Benetrends, a member of the IFA’s prestigious Supplier Forum, recently presented another IFA Lunch & Learn webinar session entitled, “We’re Now Officially a Franchise…Now What?” The central theme for this one-hour episode is addressed to brands considering a franchising program to expand their footprint and augment new business development growth.
The hosts for this online presentation included Eric Schechterman, chief development officer for Benetrends, the authority on franchise and small business financing, and Steve Beagleman, CEO of SMB Franchise Advisors, a leading franchise development firm who’ve helped more than 300 brands launch their franchising operations. In case you missed it, below is a recap of the key insights and takeaways shared by the hosts on this intriguing topic.
Key Topics Addressed:
- Determining your qualifications to become a franchisor
- Franchising your business the right way
- How to avoid the most common mistakes and pitfalls
- Best practices and proven business development strategies
Avoid Working With the Wrong People
For brands looking to franchise their concept, but it a product or a service, it’s important to seek advice and assistance from the right partners. It’s highly advisable for brands to find partners who share their same values, culture, and vision. There are plenty of partner options available, but the vetting process is an extremely important step in the process in establishing your franchising program. Review their track record with other brands and seek references whenever possible.
Meeting the Minimum Franchising Requirements
First and foremost, brands looking to franchise their concept need to work with a qualified franchise attorney to develop and complete a franchise disclosure document (FDD). Second, a franchise operations manual must be created, which covers all systems, processes, training, and support – including as many details as possible. Brands also need to create a franchising site, whether adding a menu tab to the existing site or developing a separate microsite. Make sure all information is up to date. Brands need to be ready to address and execute the franchise investigative process and buying cycle for franchisee candidates interested in the concept.
The Importance of Setting Financial Requirements
Establishing the associated costs for franchisees, such as the initial franchisee fee, net worth required, royalties, and total investment benchmarks is of utmost importance. A good rule of thumb is to reference the current requirements to obtain an SBA loan. Recently, they updated their guidance to recommend that single-unit candidates have at least 40% in liquid capital of the total project cost. For multi-unit franchisees, candidates should have twice the total franchise fees in liquid assets. It’s advisable to include an estimating calculator on your franchising site, similar to mortgage calculators used to estimate projected expenses for residential real estate buyers. Lastly, don’t underestimate the value of establishing favorable funding partnerships. Identify lending institutions with an appetite for the concept, create a thorough pre-qualification program, develop business planning templates for candidates, ensure a sound training and support program, and make sure all brand data is up to date on the SBA Franchise Directory and FRANdata’s Franchise Registry.
This IFA Lunch & Learn Webinar has been archived, and you can view the full presentation by following this link to Benetrends’ YouTube Channel.
To date, Benetrends has utilized their 401(k)/IRA rollover funding option to help more than 30,000 entrepreneurs secure the capital they need to fund the businesses of their dreams. We can help you pre-qualify or arrange an initial funding consultation to help you do the same. If you’d like to know more, simply reach out and contact us today!