Francorp

The World Leaders In Franchising

www.Francorp.com FRANCHISING YOUR

BUSINESS

Artūrs Beiers

Francorp Baltic

Rīga, LIAA

20.02.2014 www.francorpbaltic.com

Francorp

• Francorp International

• Francorp Baltic

• Francorp Connect

45 Countries served from 12 regional offices (950 Million population):

– United States, Canada

– Dubai, Kuwait, Saudi Arabia, Egypt

– Malaysia, Singapore, Thailand, Indonesia

– Argentina

– Chile

– Mexico, Central America, The Caribbean

– Japan

– The Philippines

– Lebanon

– India

– Pakistan

– Latvia, Lithuania, Estonia

Francorp in the world

Some of our clients

Reasons to Franchise

• Money

• People

• Time

Ways to Raise Capital

• Internally Generated

• Debt

• Venture Capital

• Franchising

Example:

Client: White Castle vs McDonalds

Founded: 1921 vs 1955

Is product unique: yes vs no

#units in 2013: 350 vs 35,000

Organic Growth vs Franchising

1. Expansion with a minimum of capital 2. Motivated managers because they have stake in the profits 3. Eliminates the day-to-day responsibilities of management 4. Provides rapid expansion 5. Creates a steady stream of income 6. Enhances cash flow for advertising and R&D 7. Generates money for the development of more company-

owned stores 8. Helps to enter unknown markets 9. …and many other advantages

Advantages of Franchising

How to create a franchise?

Many entrepreneurs believe that

the first thing they need to

franchise their business is a

franchise agreement.

1. Franchisability study

2. Strategic planning & Program structure

3. Legal documentation

4. Operational documentation

5. Franchise marketing / sales

A Successful franchise program

How to create a franchise?

Goals and objectives

Competition

Franchise formats

Franchisee profile

Costs

Services

Strategic Planning

Floor value >> Do not sell below this price

Ceiling value >> Competition in franchise sales

Perceived value >> What people think you are worth

– Analogies will be wrong 100% of times

Franchise Fee

Ongoing Revenue

• Royalty Percentage Based

Average 6%

Gross Sales

Weekly

• Product Sales

• Technology

• Must Provide Ongoing Value

Regional

Local

National

International

• Media

• Budget

• Creative material

Advertising Fee

Anarchy / damage to prestige

Rushed decisions

Wrong franchisees

Lack of consistency in:

– Territories – Fees – Controls

Absence of Strategic Planning

How to create a franchise?

Based on strategic decisions

Prevent litigation

Eliminate conflicts

Franchise sales tool

The Franchise Legal Documents

Legal Issues of Franchising

• Franchise Agreement – Period

– Renewal (Cost – no cost)

– Other conditions

• Brand protection

• Intellectual property and concept protection

Lack of protection for the franchisor

High risk of franchisee desertion

High risk of “system piracy”

Risk of franchisor breaching his own franchise agreement

Legal Docs with No Strategic basis:

How to create a franchise?

Operations Bible

Audit guide / Quality assurance

Training manual / Textbook for training courses

Franchise sales tool

Teaching piece for franchisees

Legal reflection

Frame of reference to refresh franchisee

Operations Manual

Anarchy

Impossibility to audit

Lack of consistency

Excessive training time

Lack of control over initial investments

Risk of breaching the agreement

Absence of Operations Manual

How to create a franchise?

The only goal of a franchise marketing program is to generate

ready, willing and able candidates

Franchise Marketing

Descriptive brochures

Ads

Videos

Trade shows

Direct mail

Internet

Franchise Marketing - Components

Consistency between goals and actions

Optimize marketing investments

Measure results

Optimize the use of time

Focus on RWA candidates

A professional marketing plan

Francorp Success Stories Francorp has franchised 37 of the worlds TOP 100 Franchise (as rated by Entrepreneur Magazine)

How Long Does it Take?

6-9 months

All franchise documents (Franchise strategic plan, Franchise legal documents, Franchise operations manual, Franchise marketing plan) are highly customized

Francorp

The World Leaders In Franchising

www.Francorp.com

Artūrs Beiers

T.+371 29176156 abeiers@francorp.com

www.francorpbaltic.com