LEARN THE SECRETS TOFinding the Right Franchise for You!

Congratulations. You’ve just taken the first step toward taking control of your success.

Whether you’re the seasoned business professional looking to add a franchise to your existing portfolio, an up-and-coming entrepreneur or simply a person looking to be their own boss, we are here to help.

This guide was designed with you in mind – giving you the basic information you need to identify the franchise opportunity that’s perfect for you. We’ll help you understand the industry’s terminology and share with you the breadth of businesses offering franchise opportunities, so that you’ll know the best questions to ask the franchise you are investigating. We’ll even help you with complex, personal items, such as assessing the kind of lifestyle you’d enjoy and calculating your net worth.

This guide is sponsored by our franchise partners – and they are eager to help you realize your entrepreneurial goals and share their opportunities with you. These partners are the top franchises in their industries. They represent thousands of people just like you... enterprising individuals who had the courage and the drive to take the first step to realizing their dreams. When our partners contact you, please take advantage of this great opportunity to learn not only about their unique offering, but also about yourself.

THE ROADMAP TO SUCCESSFUL FRANCHISING

Why is it that the majority of independent businesses fail, whereas the majority of franchise businesses succeed? When most entrepreneurs go into business for themselves, they often know “how” to do the technical work of the business but may not know as much about the strategic parts of developing a profitable business. On the other hand, a franchise business allows you to invest into proven business systems and strategies that have worked for many other business people, just like you.

The franchise concept lets you apply a proven method that, when followed correctly, will yield strong, predictable results. The experience the franchisor gives you is invaluable, as is the help you’ll receive with things like site-selection, employee training, marketing and inventory. A franchise gives you a proven system that is already working for others. It reduces the learning curve and helps prepare you to be as successful as possible. Can franchising be as big as it appears to be? “The Economic Impact of Franchised Businesses,” conducted by PricewaterhouseCoopers, calculated the total economic impact of franchise systems at $2.3 trillion. Yes, that’s trillion with a “T!” This accounts for over 11 million jobs from over 900,000 businesses.

But don’t focus on just the numbers, because this is a very personal decision. Think carefully about your skills, as well as the lifestyle you want and type of work you’re most passionate about. Franchising lets you follow your dream by doing something you love, while eliminating much of the risk and guesswork that usually accompanies a new business start-up.

“I had a desire to be directly rewarded for the effort I put into my job.”

WITH A FRANCHISE, THE ODDS ARE IN yOUR FAvOR.

1. Name Recognition… Everyone knows about Subway® or McDonald’s®. How many people know about your local hardware store or video rental location? Not many. Think about how long it took to build the brand and the benefits associated with them.

2. Strength in Numbers… You probably aren’t the only franchisee. By having a network of people doing the same thing you’re doing, you can share ideas and get quick feedback to help solve problems and strengthen your market position.

3. Improved Buying Power… It’s simple economics: the more you buy, the cheaper the price. Having tens or hundreds of partners buying the same goods will significantly reduce the price.

THE FIvE STRENGTHS OF FRANCHISING

4. A Proven Method… Your franchisor gives you a proven model that has been successful for others like you, eliminating the guesswork and minimizing the risks associated with going it alone!

5. Access to Capital… You’ll likely need to borrow money to start your business or expand your operations. Many successful franchisors have financing programs already in place for qualified applicants or existing owners. If they don’t have direct financing, the franchisor can help you secure financing, simply with the strength of their brand.

Part One: Will you be a successful franchisee?The desire to own your own business is undoubtedly the most important reason to invest in a franchise. This allows you to be independent, control your own future and attain financial success. However, before purchasing a franchise, you should ask yourself the following questions to determine if franchising is right for you.

Your personality1. Are you a motivated self-starter?

» Thriving franchisees are persistent, confident and driven. These individuals tend to have high energy levels and are usually more sales directed. Also, they are eager to follow the established procedures that have worked for franchisees before them. If you’re not willing to follow the proven franchise system, this is not an investment you should make.

2. How much do you want to run your own business?» Building and managing a business is not easy. It’s

important that you have effective people skills, because you will be interacting with employees, customers and vendors on a daily basis. Being a people person is key to running a successful franchise.

“ I wanted freedom to build my own team to move the business forward.”

yOUR SUCCESS bEGINS by ASkING THE RIGHT qUESTIONS.In order to determine which franchise is the right fit for you, start by asking the right questions. First, think about your personality, then ask about specific franchises and compare the answers to find the best franchise for you.

The Winning Match

Franchise Assessment

Self Evaluation

3. What is your background?» Any previous experience working in retail, customer service or any other business where you

interacted with the public is a solid foundation for a successful franchisee. Skills such as bookkeeping, computer knowledge or other technical expertise are also a plus. These skills, combined with your past employment and education, can help determine if you are suited for a specific franchise industry or franchising in general. (Just remember that many franchisors do not require specific industry experience, as many have in-depth training sessions and are willing to work with you.)

4. What type of work is most appealing?» What type of work makes you happy? This is an extremely important question, since you will be

intimately involved in running this business every day. Make sure your needs are compatible with the rules and restrictions established by the franchisor.

Your desired lifestyle1. Are you willing to relocate?

» Some franchises may or may not have an opportunity for you in your area. You should have the answer to this question prior to speaking with any franchisor.

2. How many hours are you willing to work?» Certain franchise structures will require longer hours than others and a more “hands on” approach.

Deciding how much time and effort you are willing to commit is significant in choosing a franchise system.

3. Are you comfortable managing others?» Franchises differ by industry, but many require hiring employees. Determining how many people, if any,

you would like to manage will help decide the franchises that are best for you. There are franchises that do not require any employees and allow you to work alone, if you choose.

4. Owner-operator versus owner-investor?» Before beginning your investigation, you should ask yourself if you’re looking to run the business

everyday or want someone else to run it for you. Determining how involved you would like to be in the business is essential. Franchisors may or may not allow someone to be an absentee owner and this can help narrow your search.

“I wanted to build financial security and didn’t want to be subject to company downsizing, mergers or buyouts.”

“That some achieve great success, is proof to all that others can achieve it as well.”

-Abraham Lincoln

FINANCIAL WORkSHEET

Part Two: Evaluating the franchise opportunityThere are hundreds of franchisors within many different categories. Trying to find the “right” one can seem over-whelming. Finding the answers to the following questions can help make the decision-making process easier for you.

1. What type of franchise is it?» When thinking about franchising, most people think strictly of owning just one unit, in one city.

However, there are many different types of franchising methods and understanding them prior to investigating can save you a great deal of time. The following is a list of the most common types of franchises:

Single-Unit Franchise – You purchase a franchise from the franchisor and operate this individual business in one location or area.

Sequential Franchise – You purchase additional franchises after the initial single-unit franchise. These additional units are approved on an individual basis and you will most likely need to hire managers to run the units.

Area Developer – You own the rights (for a fee) to a specific area and will be expected to develop a certain number of franchise units within an agreed time frame. You may also be responsible for running the units but will need to hire mangers to assist you.

Subfranchisee – You own a single-unit or multiple units, but instead of reporting to the franchisor, you report to a subfranchisor or master franchisee.

Subfranchisor or Master Franchisee – Similar to a franchisor, you are responsible for assisting subfranchisees in a given territory. Within this territory you are expected to provide on-going support to the owner-operating franchisees.

Your financial resourcesMost franchisors screen and qualify based on financial resources such as assets, liabilities, net worth and sources of income. Below is a work sheet to help assess your financial situation to understand where you fit, financially, with each opportunity you investigate.

Net Worth CalculatorAssets LiabilitiesCash on hand $ _________ Notes payable to banks $ _________Stocks and bonds $ _________ Mortgage $ _________Retirement plans $ _________ Automobile(s) loans $ _________Real estate $ _________ Credit cards $ _________Automobile(s) $ _________ Other: _______________ $ _________Money due to you $ _________Other: _______________ $ _________Total Assets $ _________ Total Liablities $ _________

Total Net worth (total assets minus total liabilities): $ _________

Annual Income CalculatorSources of IncomeAnnual salary: self $ _________Annual salary: spouse $ _________Bonus: self $ _________Bonus: spouse $ _________Dividends and interest $ _________Real estate income $ _________Other: _______________ $ _________

Total Annual Income $ _________

As you can see, virtually the only limits you have

are your own desires. Whether you want to sell

children’s clothing, run a plumbing service, operate

a restaurant or provide sales training to executives,

there are franchise opportunities for you.

Travel 1%

Sports & Recreation2%

Service Businesses11%

Retail11%

Retail Food5%

Restaurants8%

Real Estate5%

Personnel Services2%

Printing1% Maintenance Services

8%

Lodging3%

Fast Food20%

Education-Related2%

Child-Related3%

Business Services5%

Building & Construction5%

Baked Goods2%

Automotive6%

Franchise Opportunties by Industry

2. What industries offer franchises?» Name an industry you are interested in and, most likely, there’s a franchise opportunity for you. Here’s

a chart that shows the top 18 industries providing franchise opportunities.

3. What franchise industries are growing the fastest?» FRANdata, the leading source of information and analysis concerning franchising, provided the following

data to the IFA citing which franchises are growing the fastest, based on the number of new franchise concepts entering the marketplace.

Not only are there opportunities in almost any

industry you can think of, each industry is growing.

The tremendous growth rates in franchising mean

more opportunities for you to evaluate.

4. What costs are associated with starting a franchise? » Initial capital investment varies based on the industry and the

type of franchise business. Total start-up costs can range from $20,000 to over a million dollars, depending on the franchise, location and cost of real estate. In addition to the start-up costs, there are often continuing royalty fees that typically range from three to eight percent of gross revenues. It’s important to examine all expenses involved prior to purchasing a franchise to help discover any hidden overhead. The following is an itemized list of costs typically associated with owning a franchise:

o Advertising fees – Franchisors may require you to contribute a percentage of your sales to an advertising fund for nationally-run campaigns. In addition, franchisors may also ask you to spend a specific amount of money on local advertising per month.

o Opening inventory – Many franchisors will require you to purchase supplies and inventory directly from them rather than an outsourced company. The opening inventory usually consists of enough supplies to run your business for at least two weeks.

o Equipment and signage – Different equipment is needed for various businesses. Generally, payment plans can be arranged for most large equipment purchases. In addition, franchisors have signage packages to keep their brand streamlined.

o Working capital – You will need a specific amount of initial working capital to operate your business. This is needed to pay for employees, operating expenses and additional miscellaneous costs until you start producing revenue.

o Real estate/leases – You will need to purchase or lease a property – and these costs will either go to your franchisor (which is uncommon) or to a real estate agent.

o Training fees – To attend training programs, you may have to pay for travel, lodging and meals. These costs are usually not covered by the franchise fee and can add up quickly if you need to take others to training with you.

o Insurance – It is necessary to have health insurance (for you and your employees) – as well as fire, occupancy, inventory, burglary, workers’ compensation, accident and general liability insurance.

o Operating licenses, permits, deposits and prepaid expenses – These miscellaneous costs are determined by the franchise and the area for development.

Franchise Categories

Advertising

Automotive

Bridal

Business Service

Children’s Business

Cleaning

Computer/Internet

Financial Services

Food/Restaurant

Health/Fitness

Home Improvements

Lodging

Maintenance

Manufacturing

Personal Care

Pets

Photography/Video

Real Estate

Retail

Securities

Security/Investigations

Senior Care Service

Sports/Recreation

Travel

Vending

Wholesale/Distribution

5. What are the benefits of a specific franchise?» When looking at different franchises, it is important to look at what they offer you as a potential franchisee.

The most important benefit, of course, is having a standardized franchise system. But it’s important to determine what other benefits are being offered, like:

o Operational and management training o Employee training o Site selection and demographic research o Real estate construction and assistance o Grand opening assistance o Marketing o Advertising

o On-going support

Obviously, in order to find a franchise that best fits you, it is essential to do as much research as possible. We recommend starting your search online by visiting the company’s website. Then check with the Federal Trade Commission (FTC), Better Business Bureau (BBB) and the International Franchise Association (IFA) for any possible red flags. Once you have narrowed your search down to a specific franchise, pay attention to their responsiveness to your inquiries. This will show you how they work on a day-to-day basis. Also, many franchisors are required by specific states to provide prospective franchisees with their Franchise Disclosure Document (FDD). To find more information on FDD’s, check your state government office. You should read their disclosure document closely, as it contains information regarding the company’s past business experience, franchisees and legal history.

Also, it is wise to visit the company’s headquarters and, if possible, attend one of their staff meetings prior to signing the franchise agreement. You can see firsthand how they treat their employees and get a feel for attitude and culture. Another way to gain insight ino the opportunity is to talk to current franchisees to get the true “insider’s view.”

Part Three: Choosing the perfect franchiseThe screening process for a franchise is a two-way street; you need to interview the franchisor just as much as the franchisor needs to interview you. Working through the first two parts of this section will give you a head start toward what you are looking for and what a franchise provides.

Ideally, for you to be successful, the franchise you choose should match with your financial resources, experience and personality traits. It must also be a business that is well suited for your talents and strengths – and complements your goals, lifestyle and interests.

Finding a franchise is not easy, just as owning a business isn’t easy. Asking the right questions and doing the right research will help you immensely. And by reviewing this guide, you have taken the first step toward your success.

Advertising fee: The fee that is paid annually or monthly by the franchisee to the franchisor to assist in the corporate advertising expenses.BBB (Better Business Bureau): An organization that acts as a trusted intermediary between consumers and businesses.Discovery day: A day to visit a franchise’s corporate office to learn more about the offer, meet key players and top management, and get a feel for the corporate culture. FDD (Franchise Disclosure Document): The Federal Trade Commission’s mandated disclosure document that gives a wealth of information about the franchisor. Franchise: Authorization of a right or brand name to a person to sell or distribute the company’s goods or services.Franchisee: The one who is granted a franchise.Franchise agreement: Positions the nature of the business and the expectations of the franchisor.Franchise broker: An agent between the buyer and the seller. Can represent either the buyer or the seller.Franchise fee: An up-front fee for the right to purchase a franchise. Franchise termination: A franchisor can end your franchise agreement, usually occurring if the franchisee does not pay the royalties or abide by the franchise restrictions.

IMPORTANT TERMS yOU SHOULD kNOW…FTC (Federal Trade Commission): A federal agency charged with enforcing antitrust laws and prohibitions against false, deceptive or unfair trade or advertising practices.IFA (International Franchise Association): Founded in 1960, is a membership organization of franchisors, franchisees and suppliers.Liquidity: Assets that can quickly be turned into cash without a significant loss such as checking accounts, savings accounts and money market accounts.Net worth: Total assets minus total liabilities of an individual.Owner-investor: The franchisee will purchase the franchise unit but will hire someone else to manage and run the unit, otherwise known as absentee ownership.Owner-operator: The franchisee will run the franchise unit him or herself. Renewals: Franchise agreements generally expire after 10-20 years. After the initial agreement, the contract can be renewed but not always under the same original conditions. A renewal fee is usually less than the original franchise fee.Royalties: The franchisor receives a cut of the sales your franchise generates usually on a percent basis.SBA (Small Business Administration): An independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns.