The History of Franchising What Makes a Good Franchisor Turning Your Business into a Franchise Why Use Franchise Connect / Signature Franchising The Process Questions and Answers

1. Franchising Your Business
by

2. Agenda
1.
2.
3.
4.
The History of Franchising
What Makes a Good Franchisor
Turning Your Business into a Franchise
Why Use Franchise Connect / Signature Franchising
– The Process
1. Questions and Answers

3. The History of Franchising
• What Is Franchising?
• Why Franchises Are So Successful.
Edward Clark
Singer Sewing Machine Company
The First Franchisor

4. What is a Franchise?
A franchise is a business model created by an individual or a
team of individuals, called the franchisor, that grants the
right to someone to sell the business model’s proven or
well-recognized goods or services under a pre-defined set
of terms and conditions, also known as a “system.”
The relationship between a franchisor and franchisee is held
together by a contract called a Franchise Agreement which
outlines the privileges, terms, conditions, restrictions and
other details of the system.

5. I’ll Bet You Didn’t Know
The Indian Chamber Of Commerce says…
• Over 75% of Indian’s dream of owning their own
business! – but few every buy! Fear drives them away.
• Estimates that franchised businesses have a 90% success
rate within 5 years of opening.
• Non-franchised businesses have only a 48% success rate
within their first 6 years.

6. The Four Elements of a Franchise
• Brand
– Brand - the name associated with the services delivered in a memorable and satisfying
experience to the customer
• Operating System
– Operating System - institutionalizes the excellent service delivered in a memorable
experience so it can be done over and over again from Franchise to Franchise in a
consistent manner
• Support System
– Support System - helps the Franchisee get better and better at delivering the service in a
memorable experience & helps a Franchisee improve their performance
• Franchisee
– Franchisee - the individual motivations or reasons for being in a good system, as well as
the talents and experience delivered to the business.

7. Franchise Statistics
• Franchise business account for approximately 12% of all
businesses.
• Franchise businesses account for about 40% of all retail sales
in the India.
• A new franchised business is opened every day of every
business day.
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• There are an estimated 1,200 franchise companies operating in
India doing business through more than 1,20,000 retail outlets.

8. Franchise Statistics
• It is estimated that franchise businesses were responsible for
over $1.5 trillion in economic output.
• Over 10 million people are employed globally by businesses
within the franchising industry.

9. Franchising Works
A recent Gallup poll of 994 franchise owners: produced the
following snapshot of the field.
• 94% considered their franchises successful. (How many
employees would say their companies were succeeding?)
• 75% said they'd "do it all again". (Most employees seem
dissatisfied with their work, pay and prospects for
advancement.)
• 6% reported unhappiness with their franchisor (No industry is
perfect, but the media's reporting of unfairness seems
overrated.)

11. Top 10 Reasons Why Franchises Are
Purchase?
1.
People want to buy into an idea that’s already proven to be
successful.
2. The management of the business has already been
formulated.
3. The support network is already in place.
4. The chances at receiving business financing are greatly
improved.
5. They buy a company has a “Brand Name.”
6. Collective buying power.
7. Local and national advertising.
8. Supervision, training programs and consulting.
9. Managerial, operational and accounting systems.
10. Stay current with legal issues.

12. All Franchisors Assume Two Things
1. Their new franchisees don’t know
anything about their business.
2. This the first time their franchisees
have been in business.

13. Franchise Investments
• There are franchise investments that range from
Rs 1,00,000 to Rs. 5 Cr +
• Franchise companies average between 50 and 100 units.

14. Why do people buy franchises?
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Assurance of adequate capitalization.
Ongoing product research and development.
Protected location.
Franchisor has a vested interest in their success.
In a franchise you are in business for yourself, not by
yourself.

15. Reasons Prospects Open a New
Business Now
• In Five Years They Could Have Something to Sell.
• With a job they have uncertainty

16. Turning Your Business Into a
Franchise
• Key Issues to Determine
• Transformation – Business Owner to Franchisor
• How Do I Make Money

17. Franchisors Revenue Streams
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Franchise Terms between 5 and 20 years.
Initial Franchise Fee. Rs.1,00,000 to Rs.1,00,000 average
On Going Royalty fee of 5 - 10% of sales.
Monthly Advertising fee of 2 – 5% of sales.

18. 2 Key Points
1. Not All Franchises are Created Equal!
2. Not All Franchisees are Created Equal!

19. Basic Types of Franchises
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Single Unit Franchise
Multi Unit Franchise
Multi Exclusive Area Unit Franchise
Region / Area Developer
Master Franchise

20. Single Unit Franchise
• Just, as it sounds. The franchise owns one unit.

21. Multi Unit Franchise
• A purchase to the rights of 3 or more units at once.
• Often this is done with new to the area food concepts.

22. Multi Exclusive Area Unit Franchise
• The franchise is given the “rights” to open as many units
as they want in a defined area.
• The size of that area could be a city, a county or even a
complete metropolitan area.

23. Region / Area Developer
• Operates one or more units
• Responsible for selling licenses and product to
prospective franchisees
• Receives a portion of all fees
• A great business for the Executive who has
experience in management, sales or human
resources and training.

24. Master Developer

25. Examples of some of the Franchisors
offering Master and Area Developers

26. Key Issues To Determine
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Your Own Franchise Goals.
Locations and Protected Territories.
Ability to Expand.
Pricing
Use of Advertising Dollars.
Restrictions on Products and Services.
Obligations / Operating Standards.

27. Key Issues To Determine
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Earnings Claims – if any.
Company Growth Plans.
Target Prospects.
Training Programs
The strength of the competition.
– Locations, Marketing, Operational Abilities.
• What makes your franchise better?

28. 10 Signs of A Great Franchisor
10. In Demand Products & Services
9. Responsiveness During the Initial Process
8. Outstanding Operational Training (accounting systems, CRM
etc.)
7. Continued Training From Franchisor
6. Continued Support From Franchisor

29. 10 Signs of A Great Franchisor
5.
4.
3.
2.
Site Search Assistance
Build Out Assistance
Financing Assistance
Proven Marketing Programs
1. Happy Franchisees

30. Is Your Business Right for
Franchising?

31. Do It Right the First Time
• It highly important to have your franchise set up properly by
an expert.
• Once you become a franchisor you are transformed from
business owner to franchisor.

32. Why Us Franchise Connect /
Signature Franchising
• The Process
• Packages & Services
• Final Product – The Franchise

33. Signature Franchise Program
Franchise Connect /
Signature Franchising
Is Here to Help

34. Client’s Initial Meeting:
• The Client and Signature Franchising team will discuss the
franchise development of the Client. The initial
discussions are for the purpose of reviewing the
company’s history, operations, and goals, as well as
identifying Client’s principal franchise strategy.
Subsequently, in meetings with individual departments,
issues related to developing a customized franchise
program will be discussed in detail, and preliminary
schedules for completion of work product will be
established.

35. Concept Research and Review for
Client’s Segment of Franchising:
• Signature Franchising’ personnel will examine the basic
concept, operational format, and general marketing
characteristics of Client’s business. Each will be
benchmarked against those of comparable franchisors and
businesses in various industries and will be evaluated in
terms of their overall effect upon the franchise program.
This review will encompass types of products and services
offered; types and sizes of locations utilized; total
investment for establishing an outlet; and sales and
earnings of the corporate entity and franchising concept.

36. Analysis of Client as a Franchise
• A Signature Franchising’ Consultant will analyze the
operations of Client to review its operational
characteristics and recommend policies and procedures
aimed at retaining or improving those suitable for
franchising and altering or eliminating those that are not.
The Signature Franchising’ Consultant will also identify
operational elements of the business critical to the legal,
operations, and marketing aspects of the franchise
program, and relay this information to appropriate
Signature Franchising’ personnel.

37. Client’s Franchise Structure
• Signature Franchising’ will make recommendations
relating to the critical business decisions that become the
foundation of the franchise program for Client’s and that
are incorporated into the legal, operations, and marketing
documents and strategies. These issues include policy
formulation, market potential, speed of expansion, the
franchise structure best suited to Client’s situation, and
current company resources available to meet franchise
goals.

38. Client’s Franchise Owner Profile
• The ability to identify specific characteristics of the target
franchisee is essential to structuring a franchise program.
Qualifications, such as financial resources, previous
experience, and business skills, will be addressed, based
on the needs of Client and Signature Franchising’
knowledge of the franchise marketplace. Proper education
and training as a service person within the subject industry
may be a requirement for ownership of this franchise
model.

39. Type of Franchise Offered
• Client’s may offer individual franchises (Single Territory),
multi-unit franchises (Larger Area, multiple units), or subfranchises (Brokerage Structure) – or all three – depending on
such factors as unit investment, complexity of operation, cost
and nature of support programs, and expansion goals. In
addition, Client may offer a start-up franchise or a conversion
franchise (to a compatible existing business) or both.
Signature Franchising’ will recommend a franchise program
designed to meet Client’s needs and to most effectively
accomplish the company’s goals.

40. Determination of Territory for
Client’s Franchisees
• Based on the nature of the Client’s business, competition
and other factors, Signature Franchising’ will suggest
whether or not the franchisee needs an exclusive territory
and the degree of exclusivity. If it does, Signature
Franchising’ will analyze available territorial and
demographic data from Client existing business and
prioritize appropriate criteria, such as population,
competition, income levels, size of the market needed to
support a franchise, industrial base, or business base. It is
critical that we accurately establish the size and scope of
each of the franchisee’s territories.

41. Franchisee Support Programs
• Signature Franchising’ will identify the type and scope of
services to be provided to Client franchisees, including
initial training, supervisory visits, site selection, and
advertising support. In this manner, a comprehensive
support program can be planned and the cost of that
program anticipated

42. Internal Staffing
• Signature Franchising’ will assess human resource needs
for implementing the franchise program and will determine
how best to meet the needs, whether by expanding the
roles of current employees, or by creating new positions.
Signature Franchising’ will also review Client’s
organization structure, assess its adaptability to
franchising, and recommend changes, if necessary.

43. Franchise Revenue Sources for
Clients Franchise Holdings:
• Signature Franchising’ will review Client’s revenue options
and recommend appropriate revenue sources that may
contribute to the new franchise organization’s income and
profits. The available revenue sources are outlined on the
following
slides

44. Initial Franchise Fees:
• Franchise fees will be determined after weighing various
factors, among them the marketability of the franchise at
various price levels, competition from other business
opportunities available to potential buyers, and the cash
flow produced by the business. The recommended initial
franchise fee will be structured in light of a number of
factors, such as front-end selling expenses, advertising,
commissions, training, site and start-up assistance costs,
market needs, and other variables.

45. Royalties:
Royalties will be recommended after a review of Client’s
business and in light of the needs of franchisees and current
industry practices. They will be based on the need to maintain
sufficient corporate cash flow, to support general and
administrative costs and franchise services, and to provide
ongoing income for the continuing operation of the franchise.
They must also be affordable for franchisees while being
profitable for the franchise entity. Signature Franchising’ will
develop a structure for collection and management of royalty
income for the Client Franchise entity.

46. Advertising Fees:
• Local, cooperative, and corporate advertising fees will be
recommended after an evaluation of the amounts currently
spent for advertising in operating units and the type of
advertising needed at the unit level. Corporate advertising
fees required of franchisees will be based on the need for
finished advertisements in their various forms. Although
Client currently uses very little advertising dollars for
promoting the business, we will want to establish a
program for the franchisees that we can hold them to in
their respective markets.

47. Other Income for Franchisor:
• Some franchisors derive income from other sources as
well, including the sale of products and services that
Client’s may wish to distribute to the franchisees.
Signature Franchising’ will assist the Client in determining
which sources are appropriate and practical.

48. Client’s Franchise Structure Planning:
• Following the Signature Franchising’ Consultant’s analysis, team members
assigned to the Client project will review all critical decisions and weigh
the impact of these decisions on key aspects of the franchise program.
Signature Franchising’ will prepare detailed pro-forma and financial
projections, including a five-year cash flow analysis of both individual
units and the Client franchisor organization. In addition, Signature
Franchising’ will make recommendations relating to the operational, legal,
and marketing characteristics of the business that may impact the success
of the franchise program for Client. Signature Franchising’ will make
recommendations relating the operational and marketing characteristics of
the program: This plan provides key franchise business decisions,
assumptions, and financial projections needed to set short and long term
goals. Client could use this plan in presentations for financial institutions
or for corporate planning.

49. Franchise Agreement
• Signature Franchising will draft and submit to the Client’s
attorney for review and approval, a Franchise Agreement
defining the contractual relationship between the Client’s
corporate entity and the new Client’s franchisees. This
Agreement will be developed in conjunction with input
received from Signature Franchising’ program analysis
and recommendations, and will be based on current
industry practice and recent developments in franchise
law.

50. Franchise Registrations and Filings:
• After the Client attorney has approved the final drafts of the
Franchise Agreement and Disclosure Document, Signature
Franchising’ will prepare the franchise registration applications
required by the client’s state regulatory agencies. Applications
will be based on information provided to Signature Franchising’
by Client and will be submitted to Client for submission to the
state regulatory agency. Included in these applications are
materials such as the Uniform Franchise Registration
Application, Supplemental Information Form, Salesman
Disclosure Form, Uniform Consent to Service of Process, and
Corporate Acknowledgment and Certification Page, as well as
copies of advertising materials and the Disclosure Document.

51. Client’s Manuals:
• Initial Analysis and Outline: Signature Franchising’ will
develop an outline that identifies and describes the topics
that should be covered in the comprehensive Client’s
Franchise Operations Manuals. Based on discussions at the
initial Client meeting and material supplied by Client’s
team, this outline will reflect Signature Franchising’ initial
understanding of the issues relevant to the franchisee and
will be specifically tailored to the franchise concept. The
Operations Manual will then be designed and developed to
be used specifically for the Client's franchise business.

52. Operations Manuals
Signature Franchising will develop the following Manuals for
your Franchise Business
• Pre-Opening Manual
• Human Resource Reference Manual
• Suggested Employee Manual
• General Operations Manual
• Business Resource Manual

53. Franchising Website:
• Signature Franchising web designers have the creative talent to
appeal to your sense of style when designing your franchise web
presence. The training and knowledge of current web
development standards and practices will enhance your ability
to turn your Franchise Program into reality!
• If you presently have a website, then our web designers will
develop additional pages devoted to the Franchising arm your of
your business and add/link them to your present website. If you
do not have a website, then our Signature Franchising website
designers will create a complete Franchising website specifically
for your franchise sales.

54. Franchise Brochure
• Franchise Brochure: Signature Franchising will have its'
professional brochure designers prepare a full color
brochure for distribution to Clients potential franchise
prospects. The brochure will ready to print in whatever
quantities requested by Client. The cost of printing the
Brochure will be at the expense of Client and Client may
select printer of their choosing. Signature Franchising will
print the Brochure for Client, if requested, but the printing
cost is not included in the program.

55. Consulting
One Year General Consulting: For one year, beginning at the time Client’s
initiates the development program with Signature Franchising’, members of
Signature Franchising’ professional staff assigned to the Client project, will be
available on a consulting basis to advise and assist in the implementation of
Client’s franchise program and to supply useful information concerning current
practices in the industry and in franchising in general. Signature Franchising’
personnel can be consulted, via mail, electronic mail, or telephone. These
consultation services may be used to discuss franchise issues, review the
Client’s marketing and sales performance, monitor development of the
Operations Manual, refine growth objectives, or for any other consulting
purpose, provided that these services do not constitute creation or revision of
actual work product beyond that specifically described in this Proposal. If
Signature Franchising’ attendance is required at meetings elsewhere than at
Signature Franchising’ headquarters, the Client will be charged for
reimbursable expenses, as specified at the end of this Proposal. Client will have
the option of extending the Consulting Program with Signature Franchising
after the one year period.

57. Consulting Clients

58. Below is a partial list of the products and services
we offer with the Signature Franchising Program
for accepted companies.
• Franchise Agreement prepared for you.
• Marketing, Advertising, and Sales by our Franchise marketing
specialists
• Website Development for your company exclusively
• Franchise Sales Brochures in full color
• Established Franchisor Assistance with updates and marketing
• Area Development Program for multiple Franchise Sales
• Trademark Registration by our Trademark Attorney
• Pay Per Click, Search Engine Advertising Programs
• Franchise Broker Sales Program to sell your Franchise
• Operations Manuals completed exclusively for your business
• The Signature Franchising Program includes preparation of legal
documents, operations manuals and marketing materials. All of these
are created by Franchise professionals assigned to your program that
works closely with you to create a Franchise that can deliver results
for you.

59. Let us Guide you on the trip of a
Lifetime
Thank You
www.franchiseconnectindia.com
Franchise Hot line - +91- 782900144