ABOUT FRANNET AND FRANCHISE BUSINESS …



About FranNet and Franchise Business Opportunities

Business Franchise Opportunities

Would you like to start a business? Let us help! FranNet has been helping entrepreneurs find the best business opportunities since 1987. Find out which business franchise is best for you! We will match you to the right franchise opportunity for your goals and lifestyle.

Whether you are ready to buy a franchise or just want free expert assistance reviewing franchise opportunities and general business startup assistance, FranNet’s expert business consultants can help. Feel confident about your decision and use expert advice in your process. Use your local FranNet consultant to:

• Understand the pros and cons of owning a business.

• Receive your assessment with our exclusive matching profile process.

• Determine the best business for your unique goals and skills.

• Build a business and invest in yourself.

• Meet your high expectations and implement a plan.

• Use a process that makes sense and has helped thousands of people.

• Receive expert advice 100% free.

FranNet consultants work individually with clients who are interested in purchasing a franchised business. Consultants use a specific profiling and consultative process to determine a business model unique to each person. This model suggests specific franchises that fit best with each person’s goals, skill sets and interests, both personally and professionally.

Research is the key to any sound decision. So, the research suggestions and techniques – as well as referrals to other industry professionals – round out the services that FranNet consistently provides to each client. We are with you every step of the way to business ownership!

Take Advantage of Our Free Expert Business Help

Want free business consulting? We can help! Click on the orange box listed as “Get Started Today” on the right. Complete the information request form and a local franchise consulting expert will be in touch to help you start your own business.

Want to start a business?

Looking for the best business opportunities?

FranNet points you in the right direction!

You know you want to start a business but what is the right business opportunity for you? You are unique and your business plan should meet your unique goals and needs. The best formula for success is using a proven system like a franchised business instead of more common start-up business opportunities. Franchise opportunities can be replicated and offer higher growth potential as well. Use a proven process and FranNet experts to:

• Understand the pros and cons of owning a business.

• Achieve goals faster.

• See results faster.

• Control your future and success.

FranNet consultants work individually with clients who would like to buy a franchise. Consultants use a specific profiling and consultative process to determine a business model unique to each person. This model suggests specific franchises that fit best with each person’s goals, skill sets and interests, both personally and professionally.

Research is the key to any sound decision. So, the research suggestions and techniques – as well as referrals to other industry professionals – round out the services that FranNet consistently provides to each client. We are with you every step of the way to business ownership!

Want Free Expert Business Startup Help?

Would you like free business consulting? Let us help. Click on the orange box labeled “Get Started Today” on the right side of the page. Complete the info request form and a local franchise consulting expert will be in touch shortly to help you start your own business.

Why Buy a Franchise?

In a sense, franchising is a business opportunity with the primary purpose of risk minimization. Every study ever done on the success rate of new (non-franchise) business startups concludes the same thing. Starting up a new business is very risky. Most studies show that more than 90 percent fail within three years. The primary reason that the failure rate is so high is the learning curve of operating that specific type business. Unfortunately, the market place is not very tolerant of the inexperienced beginner trying to learn how to operate a new business. If you can’t compete in the marketplace, you can lose your money, your credit, your home, your reputation and sometimes even your family. Failing in business can be a horrible experience. Unfortunately this happens to thousands of people every year in the United States, and it can be avoided. Unless you have considerable experience in the specific type of business that you are considering going into, it is very probable that you will fail.

Business format franchising is as close as you are going to come in today’s marketplace to a guarantee of success. All of the studies done have found that franchise new business startups rarely fail and, when they do, it is typically because the franchisee did not stick to the franchisors systems. There is a learning process involved in all human endeavors.

This learning process requires trial and error wherein knowledge is gained by trying and failing again and again until you eventually succeed. This process is generally called the learning curve. In the context of franchising, the franchisor has already gone through the learning curve and has learned the secrets of success for the specific business. In business format franchising, all that has been learned by going through the learning curve is transferred to the franchisee. This is fundamentally why you buy a franchise – to minimize risk and give yourself the best possible chance to succeed. Avoid detours. Take a better route.

Each of FranNet’s clients is asked to participate in an in-depth interview and to complete our confidential questionnaire. The more we get to know about your experience, skills, goals and financing capability, the better we’ll be able to guide you to a franchise opportunity that is right for you from all perspectives.

It is also prudent to buy a franchise because the investment can be thoroughly researched before any significant expenditures are made. With a new business startup (non-franchise) you are always operating in the dark. No matter how much research you do, it is very difficult to get a handle on so many aspects of the new business. With a franchise, the franchisor can provide a wealth of information about the business opportunity – from how to prepare a pro forma to the best personality traits for the business. But the most important information comes from the existing franchisees. With a good systematic approach, you can get answers to nearly all the key questions such as:

• Do you feel that you were properly trained?

• How long did it take before you broke even?

• What is your annual return on investment?

• How do you feel about the day-to-day duties of the business?

• If you had it to do over, would you do it again?

You can, in a very real sense, try on the business before you buy to make sure it is a good fit for you.

Another very important reason to buy a franchise is due to its basic nature. Franchising inherently leads to rapid growth, because the franchisees provide the expansion capital. There are few restraints to growth in franchising. As a franchise system expands into hundreds of units, many positive things begin to happen. The name begins to become well known because people see it everywhere. Most people associate size with success.

The bigger the franchise, the better it must be. The large number of units enables the franchise to advertise heavily, which tends to increase sales. A synergy begins to be created in which success begets success. The franchise begins to squeeze out competition through its sheer size. The franchise can buy products in large quantity at significant discounts, which it passes on to the franchisees. The synergy just grows and grows.

A recent Gallup Poll of franchisees found that more than 94 percent considered themselves successful and that more than 75 percent would buy their franchise again if they had it to do over. The same poll also found that the average pre-tax gross income was $124,290.

In summary, the primary reason you should buy a franchise as opposed to starting up a non-franchise new business is to minimize risk and enhance your chances of success.

Franchise Buying Process

Get Started Now! Request an appointment with your local FranNet consultant, and take your first steps into a more rewarding way of life.

5 Steps to Success

1. Profile We want to be sure we understand you, your goals and your dreams. Our first step is to talk together. Then we’ll ask you to fill out our questionnaire. It’s only a few pages, but it will give us more insight into your goals and the kind of business opportunity that should be the right one for you.

2. Model We will study your questionnaire and arrange a conversation, either by phone or in person. We’ll develop a model of the perfect business for you. Later, you will use this model to evaluate businesses you choose to research. This model is uniquely yours so we want to make sure you feel it’s correct. When you are satisfied that you have identified your model correctly, we will be ready to suggest business types that structurally and strategically meet your model. Best of all, you will be able to compare each business to your model, and you will have a level playing field against which to measure them.

3. Match Once you have identified some business types that you think match your model, we’ll identify and suggest specific companies you may want to learn more about. Over the years, we have screened hundreds of franchisors and worked with thousands of people just like you. So we have a pretty good idea of the kinds of choices you’ll be faced with, and we’re here to match you with the right one.

4. Research This may be the most important step of all. We will guide you through the entire research process, however, we can’t do your research for you. It’s your job to conduct a complete and thorough investigation of any business opportunity that you think may be right for you. We’ll even give you some sample questions and research guides to help you get started with this all-important step.

5. Purchase When you are ready to buy, we can help you locate financing sources, franchise attorneys and other resources you may find helpful.

Frequently Asked Questions

1. What is franchising?

A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name or advertising symbol and an individual or group seeking the right to use that identification in a business. The franchise agreement governs the method for conducting business between the two parties. Although forms of franchising have been used since the Civil War, enormous growth has occurred more recently. Industries that rely on franchised businesses to distribute their products and services touch every aspect of life, from automobile sales and real estate to fast food and tax preparation.

In its simplest form, a franchisor owns the right to a name or trademark and sells that right to a franchisee. This is known as product/trade name franchising. The franchisor can provide a full range of services, including:

• Site selection

• Training

• Product supply

• Marketing plans

• Advertising

• Financing

Generally, a franchisee sells goods or services that are supplied by the franchisor or that meet the franchisor’s quality standards.

2. What are some of the benefits and responsibilities of franchise ownership?

There are a number of aspects to the franchising method that appeal to prospective business owners such as:

• Easy access to an established product.

• A proven method of operating a business.

• Reduced risk of opening a business.

In fact, statistics from the U.S. Small Business Administration and the U.S. Department of Commerce show a significantly lower failure rate for franchised businesses than for other business start-ups. The franchisee purchases not only a trademark, but also the experience and expertise of the franchisor’s organization. However, a franchise does not ensure easy success. If you are not prepared for the total commitment of time, energy and financial resources that any business requires, you should stop and reconsider your decision to enter the franchise business.

A franchise typically enables you, the investor or “franchisee,” to operate a business. By paying a franchise fee, which may cost several thousand dollars, you are given through a format or system developed by the company (“franchisor”), assistance from the franchisor as well as the right to use the franchisor’s name for a limited time. For example, the franchisor may help you find a location for your outlet; provide initial training and an operating manual; and advise you on management, marketing or personnel. Some franchisors offer ongoing support such as monthly newsletters, a toll free phone number for technical assistance, and periodic workshops or seminars.

3. What factors should I consider when selecting a franchise?

Like any other investment, purchasing a franchise is a risk. When selecting a franchise, you should carefully consider a number of factors, such as the demand for the products or services, likely competition, the franchisor’s background, and the level of support you will receive.

Demand

Is there a demand for the franchisor’s products or services in your community? Is the demand seasonal? For example, lawn and garden care or swimming pool maintenance may be profitable only in the spring or summer. Is there likely to be a continuing demand for the products or services in the future? Is the demand likely to be temporary, such as selling a fad food item? Does the product or service generate repeat business?

Competition

What is the level of competition, nationally and in your community? How many franchise- and company-owned outlets does the franchisor have in your area? How many competing companies sell the same or similar products or services? Are these competing companies well established, with wide name recognition in your community? Do they offer the same goods and services at the same or lower price?

Your Ability to Operate the Business

Sometimes, franchise systems fail. Will you be able to operate your outlet even if the franchisor goes out of business? Will you need the franchisor’s ongoing training, advertising or other assistance to succeed? Will you have access to the same or other suppliers? Could you conduct the business alone if you must lay off personnel to cut costs?

Name Recognition

A primary reason for purchasing a franchise is the right to associate with the company’s name. The more widely recognized the name, the more likely it will draw customers who know its products or services. Therefore, before purchasing a franchise, consider:

The company’s name and how widely recognized it is.

• If it has a registered trademark.

• How long the franchisor has been in operation.

• If the company has a reputation for quality products or services.

• If consumers have filed complaints against the franchise with the Better Business Bureau or a local consumer protection agency.

• Training and support services.

Another reason for purchasing a franchise is to obtain support from the franchisor. What training and ongoing support does the franchisor provide? How does their training compare to the training for typical workers in the industry? Could you compete with others who have more formal training? What backgrounds do the current franchise owners have? Do they have prior technical backgrounds or special training that helps them succeed? Do you have a similar background?

Franchisor’s Experience

Many franchisors operate well-established companies with years of experience both in selling goods or services and in managing a franchise system. Some franchisors started by operating their own business. There is no guarantee, however, that a successful entrepreneur can successfully manage a franchise system.

Carefully consider how long the franchisor has managed a franchise system. Do you feel comfortable with the franchisor’s expertise? If franchisors have little experience in managing a chain of franchises, their promises of guidance, training and other support may be unreliable.

Growth

A growing franchise system increases the franchisor’s name recognition and may enable you to attract customers. Growth alone does not ensure successful franchisees; a company that grows too quickly may not be able to support its franchisees with all the promised support services. Make sure the franchisor has sufficient financial assets and staff to support the franchisees.

4. How can I find a lawyer who specializes in franchising?

Entrepreneurs in search of a franchise lawyer can start by checking with their state bar association. Many state bar associations allow member lawyers to identify the areas of practice in which they specialize, and franchise or distribution law is a recognized specialty in an increasing number of states.

The American Bar Association also publishes a Membership Directory of the Forum Committee on Franchising. The Directory, which is organized by state and city, lists the names, addresses and telephone numbers of attorneys who are members of the Forum Committee. You can obtain a copy of the Directory from:

American Bar Association Service Center

750 North Lake Shore Dr.

Chicago, IL 60611

(312) 988-5522

5. What is the disclosure document?

The Federal Trade Commission (FTC) requires sellers of franchises and other business opportunity ventures to provide prospective investors with the information they need to make an informed investment decision. It also requires that all earnings claims be documented, that the information investors receive be complete and accurate, and that investors have adequate time to consider and evaluate the disclosures before making any final purchase commitment. All required information is given to prospective investors in the form of a franchise disclosure document, which must be furnished at least 10 business days before any purchase may occur. This document includes 20 important items of information, such as...

• Names, addresses and telephone numbers of other franchisees.

• A fully audited financial statement of the seller.

• The cost required to start and maintain the business.

• The responsibilities you and the seller will share once you buy a franchise.

• Litigation involving the company or its officers, if any.

Again, use your professional support to examine all of these issues. Some of the contract terms may be negotiable. Find out before you sign; otherwise, it will be too late.

6. How can I evaluate my potential to become a successful franchisee?

Perhaps your most important step in evaluating a franchise opportunity is examining your own skills, abilities and experience. The ideal franchisee is a creative, outgoing person who is eager to succeed, but not so independent that he or she resents other people’s advice. You must be able to balance your entrepreneurial initiative with a willingness to comply with the business formulas used by the franchisor. Remember, a successful partnership between franchisee and franchisor involves a mutual understanding of each other’s values and achievements.

Determine exactly what you want out of life and what you are willing to sacrifice to achieve your goals. Be honest, rigorous and specific. Ask yourself: Am I qualified for this field...

• Physically?

• By experience?

• By education?

• By learning capacity?

• Financially?

Ask yourself how this decision will affect your family. Do they understand the risks and sacrifices required, and will they support your efforts? Beginning a franchise is a major decision that does not ensure easy success. However, an informed commitment of time, energy and money by you and your family can lead to an exciting and profitable venture.

7. How can I prepare prior to shopping at a franchise exposition?

Attending a franchise exposition allows you to view and compare a variety of franchise possibilities. Keep in mind that exhibitors at the exposition primarily want to sell their franchise systems. Be cautious of salespersons that are interested in selling a franchise that you are not interested in. Before you attend, research what type of franchise best suits your investment limitations, experience and goals. Then, comparison shop for the opportunity that best suits your needs, and ask questions.

Know How Much You Can Invest

An exhibitor may tell you how much you can afford to invest or that you can’t afford to pass up this opportunity. Before beginning to explore investment options, consider the amount you feel comfortable investing and the maximum amount you can afford.

Know What Type of Business is Right for You

An exhibitor may attempt to convince you that an opportunity is perfect for you. Only you can make that determination. Consider the industry that interests you before selecting a specific franchise system. Ask yourself the following questions:

• Have you considered working in that industry before?

• Can you see yourself engaged in that line of work for the next 20 years?

• Do you have the necessary background or skills?

If the industry does not appeal to you or you are not suited to work in that industry, do not allow an exhibitor to convince you otherwise. Spend your time focusing on those industries that offer a more realistic opportunity.

Comparison Shop

Visit several franchise exhibitors engaged in the type of industry that appeals to you. Listen to the exhibitors’ presentations and discussions with other interested consumers. Get answers to the following questions:

• How long has the franchisor been in business?

• How many franchised outlets currently exist?

• Where are they located?

• How much is the initial franchise fee and what are the additional start-up costs, if any?

• Are there any continuing royalty payments? How much?

• What management, technical and ongoing assistance does the franchisor offer?

• What controls does the franchisor impose?

Exhibitors may offer you prizes, free samples or free dinners if you attend a promotional meeting later that day or the next week to discuss the franchise in greater detail. Do not feel compelled to attend. Rather, consider these meetings as one way to acquire more information and to ask additional questions. Be prepared to walk away from any promotion if the franchise does not suit your needs.

Get Substantiation for Any Earnings Representations

Some franchisors may tell you how much you can earn if you invest in their franchise system or how current franchisees in their system are performing. Be careful. The Federal Trade Commission (FTC) requires that franchisors that make such claims provide you with written substantiation. Make sure you ask for and obtain written substantiation for any income projections, or income or profit claims. If the franchisor does not have the required substantiation, or refuses to provide it to you, consider the claims to be suspect.

Take Notes

It may be difficult to remember each franchise exhibit. Bring a pad and pen to take notes. Get promotional literature that you can review. Take the exhibitors’ business cards so you can contact them later with any additional questions.

Avoid High Pressure Sales Tactics

You may be told that the franchisor’s offering is limited, that there is only one territory left, or that this is a one-time reduced franchise sales price. Do not feel pressured to make any commitment. Legitimate franchisors expect you to comparison shop and to investigate their offering. A good deal today should be available tomorrow.

Study the Franchisor’s Offering

Do not sign any contract or make any payment until you have the opportunity to investigate the franchisor’s offering thoroughly. As will be explained further in the next section, the FTC’s Franchise Rule requires the franchisor to provide you with a disclosure document containing important information about the franchise system.

Study the Disclosure Document

Take time to speak with current and former franchisees about their experiences. Because investing in a franchise can entail a significant investment, you should have an attorney review the disclosure document and franchise contract. You also should have an accountant review the company’s financial disclosures.

8. Are there additional sources of information?

Before you invest in a franchise system, you should investigate the franchisor thoroughly. In addition to reading the company’s disclosure document and speaking with current and former franchisees, you should speak with the following:

• Accountant – Investing in a franchise is costly. An accountant can help you understand the company’s financial statements, develop a business plan, and assess any earnings projections and the assumptions upon which they are based. An accountant can help you pick a franchise system that is best suited to your investment resources and your goals.

• Lawyer – Franchise contracts are usually long and complex. A contract problem that arises after you have signed the contract may be impossible or very expensive to fix. A lawyer will help you understand your obligations under the contract, so you will not be surprised later. Choose a lawyer who is experienced in franchise matters. It is best to rely upon your own lawyer or accountant, rather than those of the franchisor.

• Banks and Other Financial Institutions – These organizations may provide an unbiased view of the franchise opportunity you are considering. Your banker should be able to get a Dun and Bradstreet report or similar reports on the franchisor.

• Better Business Bureau – Check with the local Better Business Bureau (BBB) in the cities where the franchisor has its headquarters. Ask if any consumers have complained about the company’s products, services or personnel.

• Government Departments – Several states regulate the sale of franchises. Check with your state Division of Securities or Office of Attorney General for more information about your rights as a franchise owner in your state.

• Federal Trade Commission (FTC) – The FTC publishes information that may be of interest to you, including business guides. Visit for more information.

• Franchise Financing

In order to receive financing, a business must apply for credit at a source such as a bank, commercial lender or leasing company. With proper planning and guidance, you can greatly influence the financial institution's decision on whether or not to extend you the amount of credit on the terms you desire. Since the credit source most likely knows little, if anything, about your business, it is your responsibility to educate them and get them to look favorably on your application.

Have A Business Plan

A well conceived, comprehensive business plan is crucial. You must clearly and convincingly communicate what you intend to accomplish and how you plan to achieve your goals. The experience of writing the business plan forces you to become more focused about your specific business.

Be Complete and Thorough

A lender will give you an application to complete. Answer ALL of the questions in detail, fill in ALL of the blanks and provide COMPLETE addresses, etc. In most cases, your application and supporting documents are all a potential creditor may see of you. If you don’t care enough to provide all of the information as requested, why should the lender think you are going to pay enough attention to detail to make your business succeed? It may become tedious, but everything is requested for a reason. Plus, complete applications get expedited processing; incomplete applications get set aside for later follow-up.

Know How Much You Need and For What Purposes

Be specific. It is up to you to know these things. It is not up to the lender to guess.

Be Realistic

Optimism is expected, but unrealistic expectations create skepticism on the lender’s part. Explain how you will use the financing requested and how it will benefit the business. Be sure you don’t make exaggerated claims, as you will most likely lose credibility.

Show How You Will Pay The Loan Back

Build repayment into your financial projections. Your likelihood to repay is the ultimate consideration in evaluating your request. Collateral is important, but lenders would rather have repayment. Prove, on paper at least, that you can generate the revenues to cover your operating costs with enough left over to pay the loan and your living expenses/salary.

Cover the Downside

Most businesses don’t operate exactly as planned. Identify any weaknesses or potential problems in your business and address contingency plans and resources, as well as an exit strategy.

Have a Stake in the Business

With the possible exception of your family, no one is likely to provide 100 percent financing. Why should anyone else take a chance on you if you’re unwilling to invest your own resources?

Put Yourself in the Lender’s Position

Lenders want to make loans that will be paid back. They evaluate your personal and business credit history, your ability to repay based on credible financial projections in your business plan, and your collateral, among other things. If you were a lender, would you give your business this loan?

Be Persistent

If you application is rejected, don’t give up. This gives you an opportunity to fix whatever was lacking. If you have put an honest, thoughtful effort into your search for financing, people will help you get it. That includes people you may be tempted to blame for not approving your request. Don’t think "rejection" think "constructive criticism."

Frame of Mind

Obtaining financing is not easy. Learning how to prepare a business plan and financial projections can be time-consuming and frustrating – but the point is that you are learning. The knowledge you gain in the process will be invaluable to you in the constant refinement that any business undergoes in both the planning and operational stages.

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