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“Turn-Key”: The Myths and Realities of Being a Franchise
Owner
Cheryl Wadeson
Agenda
• Background• Franchise concept• Process and funding• Myths and Realities• Lessons Learned
Cheryl Wadeson
Independent Business vs. FranchiseIndependent Business Owner
Franchise Owner
Brand Awareness Unknown Established brand
Control/Autonomy Total freedom Play by their rules
Cost Can start up on a shoestring budget,Control over investment decisions and timing
Upfront franchise fee, ongoing Royalty and Advertising fees, Franchisor dictates remodels
How to run your business Build it from scratch They give you the playbook, training and coaching
Operational Resources Go it aloneTotal freedom
Tried and tested business – with an established system and support (training, real estate, advertising, product development, supplier network)
Source: ”Independent Business or Franchise? How to Decide”, Curtis Kroeker, Inc., June 2013
Franchise + Fee
Start Up + Investment
Royalty Fee
$27K $100K - $200K 6%
$45K $1M - $3M 2% - 5%
$15K $250K 8%
$40K $215K 6%
$5K $250K 3%
Source: www.entrepreneur.com 2013 Franchise 500
What Does it Take to Become a Franchisee?
Why Cold Stone?
Franchise Track Record
Strength of the Product or Service
Market Area
and Trends
Franchise Terms and Support
Paying for a Franchise
• #1 - You are selling yourself • Getting an SBA loan:– You need good credit– 15-25% cash for a down payment – May require collateral– 10 – 25 year repayment terms– Patriot Express loans
Myth: Franchise Owners are Rich!
23%
22%
15%
9%
9%
4%4%
14%
Sales
COGS
Salaries
Rent
Royalties/Ad
Other
Utilities
Taxes/Fees
Profit
Successes and Lessons Learned
Working Capital
Human Relations
Know Yourself