FOUR TIPS TO STARTING A SUCCESSFUL FRANCHISE

Have a successful model. It is impossible to create a franchise program without having at least one successful operation, a pilot, if you will. It is not feasible to think that if your core business loses money and is unsuccessful, that a franchisee will be any different.

INTRODUCTION TO FRANCHISING
FOUR TIPS TO STARTING A SUCCESSFUL FRANCHISE

By Cambridge Who’s Who Lifetime Member and Contributing Author Harold Kestenbaum

My name is Harold Kestenbaum, and I am a franchise attorney. Many of you may want some information about what a franchise attorney does. I realize that franchising is not a well-known sector of the legal profession unless you work in the industry as either a franchisor or a franchisee. Here is how I became involved in franchise law.

In 1977, at my third job out of law school, I worked for a solo practitioner in Manhattan who represented many corporate clients, some of whom were publicly traded. One company happened to find the opportunity to franchise their business. One day my boss said to me, “Kestenbaum, I need you to learn about franchising opportunities, so that you can handle our franchise client.” Not knowing what in the world he was talking about (I had done everything but franchise law up until then) I found every book I could on business franchising information (there was no Internet in 1977) and for the next four years I immersed myself in franchise law. When New York State passed a new franchise registration law in 1981, I decided that it was time for me to become a solo franchise attorney and resigned my position. I have been practicing franchise law ever since.

Based on my years of franchise experience, I wrote a book, So, You Want to Franchise Your Business, that delves into the opportunity a company embarks on the franchise path. It includes the dos and the don’ts of how to franchise your business. In my book, my co-author, Adina Genn, and I discuss what makes a company have the right opportunity for franchising and how to go about turning a successful business into a franchise company. Here are a few key tips from my book:

1. Have a successful model. It is impossible to create a franchise program without having at least one successful operation, a pilot, if you will. It is not feasible to think that if your core business loses money and is unsuccessful, that a franchisee will be any different. It is imperative that your franchisees be successful, otherwise franchising opportunities will not work.

2. Make sure your business model is replicable. You must be able to build clones of your operation, otherwise, the system will not work. Have you ever seen a McDonald’s without the infamous golden arches? That is just one example, but it goes beyond the look. It is the method of operation that must be duplicated in order to have the opportunity to franchise.

3. Attain capital for your franchise. You must have capital in order to roll out the franchise program. You cannot believe that franchising will cure your cash flow issues, you need to have money in order to roll out the program. Do not view the program as a way to fund an undercapitalized business model.

4. Prove your model works! The concept that you are trying to franchise must be lucrative. You must demonstrate that your concept works before you try to offer it to the public as a franchise. If the business model is a failure, your franchisees will inevitably fail as well. Franchising can be a wonderful business opportunity, but your initial model must work first, otherwise franchising will not be possible.

Why franchise your business? That is a very good question. But to those of us in the business, the answer is quite obvious. If you want the opportunity to grow your business beyond one or two stores, and you cannot afford to build more units at, for example, $500,000 each, then what better way to grow than to let a franchisee buy a franchise and build the unit himself or herself for that amount, and you simply receive the weekly royalty of 5% or 6% of gross revenues? Franchising is a vehicle for growth using the capital and human resources of someone else (the franchisee). How great is that? It is simple, yet complex. The franchising relationship goes much deeper than building the unit and collecting royalties. It is a starting place for companies that want to grow but do not have the internal capital or human resources, like Starbucks, to do it by themselves.
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Learn how to FRANCHISE YOUR BUSINESS and collect royalties! www.franchisegrowthsolutions.com

WHY PERFORM ROYALTY AUDITS?

Accurate royalty and marketing payments not only benefit you as the franchiser, they also benefit all of your individual franchise owners – assuring dollars for marketing and promotional programs are shared fairly by all franchisees

WHY PERFORM ROYALTY AUDITS?
By Barry Knepper

Your franchise’s profitability can increase dramatically if your royalty payments are monitored and managed well.A 10 % increase in collected royalties could increase your bottom line by as much as 50%.If you need a reason to start performing royalty audits , just think of what would happen to tax collections in the US if taxpayers knew that that the IRS did not perform audits.

Accurate royalty and marketing payments not only benefit you as the franchiser, they also benefit all of your individual franchise owners – assuring dollars for marketing and promotional programs are shared fairly by all franchisees. While under-reporting of appropriate royalties is at the heart of third-party franchise auditing, it can also identify other issues that can ultimately cut into franchisee profitability such as employee theft, poor inventory control or a weak accounting system.

Royalty audits are a wise business practice and if properly presented to your franchisees will not be misunderstood .Please follow our recommendation to notify all of your franchisees that you are commencing a program of periodic audits and that audits are common in the franchise industry. It is our experience that if a franchisee is insulted by being selected for audit it is likely due to the fact that they have something to hide.

Many companies are hesitant to conduct audits because they do not believe that the audit will be worth the cost, but In most cases the franchisee pays the audit fee due to errors uncovered as a result of the audit. Additionally, a regular audit program will increase payment compliance throughout your franchise system. Royalties can be under reported for a variety of reasons, some of which can be completely innocent. Some of the causes of under reporting include:

STAFF TURNOVER
COMPUTER PROGRAMMING ERRORS
FRAUD BY FRANCHISEE
NEW SOFTWARE
MISINTERPRETATION OF THE TERMS OF THE FRANCHISE AGREEMENT
THEFT BY FRANCHISE EMPLOYEES

Over the past decade an increasing number of companies have made the decision to outsource non core business functions in order to concentrate on their core competency.As a third-party auditor with a long history of working with some of the country’s most successful franchisers, I can provide a more efficient and less costly audit than what a larger CPA firm with a higher cost structure can offer. As the former CFO of five franchisers, I offer the advantage of understanding the sensitive nature of the franchiser/franchisee relationship.


The Franchiser’s Accounting Pro

Barry has a unique combination of real-world experience as a franchisee, as the CFO of a multi-concept franchiser and from providing financial statement audits, royalty audits and part time CFO services to more than 40 franchisers. He is also more cost efficient than large CPA firms. Because of his background he understands the sensitive nature of the franchiser/franchisee relationship and works hard to preserve that relationship.
Through his part-time CFO services he meets the needs of franchisers that do not need or cannot afford a full-time controller or CFO. As your part time CFO, he will assist you in improving your financial performance, maximizing cash flow and building long-term stability. Best of all, with his support you’ll have more time to do what you do best – run your franchise.

Contact Barry at barrykneppercfo.com OR 516-724-0351

All About Franchising in a Nut Shell

Nothing can be more comforting than owning a successful franchise in food or any interested industry. But care should be taken while opening a franchise store in a new market. Many times the outcome does not meet the expectations. For restaurant owners who are interested in expanding their business,


All About Franchising in a Nut Shell

By Jamiee Parker

In simple terms, a franchise gets created as part of an agreement made between the franchisee and franchiser. Here, the franchisee has the authority to use the franchiser’s trademarks and logos and market its products. A legal agreement is being made to protect the individual interests. An initial franchise fee is paid by the franchisee and a royalty payment from that time on.

Franchising has now become an established business activity. With the help of franchisees, large corporations can achieve diversification and also an upper edge over other small businesses. This is now increasingly popular in many different industries, especially the food industry. Along with fast food restaurants there are many other such sectors that are franchised today actively. With franchises, a business has the potential to create new business units. As per a recent survey, around one-third of total retail sales are made via franchise stores.

Nothing can be more comforting than owning a successful franchise in food or any interested industry. But care should be taken while opening a franchise store in a new market. Many times the outcome does not meet the expectations. For restaurant owners who are interested in expanding their business, but have shortage of management personnel or financial resources to operate a chain of stores, creating franchise opportunities can be a solution to the problem.

The initial franchise cost is the onetime payment made by the franchisees in order to secure the new franchise. The royalty fee paid henceforth depends on the gross sales from different stores. A franchiser can make money through the franchise fee, sale of supplies and the royalty fees. In order to obtain the legalities of a franchise, one needs to consult a franchise lawyer and a consultant having good knowledge about franchising. The franchise lawyer will do the necessary paper work like franchise contract, register and drafting of franchise offering circular and the like. The right consultant on the other hand can help you with advertising, operation manuals, public relation materials and training programs.

If you are making a profit with your franchise business then you can always put the businesses for sale if you want to. You can get potential buyers who can strike a deal with you. But if you are not making enough profit then it is pretty difficult to sell your business in the market. There are also magazines available which are dedicated in providing data regarding the franchising business.

You can get valuable information on business franchise through the internet. Find out more about exciting [http://www.frannetkc.com/useful/franchise-opportunities/]franchise opportunities Kansas City right here.

Article Source: [http://EzineArticles.com/?All-About-Franchising-in-a-Nut-Shell&id=7823622] All About Franchising in a Nut Shell

Author: Jamiee Lee Parker [http://ezinearticles.com/?expert=Jamiee_Parker]

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