Posted by admin on Jan 13, 2010 in
Franchise Franchise operations manuals may seem daunting, especially for a company that has never written an operations manual before. Bewildered by the new business of franchising, with its legal requirements, franchise disclosure documents, operations manuals, training programs, etc., many companies delegate responsibility to a high-priced franchise consultant.
But using someone to write your franchise operations manual who knows literally nothing about your business, never makes any sense when everything is considered objectively. And, besides a hefty price tag of $20,000 or more to write the manuals, using franchise consultants brings another, expensive result – legal risk. Here are some drafting tips and strategies from a recognized, international franchise expert.
Why Franchise Consultants Are Risky Business
Paying someone who knows nothing about your business, and having them learn it from scratch at your expense is really just common sense. Using franchise consultants for what is a relatively easy and straightforward task has never made any sense – except to the franchise consultants who charge exorbitant amounts to write an operations manual. It’s one of those little franchise secrets that the consultants don’t ever mention or discuss. Read more... (902 words, estimated 3:36 mins reading time)
Tags: Affordable, Easy, Franchise, Manual, Manuals, Operations, Steps, Three, Write
Posted by admin on Jan 12, 2010 in
Franchise For the last twenty-eight years, as a franchise attorney, author, instructor and recognized franchise expert, I’ve helped firms enter and prosper in the franchise industry – each hoping to become the next “McDonalds” of their respective industries. Along the way, I’ve met and worked with an interesting group of entrepreneurial founders. From apparel to water treatment, the franchised concepts were also incredibly diverse. Some of them interested me to the point where I considered buying a franchise myself. In two or three cases, talks were initiated to discuss the possibility, but never moved forward. I just couldn’t find the precise set of criteria to satisfy my exacting requirements. After all, I had advised hundreds of prospective franchise buyers, and developed sophisticated radar for detecting the good, the bad and the ugly in franchise investments.
In May of 2002, my life changed dramatically as I took the plunge and became a first-time franchise owner. I’d just completed a franchise development project for a San Francisco Peninsula company poised to enter franchising. They operated a very successful home improvement business that specialized in a unique niche. Targeting homes constructed in the 1960’s to the 1980’s having old, flat, ugly interior doors, this company replaced all interior doors in a home with new, freshly-painted raised panel designer doors, locksets and hinges. Their advertising mantra was “Replacing America’s 1.16 Billion Interior Doors.” Read more... (3424 words, estimated 13:42 mins reading time)
Tags: Buying, First, Franchise, Mrs., Their
Posted by admin on Jan 6, 2010 in
Franchise Evaluating franchise attorneys and evaluating franchise consultants can seem a daunting task. But the firm a company selects to assist its entry into franchising, refine existing franchise efforts or make franchise opportunity investment decisions will have profound consequences. While asking for a list of references is one approach (and when is anyone ever dumb enough to provide a bad reference?) there are more objective criteria that are not dependent on selectively disseminated information.
By addressing the nine Franchise Questions, topics and subcategories of information discussed below, you will eliminate virtually 95% of the individuals or firms you are considering. Then efforts can concentrate on evaluating the 5% cream of the crop (especially franchise attorneys) that truly merit consideration:
A. FRANCHISE EXPERT:
The #1 factor in evaluating so-called expertise – are the principals really franchise experts? There are objective criteria to determine this:
(1) Have they qualified and been allowed to testify as a franchise expert in court and arbitration proceedings? Being involved as a franchise expert in the franchise litigation process gives a sensitivity and radar for detecting and avoiding future franchise problems.
(2) How many books on franchising have been written by the principals?
(3) How many franchise articles have been published in journals or magazines?
(4) What is their franchise-related teaching experience? (see topics E and F below)
(5) What is their depth of experience in the franchise industry? (see next topic below) Read more... (1366 words, estimated 5:28 mins reading time)
Tags: Attorneys, Consultants, Critical, Evaluation, Franchise, Questions
Posted by admin on Jan 4, 2010 in
Franchise What’s the difference between franchising vs. licensing a business? The starting point in the franchising vs. licensing a business analysis is to consider the legal aspects, then the business aspects. In considering the legal aspects, begin with the following premise that applies to both options. If you put someone into business (or allow them to use your business name/mark) this transaction will normally be a regulated activity, subject to substantial penalties for noncompliance.
This guiding legal principle, coupled with the business aspects of selling a franchise vs. a license (discussed below) will answer most franchise vs. license questions. Advice from a competent franchise attorney is indispensable.
BACKGROUND OF FRANCHISE & BUSINESS OPPORTUNITY LAWS
Why does regulation exist? The government, due to documented past abuses where tens of thousands of individuals lost all of their net worth by investing in nonexistent or worthless business endeavors, has devised two principal consumer protection mechanisms:
(1) franchise disclosure-registration laws; and
(2) business opportunity laws.
The thrust of these laws is to require sellers to give potential buyers enough pre-sale information so informed investment decisions can be made before money changes hands, long-term contracts are signed and sizeable financial commitments are undertaken. Under federal regulations, a Franchise Disclosure Document (FDD) covering twenty-three individual chapters and a hundred or more pages in length must be prepared and given to every potential buyer at least 14 calendar days before any contract is signed or money paid. Read more... (2599 words, estimated 10:24 mins reading time)
Tags: business, Expansion, Franchise, Franchising, License, Licensing, Opportunity, Options
Posted by admin on Jan 2, 2010 in
Franchise Franchise Disclosure Documents (FDD) under the FTC’s new Franchise Rule continue to be a good concept in theory. Unfortunately, reality plays a more important role and reveals an entirely different picture.
Here are some of my observations, based on twenty-eight plus years of experience in the franchise industry as a franchise attorney, franchise expert and former franchise owner. During this time, I’ve drafted, reviewed and negotiated over 500 Franchise Disclosure Documents.
Franchise Disclosure Goals
Franchise Disclosure Documents or FDD (formerly known as Uniform Franchise Offering Circulars) are a document containing twenty-three chapters of information. These disclosures are intended to give prospective franchise buyers enough pre-sale information so an intelligent franchise investment decision can be made before long-term contracts are signed, money changes hands and sizeable financial commitments are made. In most cases, a franchise investment has long-term financial consequences. It means putting everything on the line – savings, retirement accounts, home equity, etc. With all this at stake, it’s easy to see why the disclosures in the FDD are so important.
Aura Of Credibility
Attached as exhibits to the FDD are the franchise company’s audited financial statements, franchise agreement, and a list of operating (and departed) franchise owners. If the company elects to make a franchise “Earnings Claim,” that information will be set forth either in Item 19 or attached as another exhibit. The entire document is quite lengthy and can exceed several hundred pages. In certain states (known as franchise registration states like California, New York, Illinois, etc.) the FDD makes reference to being registered with the state. All these formalities creates an aura of credibility. Many franchise buyers assume a regulatory agency has reviewed and approved the franchise offering. Unscrupulous franchise companies engage in blatant misrepresentation, referring to their franchise registration with a state as that state’s “stamp of approval.” Nothing could be further from the truth. Read more... (1584 words, estimated 6:20 mins reading time)
Tags: Accomplished, Disclosure, Documents, Franchise, Mission