The Middle Spoon

The Middle Spoon

The Middle Spoon is a specialty cocktail, light fare and dessert bar which was founded originally in Halifax, Nova Scotia.  The concept was designed to offer a cozy, warm and intimate setting for primarily female clientele.  The menu, atmosphere and entire personality of the Middle Spoon was created to make an excellent venue for events such as company lunches or dinners, date nights, girls nights out or just an after dinner treat for a dessert and a drink in a romantic setting.  The Middle Spoon was an immediate hit with the Halifax crowd and the first location took off with a bang and became a Nova Scotia favorite.  The original location was enormously successful, but the opportunities for growth were limited given geographic location of the original store.  There were opportunities to open maybe two more stores in the Halifax, Nova Scotia market, but outside of this, there were limited markets for expansion considering the long distance between markets.  The natural evolution of the expansion strategy.      

 

In 2015, The Middle Spoon decided to franchise the model in order to scale from a single location to new markets in both Canada and the U.S.  The Canadian franchise decided to hire Franchise Marketing Systems to develop the brand and create the franchise model.  Franchise Marketing Systems team of consultants, led by Chris Conner, worked with The Middle Spoon to create a market strategy and develop a plan for how to scale the model.  What was particularly intriguing about the Middle Spoon model was that the market was generally open for both dessert and high end cocktails on both the consumer and franchise side of the business.  The Middle Spoon brand needed to be transitioned to the U.S. from a branding, business model and operating concept standpoint to effectively.  The franchise strategy was designed to offer a single, multi-unit and area developer franchise platform which could provide options for both owner-operator franchisees and larger, well capitalized franchisees. 

 

Franchise legal work was handled by a franchise law firm who created the FDD, Franchise Agreement and handled the legal work needed to launch the franchise system in both Canada and the U.S.  Franchise Marketing Systems then created the operations manuals, training programs and franchise development platform needed to support the new franchisees as they came on board and opened franchise locations.  The documentation was wrapped into franchise operations manuals and training classes by FMS consultants and documented to deliver support and training.  Then Franchise Marketing Systems creative team put together the brochures, presentations, franchise website and other materials to be used to promote the Middle Spoon Franchise Offering. 

 

The first two franchises were sold in Canada and the first U.S. franchise was sold in Sugarland, Texas outside of Houston.  Sugarland was considered one of the best markets around Houston as it exhibits the key characteristics of what makes an ideal market for Middle Spoon.  Sugarland has great demographics, higher income levels, has a focus on family and is made up of a large population of people with higher disposable income levels.  The menu for Houston was redesigned to focus on a wider range of lunch and dinner offerings to accompany the dessert and drink offerings (https://www.themiddlespoon.com/houston-tx-sugarland-menu/ ).  Sugarland, Texas also has a lower level of dessert and cocktail lounges making the Middle Spoon offering even more attractive. 

 

The concept opened at the following address:

Sugar Land Town Square

15911 City Walk, Sugar Land, TX

 

For more information on The Middle Spoon Franchise, visit the corporate site:

https://www.themiddlespoon.com/houston-tx/

 

Mitsubishi (Japan)

Mitsubishi is one of the world’s largest companies with business divisions in a wide range of different market segments and industries.  The organization was developed in the late 1800’s and quickly diversified into a number of businesses starting with shipbuilding, mail service and mining.  The company was heavily involved in the Japanese war effort during World War II and following was disassembled.  By the mid-1950’s, the organization began to take shape again and was slowly put back together, by 1954, Mitsubishi was officially back in operation.  The company then began to expand with new offices in 14 different countries and entryway into new industry segments such as banking and trading. 

 

One of the Mitsubishi business divisions is what is defined as the Living Essentials Group which focuses on products, services and other consumer goods.  Through this division, the organization developed a subsidiary under the brand Jalux.  Jalux is also involved in a wide range of products and consumer markets, one of which was a specialty sweet and confectionary retail brand called J. Sweets.  The brand consisted of products that originated from the Japanese market, but had appeal throughout the Asian markets.  The model had been originally proven in a single Los Angeles retail outlet.  The J. Sweet brand was successful, but needed scale to be able to purchase products at less cost and advertise the brand on a broader scale more efficiently.  Although the Japanese American market was the “low hanging fruit” for the J. Sweets brand, there was a much larger market that just needed to be educated and shown how great the product line was and introduced to the brand. 

 

In 2013, Mitsubishi hired Franchise Marketing Systems and Christopher Conner to develop the franchise model and create a franchise prototype that could be developed throughout the United States.  The Franchise Marketing Systems team worked closely with Jalux management to conduct franchise research and develop a franchise business plan.  Market demographics were reviewed for the current customers to understand how far people were traveling and what primary demographics were for the key customer base.  Retail locations for J. Sweets were very high end and a bit too expensive for broad scalability, the model was toned down and stripped down to only what was necessary to make the model work and allow for a lower initial franchise investment.  Franchise Marketing System’s team developed the franchise business plans for both the franchisor and the franchisees who would invest in the J. Sweets business model. 

 

Franchise Marketing Systems completed the franchise feasibility study and presented to Mitsubishi’s management team.  Retail and confectionary products had performed well in the U.S. franchise market in recent years and there were no brands that focused on the Asian population throughout the U.S.  The opportunity for the brand to scale was significant and given the strong backing, credibility and significant market for Asian-American products, but the Franchise model would require a focused U.S. based team to support growth, deliver training and execute the expansion model.  Mitsubishi’s team was not willing to have personnel in the U.S. in order to support this growth.  As a result, Franchise Marketing Systems recommended to hold off on a retail franchise model and focus more on e-commerce as a way to leverage the product lines and develop revenues through online sales.   

 

For more information on how to develop a Franchise Feasibility Study, Contact Us:

info@FranchiseMarketingSystems.com

 

HOW DO I BECOME A FRANCHISOR?

 

HOW DO I BECOME A FRANCHISOR?

You have a great idea and your company is growing so fast you can hardly keep up, clearly, the market wants more of what you have to offer. There aren’t enough hours in the day to meet the demand and if you had more locations, you could sell a lot more of your product or service. You need and want to grow your business, but the difficulties related to raising capital, hiring large amounts of staff and operating a large entirely corporate-owned chain is cumbersome. 

It could be time to franchise your business, but how do you become a franchisor?

You will need help.  Like any new endeavor, the process of becoming a franchisor has potential risks associated and the business model is unique when compared to other growth models.  Good franchise systems have excellent models in place to benefit all parties involved and that doesn’t happen by accident. 

Franchise consultants exist who can facilitate your becoming a franchisor.

 

To become a franchisor, there is a significant amount of planning, strategy and simply put, paperwork to do.  Experienced franchise consultants can help with this franchise development process every step of the way. The key to choosing the right franchise consultant can be broken into three categories to help franchise your business:

First, does the franchise consultant have a team behind them to support all aspects of the development process?  Make sure the resources and experience exist to support the franchise development process from beginning to end.

Second, do the team of franchise consultants have experience working with start-up franchisors who are new to the market and are working on selling their first 5 units.  This is a unique part of franchise development and requires special processes.

Third, are the franchise consultants compensated on performance and results of the franchise roll out?  You will want people who are vested in your success and have a reason to make sure that the franchise model is effective. 

 

Franchise consultants will help evaluate the franchisability of your business which must be repeatable and have opportunity for scale. They will identify your competition and research where there is opportunity for competitive advantages in the market.  The first step is the franchise Strategic Plan where franchise consultants would help you determine the numbers and structure of the new franchise model. As a new franchisor, you will need guidance in determining what a realistic franchise fee should be for your business; what royalty could be expected as a new franchisor; what kind of territory should be identified; what kind of training you will provide; what the franchisee will need to run the business; what the initial investment will be for the new franchisee along with other key aspects.

 

As franchisor, you will need to create a new and separate entity that will be the franchise business. After the initial planning stage, there is the Franchise Disclosure Document, also known as the FDD. That is the legal document that is presented to prospective buyers of the franchise in the pre-sale disclosure. Some states require that the FDD be registered before you can sell your franchise concept in that state. You should retain a good franchise attorney who can guide you through this process and develop the FDD with proficiency.  This document has 2 main parts, the first part discloses what you as franchisor agree to do for franchisees in plain English. The initial investment is stated again along with franchise fees, royalties, advertising requirements, a P&L, territory, duration of the agreement, trademarks and the training program. The second half is the franchise agreement which outlines the agreement between you the franchisor and your new franchisee. After the FDD, your franchise consultant should help the new franchisor create an Operations Manual for the business. The manual outlines the steps a new franchisee will follow to have a business continue to be as successful as what you, the franchisor, have created. Other franchise consulting services provided to ensure a successful new franchise include a marketing plan and some creative artwork for the logo, a good franchise website and effective advertising.

 

After the paperwork is done, your franchise consultant should carry the staff and the procedures to guide you in the right direction to start selling the concept for you, the new franchisor.

 

Trisha Conner

Franchise Consultant

Franchise Marketing Systems

Trisha.Conner@FMSFranchise.com

 

 

Benefits of Franchising Your Business

Benefits of Franchising Your Business

As an entrepreneur continues to grow their business, managing all aspects of the day to day business effectively quickly becomes a challenge.  Multiple locations of any enterprise involves many moving parts, all of which need to be monitored and maintained in order to sufficiently and successfully exercise a typical day of business.  Elements such as staffing, customer service, sales and brand continuity all become more and more difficult as   Growth can lead to unsustainability if not acted on properly.  Business owners frequently wish for expansion, but fear their ability to control each operational process will become muddled or lost altogether.  And, in most cases, they are probably right.  Many times, business owners who grow through company-owned and managed locations run into obstacles that hinder growth as the business expands beyond what they can manage directly.   

 

It is at this crossroad in a business’ growth that franchising becomes a viable expansion option.  Franchising your business allows you to multiply a brand’s footprint, but with added manpower and capital to scale the growth.  The value of having independent business owners who have money invested and their direct, onsite focus is enormous and the performance of franchise-owned and operated businesses almost always outperforms company-owned locations of the same business model.  Franchising your business can also reflect positively to the business’ image, as the public sees this new business as locally owned and operated and if the franchise owner is the right person they are connected to the community and know how to connect to consumers in the area. 

 

People are naturally attracted to familiarity, and a process that is consistent regardless of the location in which it is being executed will lead to successful results.  Franchising allows a brand to grow and duplicate at several levels.  At the national or global level, all franchisees and corporate units contribute to a marketing fund that is used to promote the brand and build awareness for the company.  At the regional level, franchisees work together through regional cooperatives where advertising dollars are spent in a region to build local awareness and leverage economies of scale in advertising and promotion spend.  At the local level, franchisees are required to spend dollars in promoting and advertising the business in their immediate market.  The combination of the advertising platforms maximizes the opportunity for brand development and makes franchising a win-win relationship between franchisor and franchisee.  

               

Franchising your business allows entrepreneurs to attract other like-minded people with a thirst for owning their own business, but with the desire to have guidance and support along the way.  Many do not want to endure the time, effort and risks inherent in starting a business from the ground up.  By purchasing and joining a franchise, franchisees are able to reduce the stress and increase the chances of success.  Franchising your business will naturally pool resources together – collaboration amongst franchisees leads to sharing of ideas and proper quality checking of each system and process.  A business owner benefits in having easy access to criticism in an appropriate and relevant manner.

               

The benefits of franchising your business can be extensive, but when it comes down to it, the key benefit is a transition from operational focus to strategic.  The entrepreneur who is able to make this transition stops focusing on the small items inherent in managing a business and begins to focus on what strategic aspects will help drive the growth of the brand and scale the business.  The funny thing about this transition is that people who are stuck in an operational mindset many times are busier and work harder than those who are strategic-minded.  Franchising is a big picture initiative where the product becomes the business model itself and with each transaction, the brand grows exponentially. 

 

For more information on the benefits of Franchising Your Business, Contact us:

info@FranchiseMarketingSystems.com

What Impact the Tax Reform has on Franchising.

What Impact the Tax Reform has on Franchising.

The upcoming tax reform is certainly catching everyone’s attention and has been front and center in the news.  The question is how will this tax reform affect the franchise and small businesses in the U.S.  The wide sweeping repeal of tax law has what most business people would consider extremely positive potential effects on the business community and as a result positive effects on the consumers.  The thinking is that more money in people’s pockets equates to more spending more job growth and more opportunity for everyone.  Regardless of political stances, this formula sounds very good in theory.

 

Unlike many of the personal tax exemptions which will expire in a few years, most of the business reforms are permanent and will have lasting effects.  Corporate tax rates today vary from 15% to 39%.  For this reason, many businesses in certain cases refuse to expand and increase their profitability with an increasing tax burden.  This is also the supposed reason why companies like Apple refuse to bring their profits into the United States and keep funds overseas in more tax-rate friendly environments.  The new corporate tax rate is set at a flat 21% rate which makes for an attractive way for businesses to invest in their business growth and expand their businesses in the U.S.  In addition, Trump has suggested that he will work towards a one time tax credit for companies like Apple, Microsoft and Google to bring these funds back into the United States and invest in business, jobs and other economy-boosting elements.  Read more here on Apple (http://money.cnn.com/2017/02/01/investing/apple-cash-overseas/index.html )   

 

With this drop in the corporate tax rate, in order to keep uniformity between personal and business rates, there is a 20% deduction against individual tax rates.  There are limitations on this deduction based on income levels, but the end result is a significantly greater degree of attractiveness for individuals to start a business and take the first step into entrepreneurship.  The threshold limit of $315,000 for married couples filing jointly is most likely above what the large majority of these small business owners make in income meaning that the tax code is simplified and more understandable.  What many maybe don’t realize is that the majority of business growth in the U.S. is through what is defined by the SBA as Micro-companies.  These are businesses with 10 employees or less, they are typically operated by a person who works in the business every day.  This trend started in 2014 where the number of new businesses in the U.S. finally turned to growth whereas in the decade before the number of new businesses shrunk considerably.  This new tax reform should drastically increase this trend with more entrepreneurship and more job creation.  The SBA presents that an estimated 67% of all new jobs created since the recession have come from these small firms.  (  https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf )  Once again, this new tax reform only supports and should expand this trend of new hiring and business growth. 

 

And how does this affect the franchise market and what impact will these tax reforms have on the franchise industry?  The short answer is that all effects seem to be very positive.  Franchises by nature are generally in the small firm category and would be considered owner operated in most cases.  This tax reform will create yet more incentives to invest in a franchise and open a business.  The traditional value proposition of a franchise investment remains the same where a new business owner benefits from business plans, training, support and a proven model, but in the end the franchisee is still a small business owner.  Only time will tell how much of an impact this tax reform has on franchising, but most perspectives, this should be an excellent starting point for a strong growth curve in the franchise market. 

When Are You Ready to Franchise Your Business?

When Are You Ready to Franchise Your Business?

You have a business and want to expand.  There are a variety of ways to expand the number of locations, company owned, bringing on partners, venture capital or franchising. Many businesses decide that franchising could be an extremely effective way to develop a brand and business model without the intensive capital or staffing needs of other channels. But how do you know your business is ready to franchise and how do you know when is the right time to franchise your business? Here are some items to think about if you’re seriously considering whether to franchise your business.

 

1- Is your business currently successful and how do you define that success? If you want to entice entrepreneurs to invest in your brand, it must have a track record of solid revenue growth, dependable profit margins, and a strong customer/client base. Your business may be ready to franchise if the business has credibility based on current success.

 

2- Why is your business successful? Can that success be achieved in other locations in volume? The success must be due to factors that can be replicated and easily taught to others. For example, if your successful concept is based on a service that’s in high demand and isn’t widely available, your business may be ready to franchise if prospective owners can learn how to run your business model. But if the reason your business is successful is due to being located in one hot market or to having unique skills that make you best suited for success, you may not be able to replicate that success.

 

3- Can you afford to franchise? You may be ready to franchise your business if you have the capital to put the necessary franchise infrastructure in place. You’ll need to hire attorneys to provide legal support and all the necessary documentation. You’ll need to set up training, operations, and marketing systems. You’ll need to cover the cost of state registration fees. You may hire franchise consultants. The cost to franchise can range from $15,000 to $100,00 depending on the business.

 

4- Can you sell your franchise business concept to entrepreneurs? How will you convince anyone to spend the money necessary to open a location for your brand? You’ll need to market your business to prospective owners and sell them on your concept. You may be ready to franchise if you can make the argument that between the franchise systems you’ve put into place and the prospect for customer/client demand and revenue, that your business will be a success for anyone willing to take a risk.

 

5- Are you ready to provide the systems to franchise owners for long-term success? If you’re ready to franchise your business, your franchise plan must include systems for training, operations, administration, and marketing. If your business requires equipment, you need to find ways to minimize those hard costs for owners. You may need to offer assistance with lease agreements or attaining the most desired locations. Your business needs to be turnkey for every franchise owner. You may be ready to franchise your business if you have a solid plan for franchise owner support.

 

For more information on when you should franchise your business, contact us for a free franchise consultation:

https://www.franchisemarketingsystems.com/contact_franchise_consultants/

How to Franchise Your Business Well

Why is it that some franchises seem to expand so quickly and others can’t seem to get off the ground?  In the franchise development world, you have the opportunity to see some “out of this world” ideas and business concepts.  The really exciting part of working in franchising is that we are able to work closely with entrepreneurs who have more vision, insight and ability to innovate than anyone on the planet.  We are confident that what drives the global economy is the small business owner, entrepreneur who is looking for ways to create, constantly looking for ways to build and always taking a positive spin on how to approach opportunities.  Franchising is a nice way to keep your finger on the pulse of the global small business economy and to see what, who and how people are doing business.  In most cases, what happens in the small business and franchise markets is what is coming to the broader market.  On one hand, the franchise market has produced a multitude of amazing success stories, but why do some not scale as efficiently and achieve duplication of their brand through franchising?

 

When you franchise a business, you enter a new world of business, some business leaders just aren’t great at being a coach. 

Just because an entrepreneur makes a fantastic product and excellent pizza, doesn’t necessarily mean they have the business skill set needed to teach, coach or mentor others.  Franchising is a business where the franchisee invests in the business because they need the advice, guidance and counseling from the franchisor.  A Franchisor needs to be able to share and teach intellectual property to new franchisees and sometimes the entrepreneur can hold back the growth of the company if they are unable to communicate effectively to teach, train and sell the vision of the franchise model.  Our direction to a business that is just starting to Franchise the Business model, do a hard self-evaluation, if you don’t have the skill set to do this, there are lots of professionals out there you can bring into your system to support your growth and be a leader within your franchise business. 

 

Franchise Development is a Serious marketing and sales business.

There are cases in franchise development where “Build it and they will come” holds true, but the majority of the time, it takes a concentrated effort to market, promote and sell the franchise.  When you franchise your business, you now are tasked with the responsibility of sharing your vision and convincing other people that what you have to offer is worth the investment and offers value to them over doing it on their own.  Franchise development is unique in that you are effectively selling “air” when you promote your franchise brand.  This transition from selling a physical good, product or item to now selling an idea requires a good marketing plan, franchise sales process and resources to support these marketing efforts.  Typically, this requires the involvement of franchise brokers, or professional franchise sales people who can assist the new franchise in going to market.  The franchise systems that have success in franchising invest the time, money and effort into franchise collateral materials, promotional tools and overall branding.  The great franchise systems certainly have a look, feel and presentation that resonates with a potential investor and looks bigger than a “mom and pop”. 

 

You Should have a Great Concept when you Franchise your Business.

Good ideas are never easy to come by, when you do find one, the process of franchising allows a business owner to leverage that idea and monetize the concept through growth and duplication into new markets.  Some markets are just tough to franchise when it comes down to it.  If you have a QSR food service model and are considering franchise expansion, you better have a strong differentiator to be able to attract attention and draw interest from other food service franchise brands.  In some cases, established and mature markets can be franchised with a good concept and a unique approach to the model.  OrangeTheory is a great example of this idea, it started with a new approach to fitness and health services using the group fitness model and what started out as the “Ellen Latham” fitness program used an innovative technology and system to help clients measure their heart rate as they went through the fitness program.  With partners, the business rebranded to OrangeTheory and in only 6 years was able to expand to over 1,000 locations worldwide.  Fitness is a crowded and competitive market which makes this growth even more incredible, but what has helped drive the expansion is a great concept, something innovative and different from what had been done in the past.  The branding and overall look, feel and presentation are what has helped carry the model forward and in an essence has been the vehicle to support new franchisees willingness to invest in the model.  Ultimately, if you are going to franchise your business, you should have something innovative and something that will create interest and ultimately spark the investment in your brand and franchise model.

 

Good Numbers are the Heart of a Good Franchise.

It only makes sense that when you franchise your business, you are ultimately selling an investment opportunity.  If the numbers and return on investment exceed expectations for franchise investors, odds are that the model will continue to sell and grow.  The Creamistry Franchise model is a good example of this which is a new brand in the ice cream and frozen desert market segment who has in a way redefined the market niche.  The model incorporates liquid nitrogen to freeze the ice cream product and at the unit level has produced significant revenues and profitability for early adopter franchisees.  Impressive financials have been part of the presentation for Creamistry and the response has been nothing short of miraculous with over 200 units sold in the first three years of franchise development.  Fortunately, franchisees have been able to generate similar numbers in their units and continue to validate the brand and financials which in turn only drives more unit growth.  What Creamistry has realized, much like other brands is that when the model works and financials exceed the norm for an industry, multi-unit and master franchise growth becomes a reality.  Multi-unit franchisees are capable investors who have the capital to invest in 2 or more locations at one time.  In some cases, they will invest in large numbers of units at one time exceeding 50 units over a defined time period. 

 

For more information on how to decide whether to franchise your business and when is the right time to franchise, contact us for a no obligation consultation to review the model:

info@FranchiseMarketingSystems.com

 

 

Franchise Sales While Managing the Franchise State Registration Requirements

Franchise Sales While Managing the Franchise State Registration Requirements 

Franchise development is a highly regulated market segment of business and requires careful management to offer franchises appropriately and within the guidelines of each state’s franchise rules and regulations.  It is important to first understand why and what the franchise regulations are meant to do and then the process of adhering to franchise registration requirements makes more sense. 

The first item to know and understand is that there are two levels of compliance, the first is drawn from the Federal Trade Commission and was derived from FTC Rule 436 which originated in the 1970’s.  The FTC Franchise guidelines were meant to protect the franchise buyer from unruly franchise sales people who might tell a buyer anything in order in order to get the sale.  The Federal Trade Commission set out to create a franchise marketplace where the buyer had the opportunity to full access to information related to the franchise seller and the business they were investing in and therefore could make a better informed decision related to the franchise purchase.  Out of this legislation came the responsibility to create a Franchise Disclosure Document, originally referred to as a Uniform Franchise Offering Circular.  In 2008, the guidelines were drastically overhauled to bring the rules up to modern day practices and allow for more current business practices, they were referred to as the NASAA Franchise Registration and Disclosure Guidelines.

The Franchise Disclosure Document is a lengthy document which offers the prospective franchisee with an enormous amount of detail.  The document contains 23 items providing information covering a wide range of topics.   Item 1 discloses the companies involved in the franchise entity, Affiliates, Parent Companies and other organizations which have something to do with the franchise offering.  Item 2 offers information on the management team, bios, background and work experience for each of the management team members is presented.  Key elements of the disclosure include whether any of the management team or entities involved in the franchise have filed for bankruptcy or had litigation related to securities or franchising in the past.  Item 6 provides the franchise buyer with a clear picture as to what all of the related fees are in the franchise model and Item 7 clearly depicts a low and high range of the investment to open the franchised business – including working capital needed to manage the business to positive cash flow based on the affiliate’s experience.  The Franchise Disclosure Document is meant to provide the franchisee with enough information where they could make a qualified decision as to whether they should invest in the franchise. 

The FTC guidelines then go into detail related to how the franchise may be presented and what needs to happen to appropriately present the franchise opportunity.  First and foremost, the document needs to be drafted according to the specific NASAA Guidelines in order to present the franchise model.  Secondly, the FDD must be presented to the buyer at the time of a serious business discussion taking place during the franchise sales process and the buyer may not execute the Franchise Agreement until they have held the disclosure document for a minimum of 14 business days or 16 calendar days.

The Second level of franchise compliance is managed by the States.  There are 9 filing or business opportunity states and 14 franchise registration states which require acceptance and approval prior to your being able to offer a franchise in that state for sale.  The remaining 27 states follow the FTC guidelines and do not require registration to offer the franchise in that state.  With the internet and a wide-reaching marketing platform in today’s franchise market, all ads should contain disclaimers mentioning that some states require registration and that the ad contained does not constitute an offer to sell the franchise and that only the presentation of a Franchise Disclosure Document would be a true offering.  The franchise registration process is overseen by different governing bodies for each state, New York is the New York Department of Law, California is the Department of Business Oversight and Maryland is the Office of the Attorney General.  The states have unique processes and fees that range from $250 to $750 for annual registrations, again, the focus here is to protect the buyer by reviewing and approving the franchise offering. 

The Franchise legal and registration process requires capable legal counsel and strategic oversight to help maintain good standing with the states and FTC.  Particularly as a new franchisor, it is easy to sell ahead of yourself from a legal standpoint, by managing this process carefully, you can ensure a long-term growth strategy through solid franchise documentation.   

 

For more information on Franchise Registration processes, contact us:

Info@FranchiseMarketingSystems.com

 

International Franchise Registrations

International Franchise Registrations

As you build your business and expand your empire through franchising, it is not only critical, but potentially dangerous to sell Internationally without confirming you have abided by and registered your franchise offering with the necessary international regulatory agencies and governing bodies.  If you are based in the United States, you have the comfort in knowing that if you are offering a franchise in the U.S., you are already following the most strict and comprehensive franchise regulations in the world.  The Federal Trade Commission and the most developed franchise marketplace in the world have supported this evolution of what is now a complex legal environment for franchising in the United States.  Canada has similar regulations to the United States through the Arthur Wishart Act which requires disclosure of key items and the presentation of this information in a specified format to the buyer before a purchase can be made.  France, Great Britain, Australia and other nations have followed U.S. franchise regulations to have their own set of standards and rules which a franchisor must follow in order to be allowed to offer a franchise within their borders.  It is recommended that you have local counsel in any foreign country you are selling franchises into so that you may avoid obvious mistakes and potentially put your franchise in harm’s way. 

 

On top of regulation and international franchise laws, there are other specific laws which may impact your ability to offer a franchise in a given country or region of the world.  Trademark laws play a significant role in many countries franchise regulations.  Because you have a registered federal trademark with the USPTO in the United States does not mean you have any trademark protection in other countries.  U.S. brands have been surprised to find out that Canada has a completely separate trademark process, many times which is much more expensive to complete appropriately than the United States.  Many international franchise regulations require that the franchisor has a trademark in that particular country in order to offer a franchise in that region. 

 

Generally, international franchise regulations can be broken down into four categories – Disclosure Law, Relationship Law, Disclosure and Relationship Laws and Competition Law.  Although there can be variations to each, these represent the primary categories.  Disclosure Law is as it might seem, the requirement of the franchisor to provide information related to themselves, the business model and the relationship in an approved format prior to the franchisee making an investment in the franchised business.  Relationship Law stems from English contract law which states an agreement is legally enforceable in cases where the contracting parties were perceived by the court to have intended it. This legal relationship doctrine operates in addition to consideration.  Disclosure and Relationship Laws would be some combination of the two categories of legal structure between franchisee and franchisor.   Competition law is a law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies.

 

As you build your business and plan for international franchise growth, you should also build a plan for international franchise compliance.  In most cases, the logical solution is to find suitable counsel in any given country you intend to sell franchises into who can provide support for franchise and other related legal matters.  These points also speak to the benefit of finding and having a strong Master Franchise partner in any given country who can provide local market support, guidance and expertise for your expansion. 

 

For more information on how to franchise your business international, contact us:

info@FranchiseMarketingSystems.com

FYB7- You Sold a Unit at Your Franchise Companies

Be prepared for the relationship to change once you’ve sold a unit to an individual. You will want to build a stronger relationship with your franchisee now that they have purchased a unit from you. Mutual trust and respect must be shown as the individual who bought your franchise just spent a lot of money on your concept with the little faith they have from the few times they met with you. The faith an individual puts in a franchisor is even greater the smaller the franchise is.

 

shutterstock_247692859After the signing of the franchise agreement, you should already have it in your mind how much attention you plan on spending with each new franchisee. This doesn’t have to be set in stone now, but you should know how much time you want to devote to new franchisees and how to balance that out with selling franchises. You want to show that you support them and will be there when they need it, but you don’t want to get in the habit of spending all your time at one franchise location.

 

The problems with spending too much time helping one franchisee as they start are:

 

  • You’re giving a false representation of the regular assistance they will have.
  • They may become more reliant on you than they should be.
  • Your franchise sales may suffer drastically.
  • Your franchise improvements will suffer.
  • You lose time you could have invested elsewhere.
  • You will have a harder time balancing franchisees as you start opening up more than one franchise at a time.
  • If you’re the one investing time in your franchise and not your franchisee, when you leave, so will the success in the location.

 

If You Make Mistakes When Selling Franchises

If you happen to make mistakes when you’re selling our franchise companies, approach the mistakes objectively. No franchisor is perfect when they start out. The difference between the franchisors who fail and the ones who succeed is that the ones who fail do not know how to pick themselves back up. They take a mistake or a roadblock as a reason to stop instead of something pushing them harder to succeed. Franchisors who meet success see mistakes, accidents, or problems with expansion or their systems and cash in on those as opportunities to better their processes and their companies.

 

Join the winning franchise companies by facing mistakes head on with an objective mind and a will to succeed. A big name brand might not be as unachievable as it may seem.

 

Bottom Line on Selling Your Franchiseshutterstock_158383964

As you prepare to sell units for your franchise, you need to plan out the concept for your franchise companies, marketing, and who your target franchisees are. Remember that anyone can sell a franchise. The hardest part isn’t finding buyers, it’s finding the good buyers and maintain a strong brand with every new location you open. The first five years of franchising will almost always be the hardest.

 

To better insure success for the sale of your franchise companies, consider franchise development plans to:

 

  • Build a strong system slowly overtime. Create new franchises close to your headquarters when you start expanding so you do not lose resources trying to maintain franchise startups that are far away.
  • Consider hiring franchise brokers to help you sell franchises from the get go.
  • Don’t forget about the helpful resources that franchise masters are when I comes to quick expansion.
  • Don’t rush into the process.
  • Sell franchises only to worthy franchisees who fit your criteria.
  • Talk to your franchise consultants, create a review committee, and compare notes with those you believe are reliable sources and good judges of character and franchise potential.

 

Read More From the Franchise Your Business Series 7

  • Selling Your Franchise Among Franchise Companies
  • Franchise Companies Must Be Choose with Applicants
  • Doing the Prep Work for Your Franchise Companies
  • New Franchisees in Your Franchise Companies
  • “Good” Franchisees for Your Franchise Companies
  • Franchisees That Fit Your Franchise Companies Perfectly
  • Reaching Out To Bring People to Your Franchise Companies
  • Joining Franchise Companies is a Tough Decision to Consider
  • Personality Profiling for Franchise Companies
  • Including the Review Committee of You Franchise Companies
  • Better Communication in You Franchise Companies
  • Questions Will Be Asked About Your Franchise Companies
  • The Master Franchisees in Your Franchise Companies
  • Financing Your Franchise Companies and Watching Budget
  • Greeting New Startup Challenges in Franchise Companies