, the potential earnings that a franchise owner can expect after they open their location and the financial statements of the Franchisor.
Hiring an experienced franchise consultant to help you determine the many issues that must be disclosed in the FDD is a critical aspect of the Franchisor’s future. At our company, National Franchise Associates, Inc., our fees to develop a new franchise organization are on the lower end of the spectrum. In fact, most of our clients recoup their initial costs of hiring our company by making one sale of a franchise and receiving royalties or service fees for one year of operations from that Franchisee. Our clients make a profit with franchise sale number two.
Thinking About Franchising?
NFA Franchise Consultants have the experience to help businesses franchise. Just watch and listen to some of our client case studies and video testimonials. We can HELP YOU and it doesn’t cost anything to call and talk to us!
So, if you are still asking the “should I franchise my business” question over and over with no clear direction, give us a call at (706) 356-5637, or contact us through our online form. We look forward to helping you take your business to the next level and beyond.