Let’s be frank for a moment. The Financial Performance Representations, item #19 in the FDD, carry serious weight in determining if you purchase a franchise. It addresses the burning question driving every prospective buyer, “How much will I make running this franchise?” Yet, the complex financial performance representations displayed in the FDD are anything but […]
Which Term is Right for Your Franchise?
Converting your thriving business into a profitable franchise will bring about a seemingly endless laundry list of decision-making. One you will need to face is setting the best term for franchisees. Franchise terms, the length of time you are allowed to operate the business, typically come in three different flavors: 5 years, 7 years, or […]
Buying Multi-Units in a Franchise: What You Need to Know
As you prepare to close the deal on your first franchise, you will be offered a one-time opportunity for purchasing additional units. This is the multi-unit agreement. To incentivize the purchase of additional units, franchisors oftentimes discount the second and third unit franchise fee up to 50% or more. The deeper the discount, the more […]
Franchise Fees: What to Expect
The franchise fee varies between franchises, but aspiring franchisees need to have a general idea of what to expect when it comes to covering the initial fee. In my experience, the average franchise fee range is between $25,000–$50,000 for a single unit. It’s not uncommon to find newer business models with a lower franchise fee […]
Franchisees: Understanding Your Exit Strategy
You need an exit strategy. It’s as plain as day, yet most new franchisees never address the idea of leaving their business one day. All the excitement centers on opening and growing. It’s a different, but mandatory, approach to open their franchise unit with the end in mind. Bar none, the best exit strategy is […]
Choosing Which Law to Use When Creating Your Franchise Agreement
It might sound funny to read, “Choose which law you want to enforce,” but for franchises expanding outside of their state of origin, there comes a moment when a franchisor needs to choose which law to apply in the FDD. This isn’t an arbitrary look at the laws governing a state. Instead it’s a moment […]
The Most-Litigated Issues in the FDD
As franchisors, we all strive to sell units quickly. Especially for franchisors just starting out, the main focus tends to narrow in on closing the initial deal. Unfortunately, selling the unit doesn’t automatically produce a fairy tale ending. As much as we would like to write a happily ever after for all parties involved, oftentimes […]
Are Public Figures an Asset to Your Franchise?
We’ve all taken note when a celebrity comes to the stage for a product. How could you forget the iconic Air Jordans that dominated streets in the 80s and 90s? Every time you pass Chanel at the mall, images of Nicole Kidman in a stunning pink gown running through the streets of New York come […]
Death and Disability: Is Your Franchise Unit Protected?
It’s hard to consider certain possibilities in our life. Whether it’s creating a will, designing an exit plan, or getting affairs in order, people naturally stray away from activities that have to do with their potential demise or disability in the future. I admit planning for the possible early end to your life is never […]
Evaluating a Franchise Territory
Ultimately, the defining factor when reviewing territory comes down to a single question: “Do you have a large enough customer base to be successful?” While there are several components to that question, this is what you are looking to determine. Even with the best business model out there, an over-saturated market leads to frustration and […]
