As soon as you have identified the common business category you want enter into, pay a visit to some of the Web sites dedicated to franchising. On the majority of these sites, you can explore franchises classified by type of business, investment levels, and even geographic area. Some of them give you estimated evaluation of your supposed investments, in addition to the advertising payments and ongoing royalty. Moreover, you can engage a franchising consultant to assist in focusing your choices.

When you have the arranged list, start getting in touch with the franchisors for detailed information. One thing to consider during this process is that at the same time as you are shopping for a franchise, same franchises are out there hunting for franchisees too. You will be interviewed in order to find out if you match in order to proceed.

The Process of Franchising

Once you get in touch with a franchisor for detailed information, here are the steps that usually follow:

1. The franchisor will provide you with brochures and other materials, and almost certainly request that you to fill out a questionnaire. You will proceed on dependence of the result of that information exchange.
2. The next step will be your assessment of the company's UFOC (Uniform Franchise Offering Circular). The FTC (Federal Trade Commission) requires this document be supplied to disclose comprehensive information about the franchisor no less than ten days prior to purchase of any franchise. That information includes:
   • The franchisor, its affiliates and its predecessors
   • Business history/experience
   • Preliminary franchise fee
   • Litigation
   • Bankruptcy
   • Obligations of the franchisor
   • Obligations of the franchisee
   • Other fees
   • Initial investment
   • Limitations on what the franchisee may sell
   • Restrictions on sources of services and products
   • Financing
   • Territory
   • Renewal, transfer, dispute resolution and termination
   • Copyrights, patents and proprietary information
   • Trademarks
   • Earnings claims
   • Responsibility to participate in the franchise business operation
   • Financial statements
   • Public figures
   • Receipts
   • List of outlets
   • Contracts

The privilege to the franchise is leased to the franchisee by the franchisor for an initial amount of money, usually identified as franchise fee or the up-front entry fee. These funds will be paid as soon as the agreement has been signed. The franchise agreement states the responsibilities of both the franchisee and the franchisor, and is typically for a specific period (often several years). Once the franchise agreement expires, it must be prolonged or re-signed. State legislation often has an impact on the alternatives for this prolongation.

This opening franchise fee does not include anything besides the rights to use the system and name, and in some cases training, manuals, procedures, and other assistance like spot selection. It does not comprise any of the required real estate, furniture, inventory or fixtures.

Besides, to the franchise fee, the franchisee has to disburse the franchisor royalty fees, or additional on-going payments. Such payments are typically taken as a percentage of income or sales, but can be set up on a sliding scale or as a fixed amount as well. The conditions of these fees are governed by the franchise agreement. These payments are for the support and on-going services that the franchisor supplies. Franchisors may sell supplies straight to their franchisees as well.

Advertising funds are paid at regular intervals too. This money are typically deposited into a general account and used for regional and national promotion for the whole chain.

Trade Secrets (The Rules)

Trade secrets of a business are often very important to its success. It is a recognized rule that franchisees will protect trade secrets absolutely confidential. This not only guards the franchise, but it guards the franchisee's personal investment as well.

Nearly all states have adopted some edition of the Uniform Trade Secrets Act, which helps classify the franchise system parts that may constitute a trade secret. Visit U.S. Trade Secret Protection by State to view a list of states that have adopted it. Franchise information and proprietary systems that does not categorized as a "trade secret" should be treated as such nevertheless, since it may yet be protected under the franchise agreement restrictive covenants.

You also frequently get better contracts on supplies because the franchise company can purchase supplies and goods in bulk for the whole chain, and then distribute that savings all of the franchise units.

The regular immediate recognition from customers is also a big advantage. Customers are inclined to deal with a "recognized" rather than an "unrecognized." Imagine this: If you are driving through a city you've never been to before and have the choice of a "Kentucky Fried Chicken" or a "Billy Bob's Fried Chicken," which one are you will probably to stop at? Until you make out that Billy Bob's is specialized on fried chicken, you may not wish to give it a chance.

For the purchaser, the franchise advantages is in having the comfort of knowing what you're receiving. You know that the service or product quality at one location will be similar to that of another known place. You are familiar with what their assortment and you already have an opinion about it. As a potential franchisee your questions are the following: Are you seeking for something that is exclusively yours? Or do you just want to have the join the game, regardless if it's by another authority`s rules?

Prior to giving the answer to those questions, let's look at a little more detail about how the franchise works in fact.

Restricting Covenants (The Rules)

The triumph of most franchises is originated on the operating methods, systems, and produced products. Therefore, franchisors must care for their trade marks and proprietary information. With the purpose of doing this, they set up restrictive covenants for their franchisees. These covenants regulate what a franchisee can or can`t do.

For instance, one restrictive covenant may govern that the franchisee cannot manage another comparable business that would compete with the franchised company during the period of the franchise contract. These are identified as in-term non-competition covenants. There may be post-term non-competition covenants as well that forbid the franchisee to operate a comparable business even after the franchise period have expired. Each state, though, has its own laws concerning the implementation of non-competition covenants. Sometimes, in-term covenants are more readily implemented than post-term covenants.

In this series of posts, we'll review the details of business franchising to help you choose if it suits for you.

Franchising. What is it?

Imagine that you're starting your own McDonald's. You have to purchase a McDonald's franchise to do this. With the purpose of qualifying for a conventional franchise, you should have quarter of million dollars which are not borrowed. Your expenses for restaurant opening, however, will be somewhere between $700,000 and $1,600,000, which includes paying for the equipment, building, etc. 40 % of this expenses has to be paid from your own (non- rented) funds.

You'll have to pay an “Initial Franchise Fee” of $45,000 to McDonald's right away. The other expenses go to suppliers, hence this is the only upfront fee you disburse to McDonald's. After that, you'll go through a thorough 9 month training period during which you'll learn about the McDonald's approach of doing everything – all about their standards for service, quality, value, specifications and formulas for items in the menu, their inventory control techniques and operation method. You'll have to consent to manage the restaurant from a single location, typically for 20 years, following their guiding principle for layout, signage, decor, and anything else that makes McDonald's what it is.

As soon as you've completed education and are ready to begin, McDonald’s will offer you a spot they've already built up. The building exterior will be complete, but you will have to deal with interior additions such as seating, landscaping and kitchen equipment. You'll get regular support from a Field Consultant employed in McDonald's, who can consult you on details and will visit you constantly. You'll compensate McDonald's a monthly fee of 4 % of your revenue, and either a flat base rental fee or a percentage fee of as a minimum 8.5 % of your revenue. It depends on many things how much money you bring in, including the effectiveness of your operating expenses, the place and its attractiveness and your ability to control and manage the company.

Imagine franchising as paying somebody for their business, marketing or operations strategy, and the exploit their name. That's practically what franchising stands for - you are establishing a association with a successful company so you can exploit its systems and take advantage of on its existing brand recognition in order to obtain a quicker investment return. You are exploiting its proven name and system, and managing it by its rules.

Now, are you the boss for yourself? In some way, not exactly. You still must report to someone else and follow their guidelines. You don't actually own this business; you own the assets that you've acquired in order to set up the business.

Making win-win situations means continually working towards and looking for mutual benefit in relationships. It stands for not competition but cooperation. It is a self-confident method that allows you to successfully listen, influence and negotiate with others in order to enable all parties feel fine about a situation, decision or discussion - nobody feels like a loser.

Win-win circumstances are also associated with aligning your wanted professional image with your perceived appearance. Word spreads fast when you invent win-win situations, but much faster when somebody is left thinking that they are bought and sold or have been done wrong.

A win-win approach will make people seeking you out, telling their allies about you and is a safe way for you to generate your reputation as a provider of Remarkable Customer Service.

Read the other parts:

Part 1

Part 2

Speaking distinctly.

The recipe here is to communicate distinctly with the people you are interacting with. Speak at a usual pace and in a moderate loudness voice. Be courteous and polite, watch your enunciation and voice tone, and be sure of where you put the accent in your dialogue.

Dressing.

Even though nowadays business environment is far more informal than it was even ten years ago, even now it is significant to dress suitably. This is not to say that you have to dress in the latest Gucci suit, but do take care that your clothing fits well and is clean. If you look cheapie, people will suppose that you and your business are worthless tool.

Make personal contact

How many people have been phone - talking with a business, perhaps trying to purchase something or obtain information, and due to their computer screens flow they ask you for your name ten times? Guess it is not a very pleasant feeling. Now give it a minute to imagine someone you have met lately. Did you memorize and use their name immediately in conversation? That’s nice. Your interlocutor realized that you are paying attention from the very beginning of the meeting and value people enough to memorize their name. A benefit here is that by using their name right away in the conversation it is easier to memorize it and impress them even more in case you meet them by chance a second time. Everyone is pleased when memorized by others.

Keep a visually attractive work area

Make certain your workspace is mess free. Ensure any sensitive/confidential files are not left somewhere, and that your coffee cup or lunch is not the first thing that clients will notice on your desk. Have your work supplies in working order and handy. Bear in mind, first impressions are vital. If a client and customer can't see you because of the clutter, or can hear you bustle hunting for a pen, they will not get a very optimistic first impression.

Be an excellent listener.

Being an excellent listener begins with concentrating on the people you are speaking to. If having a conversation with someone, make certain to let them know, in a delicate manner, that you are paying attention to their words. Look openly into his or her eyes, do not forget to nod (show appreciation) and chip in with the occasional "I understand," or "I see". Use any other physical or verbal cue that exhibits your attentive listening to the other person. Be straight - if you are not sure what the other person is trying to express, ask for explanation. Do not interrupt and don`t allow interruptions (such as other people or phones) to divert you from the dialogue at hand.