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Franchising for Women and Diverse Communities: How to Be in Business for Yourself, But Not By Yourself

Franchising for Women and Diverse Communities: How to Be in Business for Yourself, But Not By Yourself Actual

•What is Franchising?

500 leads Total leads 830 leads

Actual •How Franchising Impacts the Economy

330 leads

•Advantages and Disadvantages to Franchising

•The Evaluation Process

Franchising for Women and Diverse Communities: How to Be in Business for Yourself, But Not By Yourself

•Attributes franchisors look for in a candidate •Addressing obstacles to franchise ownership

•Questions to ask before signing on the dotted line •Special programs for diverse candidates •Keys to franchise success

What is Franchising? Franchising is business strategy/method of distributing products or services. The “franchisor” lends their trademark/trade name and business system.

The “franchisee” pays an initial fee and ongoing royalty for the right to do business under the franchisor’s name and system.

Franchising and Its Impact on the Economy • Over 825,000 franchise businesses across 300 business lines • Provides for nearly 18 million jobs and • Generates over $2.1 trillion to the U.S. economy. • Franchising=Jobs and Economic Growth

Franchising spans more than 85 industries • Accounting/Tax Services • Automotive Products and Services • Business Services • Children’s Services • Clothing and Shoes • Construction/Remodeling • Cosmetics • Educational Services • Employment Services • Environment Services

• • • • • • • • • • •

Hair Salons Health Aids and Services Home Furnishing Hotels/Motels Janitorial Services Laundry/Dry Cleaning Lawn and Garden Maid Services Printing Services Real Estate Restaurants

Advantages to Franchising •In business for yourself, but not by yourself •In many cases, no previous experience required •Affiliate with a brand name •Become part of a proven SYSTEM •Receive on-going training and support •Access to product and equipment

Disadvantages to Franchising •Not completely independent. May be restrictions on goods and services you sell and method of operation •Continuing royalty and advertising fees in addition to the initial franchise fee •Franchisees performing poorly or the franchisor running into an unforeseen problem can be damaging systemwide •Franchise agreement term is usually limited and franchisee may have little or no say about the terms of a termination

Three Main Obstacles/Gaps to Franchise Ownership

•Informational Gap •Relational Gap

•Funding/Access to Capital Gap

Self-Evaluation •Which franchises interest me? Why?

•Are there personal interests of mine that lend themselves to operating a franchise? •Which areas of operating a business would I dislike most?

•What personality strengths do I possess that might help me succeed in business or may hinder me? •Am I willing to strictly adhere to the franchise system’s operating plan? How well do I follow instructions? •What am I passionate about?

Evaluating a Franchise •Conduct market research and compare competitors •Evaluate the strength of the franchisor •Call existing and former franchisees

•Hire a lawyer and/or accountant who specializes in franchising •Read the Disclosure Document and consult an attorney before signing any documents

Attributes Franchisors Look for in a Franchise Candidate •Individual has done their homework and understands the concept

•Has the means to obtain financial capital •Is eager to be taught and can train others

•Has a history of success in dealing and interacting with people •Is motivated and has the desire to achieve success •Is willing to completely follow the system

Sample Questions to Ask •What is the personal liability and obligations that I face?

•Where is the franchise located? •What type of trademark protections does the franchise have? •Will I be able to renew my franchise agreement? •Will I be able to terminate my franchise agreement?

Sample Questions to Ask •Must I purchase all my products from you?

•Does the franchisor allow negotiations of its franchise agreement? •May I transfer the franchise to another owner? •Can I be a passive owner? •What are all the fees I must pay?

Special Programs – DiversityFran Recruitment Initiative •Launched in February 2006 by IFA’s Diversity Institute and re-branded in July 2013 •Provides one convenient place where diverse prospects can explore franchise offerings of companies actively recruiting •Partners with organizations such as the Minority Business Development Agency, Small Business Development Centers, Urban League chapters and others to deliver educational programming on franchising to diverse communities

IFA’s Diversity Institute

Minority Business Ownership, 2007: Franchises and Non-Franchises

Source—Franchised Business Ownership, 2007: Minority and Gender Groups, prepared for IFA Educational Foundation by PwC in December 2011.

Keys to Franchise Success •Make sure you have enough money •Follow the SYSTEM •Don’t neglect your family and friends •Recruit the best and treat them with respect •Be willing to learn and to teach your employees •Give customers great service •Get and stay involved with the community •Stay in touch with your franchisor and other franchisees •Watch the details

Summary •In business for yourself, but not by yourself •Many opportunities in a wide variety of industries •Franchising= Jobs and Economic Growth •Research your options/ask questions •Conduct a self-evaluation •Thoroughly investigate the franchise system •Franchising is a realistic and attractive option for women and diverse communities

International Franchise Association

For additional information on franchising go to: www.franchise.org

Contact Information Miriam L. Brewer, CFE Senior Director, Education and Diversity International Franchise Association 1501 K Street, N.W., Suite #350 Washington DC 20005 202-662-0784 [email protected]

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