Guide Book For Franchise Buyers

Prepared by Stanley Bernstein,
President, Franchise Buyer's Guide, LLC

Table of Contents
Introduction
Who Should Buy a Franchise
Why Use Franchise Consultants
Questions for Franchise Consultants
Researching Franchises
When to Contact a Franchise
Questions for Franchise Companies
Talking with Franchise Owners
Accounting and Legal Advice
Take a Step Back
Summary
How Does the Franchise Buyer's Guide, LLC Work with You?
Contact Information

Introduction

Franchising is a great idea for certain individuals, groups and business entities.

It is NOT for everyone and that should be determined as soon as possible. It takes a lot of time to research, evaluate and finally make a decision to buy a franchise.

If it is not the right idea then the sooner that is determined the less time, effort and money will be wasted.

Franchising is an age old concept. The first time ancient rulers gave a servant a special right to trade or monopolize a craft or a license to collect tolls, the franchise idea was born.

The franchising concept has evolved into a very sophisticated business model that is represented by enormous public corporations like McDonald's and Subway's Sandwich Shops.

There are literally thousands of franchises in the United States. Some cost as little as a few thousand dollars and some cost over a million dollars.

There are more than 760,000 franchised businesses in the U.S., generating more than $1.5 trillion in total revenue, according to statistics from the International Franchise Association.

Survey: One in three Americans worried about retirement
"One in three Americans describes himself as 'apprehensive,' 'panicked' or 'clueless' about retirement preparation, according to a survey for SIFMA. People between the ages of 45 and 54 are more concerned about retirement, and the survey found that the apprehension is not likely to decline as they near retirement. 'The first step is stop panicking and start planning,' said SIFMA President and Chief Executive Officer Marc Lackritz."

Learning about this industry is a full time job. For someone who only wants to own one franchise, the task of finding the right one at a price that is affordable can be a daunting task.

With the advent of the Internet a person can simply type the word "franchise" into a search engine and come up with literally thousands of listings.

Where and how to start is the purpose of this simple pamphlet.

Who Should Buy A Franchise?

Anyone Who Is Interested In The Franchising Model!

Franchising addresses a very wide audience. This includes:

Young people starting out after graduation.
Business executives who have been downsized from large organizations.
Retirees starting a second career.
Successful business executives who want to own multi-unit operations.
Couples who want to work together.
People concerned that their retirement funds won't be large enough.
Grandfathers, grandmothers, fathers, mothers, friends and family members who want to help younger family members or friends.
Groups of individuals or companies that join together to own one or more franchises.

The purposes or reasons may be varied, however the result is the same. They want a franchise that meets their particular goals.

Do franchisors accept all of these different individuals, companies or groups as viable owners of their franchises? Absolutely.

Why Use A Franchise Consultant?

With so many franchises available in the United States, why would anyone use a franchise consultant? Why not just go directly to the franchise company?

The reasons are very persuasive.

How does one choose a franchise from the list of thousands of companies? You need help thinking the process through and finding the right franchise at the right price.

It's just like trying to diagnose yourself instead of going to a doctor. A franchise consultant does this for a living. He deals with franchises every day and he works with people interested in franchises every day.

There is another very important thing to keep in mind. If you go directly to a franchise they only want to sell you their concept. They have no interest in explaining to you anything about other franchises or telling you the pros and cons of their operations.

A franchise consultant works for you. He is only paid if you buy a franchise. He works for you for FREE. He is paid by the franchise company IF you buy a franchise. Otherwise, he makes nothing.

In other words, he is an expert in the franchise industry, works directly for you, charges you nothing for his services and only makes money if he understands what you really are looking for and finds it for you.

He is only successful if he makes you successful.

Questions For Franchise Consultants

Franchise consultants are just like other professionals. They sometimes specialize in only a few industries. You want to understand if that is the case before you start working with him.

How long have they been in the consulting business?

How many clients have they helped?

Are they getting any special "deals" from a franchisor? Are they being offered such things as additional monies for selling multiple franchises to multiple clients or winning trips to Hawaii or other exotic destinations.

Do franchise consultants get paid by every franchise company? No. Therefore, will your franchise consultant tell you about a franchise that interests you and tell you upfront that you need to contact that particular franchise company directly?

You do not want a doctor giving you a prescription for one type of pill because the pharmaceutical company is giving him bonus dollars or trips or gifts. You want him picking a particular medication because it is best for you. Ask the franchise consultant if he is getting anything special for "pushing" you toward a particular franchise.

Will my purchase price be greater if I use a franchise consultant? No, because the franchise companies appreciate the work they do in finding buyers, qualifying buyers and guiding them through the process.

Remember, if you start contacting franchise companies directly, you are going to be bombarded with phone calls, emails and literature.

You have started a selling process. What you really want to do is start a process that is low key, analytical as to what type of franchise is best for you and you need to contact someone who can find you a short list of companies that fit your needs.

Don't put yourself under pressure from the very beginning. Start with someone who wants to understand what YOU want, not someone who only wants to sell you their product and only THEIR product.

Researching Franchises

Okay, you have made the decision to research franchises. Now what?

Take your time. Patiently work with the consultant that you have chosen that fits your personality, is pleasant and low key, knowledgably about the franchise industry and wants to make a good fit for you, your investment dollars and the amount you want to invest and understands your particular needs and goals.

A good franchise consultant is first and foremost a good listener. If he has really listened to you, he will come back with a short list of franchise companies that are right for you.

His first list might not be exactly what you want. If that is the case, you need to explain a little more in detail as to how the list should be refined.

It will not take long before both of you are on the "same page".

When To Contact A Franchise

When you are enthusiastic to learn about the franchise industry and particular franchise companies, the instinct is to call several franchises immediately. Resist that emotional approach.

You will not learn anything about the industry, how to narrow down your focus, what questions you should be asking yourself, what questions you should be asking the franchise companies or what questions you should be asking about financing or legal documents or accounting and tax issues.

If you remember nothing else from this pamphlet, remember this: This Is A Major Life Decision!

If your doctor recommended surgery, you would certainly want to know the answers to many, many questions. Yet here you are making a major career decision involving your money, time and future.

Pause, take a deep breath and consult with a franchise consultant. Remember, his services are FREE. Take a few days to think about things. Better yet, take several weeks.

So the answer to the question about when to contact a franchise company is later, not sooner.

Questions for Franchise Companies

The franchise company is foremost, selling you a product - their business model or concept. You are the potential customer.

After years of experience, the franchise companies have exact procedures and questions that they use to persuade you to buy their concept. The minute you answer a question that indicates that you DO NOT profile well for what THEY want, the process will terminate quickly.

What happened? You lost control and they maintained it. Be aware of this dynamic. It's your career, not theirs. It is your money, not theirs. It is your dream, not theirs.

This is an important area where the franchise consultant can coach you ahead of time. He can prepare you for a series of interviews with the franchise company before the process even starts. Take advantage of that free guidance.

However, the franchisors do want you to succeed because that is the only way they succeed. It is their brand and they want to associate with people who will represent it well.

So keep an open mind and remember you are balancing your interests with theirs. It is only when those interests begin to compete that you need to weigh what the compromise will be and decide if you want to make that compromise.

There are so many questions that you will have about each franchise company. What areas do they service? Do they provide marketing dollars to increase brand awareness? Do they have a discovery day? What type of training do they provide? The list is very long. Again, the franchise consultant can prepare you in advance for these and other questions before you ever talk to a single franchise company.

Talking With Franchise Owners

One of the most important things you will do is talk with the owners of existing franchises. They have already done everything you are thinking about doing or are in the process of doing.

What an owner has to say is very important. Take your time, prepare your questions and remember to visit existing franchise operations. Look, see and listen - this is a big chance to learn more about what your professional life could be like.

Be considerate and to the point. You are using their valuable time. Use it wisely.

Sample Questions:

How long have you owned your franchise?
What made you decide on this franchise?
How are things going? Have you grown as fast you thought?
Do you like what you are doing?
Are you considering buying more units?
How do you rate the support from the franchisor?
Can you get help when you need it?
Did training prepare you to operate the franchise?
I anticipate earning $___ by the third year. Do you think that is realistic?
Do you think the published start-up costs are realistic and reflect true market conditions?
Are you able to find and retain the help you need?
What else should I ask?
FINALLY AND MOST IMPORTANT - Knowing what you know now, would you buy the franchise?

The franchise company is also going to provide you with the Uniform Franchise Offering Circular. It is the law. Read it very carefully. It is most helpful.

Accounting And Legal Advice

Surround yourself with professional allies. You will have to sign legal documents, make financial projections, and prepare for accounting record keeping and more.

Seek out the help of a knowledgeable franchise attorney and accountant. Your franchise consultant should be able to provide you with a list of these professionals.

Take A Step Back

You have really learned a lot at this stage. Give yourself time to absorb all of the information. If someone is pushing you to move too fast ask why? You should only go as fast as you feel comfortable. This is a very important decision. And it is your decision and only yours.

Summary

So, let's just take a minute to summarize what you have learned.

A franchise is a great way to establish financial independence and yet have the help of the franchise company to guide you along the way.
It is an enormous industry with something for everyone.
Franchise consultants are a free service. Use them to be a partner in your journey.
Prepare your questions for the franchise company before you ever make the first contact. They will respect you all the more.
Research - Research - Research. It is a big industry. Do your homework.
Only contact a franchise company when you are ready.
Prepare questions for existing franchise owners.
Use franchise attorneys and accountants. It is a necessity.
Pause and evaluate.

I hope this information has been helpful. I also hope you will chose to work with the Franchise Buyer's Guide, LLC.

How Does the Franchise Buyer's Guide, LLC Work with You?

There are two scenarios to consider. The first is when the client is too remote to have a face to face series of meetings. The second is when the client and the franchise consultant live in the same area and they can get together.

Phone Contact Only:

When phone contact is the only way to meet, the process starts off with either one party or the other making contact.

The first phone call should take about 10 minutes. The franchise consultant will ask a few questions to get some basic information and learn in a general sense what the client wants to accomplish.

This phone call will be followed up with a detailed questionnaire that is sent to the client. He will fill it out and return it to the consultant.

This will generate a second phone call to the client. About 80% of the talking will be done by the client. The consultant needs to ask good questions and most importantly, be a good listener.

The consultant needs to learn as much as possible about the client and his goals. After the second phone call, the consultant will begin an extensive research, locating franchises that meet the client's goals.

Then a third phone conversation will take place to discuss the franchises that have been researched. The client and the consultant will discuss the list in detail. If everything is approved by the client, the consultant will arrange for the franchise companies to contact the client to begin the interviewing process by both parties.

The consultant is then in the role of a facilitator. He is also available to the client to help him along through the entire process.

The goal is to have a successful transaction in which the client finds and invests in the franchise of his choice.

Face to Face Meetings:

The face to face meetings are much like the phone call scenario. The only difference is that both parties get to know each other better and can dialogue in a professional setting in person.

Otherwise, the situation is basically the same.

Contact Information

You can reach me at:

Stanley Bernstein, President
Franchise Buyer's Guide, LLC
Phone: (858) 344-5432
Fax: (858) 754-1298
Email: stanleybernstein@hotmail.com