Increase Profits by

Growth Through
Franchising!

Success Strategies for Business Owners

 About SCORE

Successful and experienced

business owners and executives
acting as volunteers

Free ongoing mentoring:

One-on-one
E-mail
Douglas S. Cavanaugh
Signup on our website Mentoring
Tab

Seminars, workshops and Meetup

Group

Resources Success
for small business:
Strategies for Business Owners
 Introductions . . . Your
Expectations?
Introduce yourself
What business are you in?
What are your expectations for the meeting
today?
Record . . .
Expectation

End of the meeting feedback:

Outcome Gaps

Success Strategies for Business Owners

Key Growth Considerations

Strategic (Growth) Vision for Your Company

Where is My
Company
Headed?
Direction by
Survival? Thriving?
Default?

Company Owned Franchisee Owned

Business Owners / Management - responsible for the

framework which guides those choices that determine
the nature and direction of an organization

Success Strategies for Business Owners

 Franchising for Profitability
Two Reports Show 2014 Franchise
Growth Expected to Increase at
Fastest Rate in Five Years
FRANdata, which has been analyzing franchising activity for
more than 25 years, reports that demand for franchise units
is expected to increase by more than 12 percent this year,
the highest rate of increase since 2009.

Separately, IHS Global Insight reported in its June update to

the IFA Franchise Business Outlook that the franchise sector
will lead the nations economic rebound by creating an
estimated 220,000 jobs this year.
Success Strategies for Business Owners

What is Franchising?
A Method of distribution
for a product or service
that includes:
Licensing of a trademark and
tradecraft
Payment now and forever
Franchise fee
Royalties and advertising fees
A proven business system
Training & ongoing support
Win-win business relationship
Regulatory Oversight
Success Strategies for Business Owners
 12 Criteria of
Franchisability
1.Credibility To sell franchises, a company
must first be credible in the eyes of its
prospective franchisees.
. organization size, number of units
. unit economics
. years in operation
. look of the prototype unit
. publicity
. consumer awareness of the brand,
demographics
. strength of management Success Strategies for Business Owners
12 Criteria of Franchisability
2. Differentiation In addition to
credibility, a franchise organization
must be adequately differentiated from
its franchised competitors.
industry leading unit economics
differentiated product or service
reduced investment cost
unique marketing strategy
different target markets.
Success Strategies for Business Owners
12 Criteria of Franchisability
3. Transferability of
knowledge
ability to teach a system to
others
short period of time - three
months
Some more complex
franchisors offset this
handicap by targeting only
franchise prospects that are
already "educated" in their
Success Strategies for Business Owners
12 Criteria of Franchisability
4. Adaptability Next, measure how
well a concept can be adapted from one
market to the next.
do not adapt well over large
geographic areas
varying state laws
very unique location
unique abilities or talents of the
individual
based on years of perseverance
Success Strategies for Business and
Owners
 12 Criteria of Franchisability
5. Refined and successful
prototype operations A refined
prototype is necessary to demonstrate
that the system is proven.
instrumental in the training of franchisees.
testing ground for new products, new
services, marketing techniques,
merchandising
and operational efficiencies.
unit economics model
Success Strategies for Business Owners 11
 12 Criteria of
Franchisability
6. Documented systems All
successful businesses have systems. But in
order to be franchisable, these systems must
be documented in a manner that
communicates them effectively to
franchisees.
policies, procedures, expectations
systems, management processes
forms, tools, specifications
business practices in a comprehensive and
user-friendly operations manual and/or
computer-based training module.
Success Strategies for Business Owners 12
 12 Criteria of
Franchisability
7. Affordability
Affordability merely reflects a prospective
franchisees ability to pay for the franchise
in question. This criterion is as much a
reflection of the prospective franchisee as
it is of the actual cost of opening a
franchise.
For example, a multi-million dollar hotel
franchise is affordable to real estate
developers, whereas a franchise with a
$100,000 start-up costSuccess
thatStrategies
targets for Business Owners
prospects with clerical experience might 13
12 Criteria of Franchisability
8. Return on Investment This is the real
acid test of franchisability.
profitable
allow enough profit after a royalty for the
franchisees to earn an adequate return on
their investment of time and money.
measured against other investments of
comparable risk that compete for the
franchisees dollar
achieve a ROI of at least 20 percent by
the second to third year of operations.
Success Strategies for Business Owners 14
 12 Criteria of
Franchisability
9. Market trends and conditions
While not an indicator of franchisability as much as a
general indicator of the success of any business,
these trends are key to long-term planning.
Is the market growing or consolidating? How will
that affect your business in the future?
What impact will the technology have?
Will the franchisees products and services
remain relevant in the years ahead?
What are other industry franchised and
non-franchised competitors doing?
Will the competitive environment affect your
franchisees likelihood of long-term success.
Success Strategies for Business Owners 15
 12 Criteria of
Franchisability
10. Capital While franchising is a low-cost
means of expanding a business, it is not a "no cost"
means of expansion.
one or two franchised units, the necessary legal
documentation may be completed at costs as low
as $15,000
For franchisors targeting aggressive national
expansion, however, start-up costs can run
$100,000 or more. And once the costs of printing,
audits, marketing, and personnel are added to the
mix, a franchisor may require a budget of $250,000
or more to reach its expansion goals.

Success Strategies for Business Owners 16

 12 Criteria of
Franchisability
11. Strength of management The
single most important aspect contributing to the
success of any franchise program. is the strength of
its management.
most common contributor to the failure of start-up
franchisors lack of experience at the management
level.
understaffing - new franchisors will try to take
everything on themselves.
franchise marketing
lead handling, franchise sales
ad fund management
training Success Strategies for Business Owners 17

 12 Criteria of
Franchisability
12. Commitment to relationships
Successful franchisors focus on building long-term,
rewarding relationships with their franchisees that are
truly mutually rewarding.
Unfortunately, not all franchise organizations
understand the link that exists between
relationships and profits.
sell franchises more effectively = validation
introduce needed changes into the system more
easily
motivate franchisees and their managers to provide
a consistent level of products and services to their
customers Success Strategies for Business Owners18
True desire to help others succeed!
 Phases of Franchising
The Legal Compliance Phase

The Franchisee Marketing Plan

Phase

The Franchisee Training Phase

The Franchise Organization Phase

Success Strategies for Business Owners 19
 Phases of Franchising
The Implementation Phase
For clients wanting more, there are organizations that provide:
Recruiting franchisees and professional staff.
Undertaking international expansion.
Ensuring continuing compliance with State and Federal
Regulatory policies.
Introducing franchisee advisory councils and mediating
franchisee disputes.
Keeping you abreast of new issues, laws and business growth
opportunities.
Modifying and creating short term and long-term strategies.
Negotiating mergers and acquisitions, private placements,
venture capital and other capital raising measures.

Success Strategies for Business Owners 20

Assessing Your Business
The SCORE Business Needs Assessment, it is
in your packet. Download at:
http://tinyurl.com/8j7fkgw
It will help you assess the current state of
your business in 5 key areas:
1. Management
2. Marketing
3. Sales
4. Finance
5. Operations
Decide what additional sessions to
attend
Develop a customized business
improvement plan
Success Strategies for Business Owners
Business Needs Assessment -
Operations

Success Strategies for Business Owners

Help Us, Help You

Please fill out the evaluation

form

Your feedback is important to

help us improve our programs!

Success Strategies for Business Owners

References

The Executive Guide to Strategic Planning

book by Morrisey / Below / Acomb

The Executive Guide to Operational

Planning
book by Morrisey / Below / Acomb

The E-Myth Revisited

book by Michael Gerber

Improving Performance
book by Rummler and Brache

Success Strategies for Business Owners

 Outside Enrichment Programs

Where to get external mentoring, training and

education?
Online
Vendors
Industry/professional associations
Colleges and universities
Adult education/continuing education
Training companies/consultants
Business coaches
State Economic Development Department
Chamber of Commerce
American Express OPEN Forum
SCORE.org Success Strategies for Business Owners