Frequently Asked Questions

 

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How do I buy into a Franchise?

Franchises are offered for sale to qualifying candidates. The process, while important to get right, is not as complex as many represent. There are generally four steps:

  1. Deciding you want to start a business by using an existing framework to improve your chances of success rather than creating your own model from scratch. It’s important to understand your financial needs while getting your business started, because having enough money to start a business is critical. This is exactly why FRANSAVE awards a portion of your initial franchise fee back to you. That additional capital puts you in a stronger financial position within days of starting your business.
  2. Matching your skills, personality, needs, wants, goals, and finances to a qualifying franchise—this is exactly why FRANSAVE uses an interactive process and predictive technology. It allows us to use hard data provided by both you and our portfolio of franchisors to find the best match for both of you. Critical to this step is thinking about the business you will create, rather than focusing on a brand whose name you like.
  3. Having discussions with select franchisors to understand their business model, the commitment they require, and how you can be successful implementing their business model as your business. This is often done directly with the franchisors via either a Discovery Day, where you visit the franchisor’s headquarters, or via a web cast called a Virtual Discovery Day. You should also plan on doing your own due diligence, which includes reading their Franchise Disclosure Document (FDD), having your attorney and accountant review the FDD, talking with existing franchisees about their experience with the franchisor, etc.
  4. Signing the contract, paying your franchise fee, and getting to work. This is when FRANSAVE will award you a portion of your initial franchise fee in the form of our Reward. At this point, you will schedule training, if necessary, and start building the infrastructure necessary for your business.
How do I decide what Franchise is right for me?

You have already taken an important step towards this goal by researching FRANSAVE. Our rigorous interactive process and proprietary predictive technology, along with the assistance of our highly trained consultants, will help you narrow the options with confidence. But there is additional work that you must do.

There are three other steps to making sure you find the right franchise for you: (1) Deciding you want to start a business by using an existing framework to improve your chances of success, rather than creating your own model from scratch. It’s important to understand your financial needs while getting your business started, because having enough money to start a business is critical. This is exactly why FRANSAVE awards a portion of your initial franchise fee back to you. That additional capital puts you in a stronger financial position within days of starting your business. (2) Matching your skills, personality, needs, wants, goals, and finances to a qualifying franchise—this is exactly why FRANSAVE uses an interactive process and predictive technology. It allows us to use hard data provided by both you and our portfolio of franchisors to find the best match for both of you. Critical to this step is thinking about the business you will create, rather than focusing on a brand whose name you like. (3) Having discussions with select franchisors to understand their business model, the commitment they require, and how you can be successful implementing their business model as your business. This is often done directly with the franchisors via either a Discovery Day, where you visit the franchisor’s headquarters, or via a web cast called a Virtual Discovery Day. You should also plan on doing your own due diligence, which includes reading their Franchise Disclosure Document (FDD), having your attorney and accountant review the FDD, talking with existing franchisees about their experience with the franchisor, etc.
In the end you are now in charge of your destiny, so the better you understand how to leverage the franchise you’ve bought the better your outcome will be. It’s hard work, but it is worth it.

How does FRANSAVE work?

FRANSAVE implements a rigorous interactive process that easily walks you through the information required to match you to specific franchise brands. Using that information, and information provided to us by franchisors, along with the extensive experience of our in-house consultants, we match you to several brands and make introductions for you. After you talk with the franchisors about their brand and how you can build a successful business, you can be awarded a franchise. There is a franchise fee that is paid to the franchisor. In a traditional broker transaction, a significant part of the fee, often as much as 50 to 80 percent, is paid to the broker as a referral fee. Unlike traditional brokers, FRANSAVE returns a portion of your initial franchise fee to you in the form of your FRANSAVE Reward. That money is often the difference between success and failure in a startup. We put the money back into your pocket within days of signing your franchise agreement!

What can I expected my first day as a Franchise Owner?

Usually the first day is focused on training and setting up your new business. You should definitely take advantage of all of the training your franchisor offers. Understanding the details about how your new business works is critical for your success. If your franchise has a brick-and-mortar operation, you will begin site selection and analyze the pros and cons of both buying and leasing space. You will also start preparing for opening day, which can include hiring employees, purchasing inventory and implementing marketing and advertising campaigns. Of course, many of these activities will take weeks, if not months, to complete. But your first day should be a very exciting and rewarding day now that you are officially in business for yourself!

How long does it take to be profitable?

This is difficult to answer specifically, because every brand is different. However, you can definitely gather information that will help you narrow down the timeframe in your specific case. Profitability may be reached in a few months, or it may take a few years. Obviously, any and all expenses affect profitability, so the specifics of your particular business will be important. For example, someone who has self-funded their business will have a different break even number and, thus, a different time frame for break even than someone who used a loan to fund their business. Additionally, some business owners choose to delay profitability in order to build a bigger business and be more profitable when they finally are profitable. A well known example is Amazon, which lost money for over a decade while they were building infrastructure that would eventually allow them to compete with the likes of Walmart. Amazon would not be Amazon today if they strove for profitability earlier. But, some business owners need to reach profitability as fast as they can. It’s a good due diligence step for you to understand not only when you will be profitable, but why that is the appropriate timeline for you.

The good news is that much of the information you need to decide your personal best course to profitability should be readily available. In many cases, your franchisor will have documentation available that will help you clarify the profitability question. It’s important for you to have facts that are validated. Don’t guess. You will find a lot of information in Item 19 of the franchisors FDD. Each franchise will be different, so the “why” is critical for you to understand. Once you have this information, you can build your own profit and loss statement, projecting out for several years. This will give you a good sense of when you can be profitable and will provide benchmarks you will need to hit in order to get there in your target time frame. It’s also good to have mentors, people who have already done what you want to do. Most successful business owners have one, and some many. Many franchise systems offer mentoring as part of their operational support. You can ask these people for advice. Questions like, are you making the right assumptions? Are you being optimistic about initial sales, or what you spend on marketing? Are you buying the right stuff at the right time? Many business owners buy what they “think” they might need and end up wasting money on inventory or supplies that they may not need for a long time, if ever. A good mentor can tell you if your thinking is on target and will help you leverage their experience. Lastly, you should update your plan often. The old saying, “Plan the work and work the plan” applies here. When something changes in your business, your plan needs to change.

Why would I buy a franchise rather than start a company on my own?

This is a great question. It depends on your goals. Have you thought of an idea that no one in the world has had before? Something that will change the face of a business or industry? Have you discovered a new and better way to do something that is currently being done and is hard to copy? If so, you might want to start you own business. However, if you are like many, you might think of new innovations only to discover the next day that they already exist. Or, even worse, you see someone implement your idea a few years after you had it, and become rich. Pioneering costs can be steep.

Starting a business takes a lot more than a good idea. It takes good execution and a model that is built for profitability from the outset. Fortune magazine states that 90% of all startups fail. Of those that fail, 55% of founders say the #1 cause of the failure was no market need or their product was mis-timed for the market. The #2 cause cited is running out of cash. Pretty risky right? And this is exactly why you might want a franchise. A good franchisor will have validated the market and will have existing franchisees who prove that both their idea and execution are right.

A good franchisor will be able to provide the documented financials necessary to operate a successful business. This is why businesses which are franchises succeed more often than new startups. You are starting with a plan for your business that has been tested and demonstrated by the work of others. No plan is fool-proof, and success takes work, no matter which approach you take. But if you want to eliminate 55% or more of the reasons businesses fail, looking for the right franchise can be a wise step.

How much does a franchise cost?

There are several costs which make up the total cost of buying a franchise. There are direct costs that get paid to the franchisor. The Franchise Disclosure Document (FDD) will have details of these costs. Examples include the initial franchise fee, training fees, etc. These are typically paid in one lump sum at the beginning of your journey. Often, there is also an ongoing royalty fee, also paid to the franchisor every month based on sales.

There can be other costs, which will be listed in the FDD. Each franchise is different. There are also the direct costs you incur running your business that are paid to parties other than the franchisor, such as rent, payroll and utilities. There can also be indirect costs, such as your living expenses. All of these need to be considered and factored into your plan.

It’s important for you to have a complete picture of all of the direct and indirect costs. Getting that right is critical to making sure you have enough money, through either personal assets or a loan, to be appropriately capitalized to be successful in your business.

What is the Franchise Disclosure Document and why is it important?

The Franchise Disclosure Document (FDD) is a document that the federal government requires all franchisors to publish and make available to current and prospective franchisees. It is designed to aid prospective buyers of franchises in the pre-sale disclosure process. The document discloses extensive information about the franchisor and the franchise organization and is intended to give the potential franchisee enough information to make educated decisions about their investments. The information is divided into a cover page, table of contents and 23 categories called “Items.”

If you are interested in a franchise, you should definitely read the FDD. While all of the items are important, a few should not be over looked. Item 3 is Litigation History, which details the litigation the franchisor has been involved in. While it’s not unusual for there to be some litigation, if there is a significant amount, that should be a red flag to ask the franchisor a lot of questions Items 5, 6, 7, 19, and 21 have to do with various financial details, such as initial franchise fee, additional fees for which franchisees are responsible, etc. It’s important to understand how this information is presented. For example, any financial performance disclosed in Item 19 is not a guarantee of how you will perform. Often there are many assumptions underlying those numbers. You are encouraged to ask a franchisor about their assumptions in these Items.

What is my Franchise Fee used for?

The franchise fee i typically represents the cost of acquisition for obtaining a new franchisee. It covers sales commissions, initial training, and support. This is the fee paid to a franchisor when you buy a franchise. A large portion of the franchise fee, often greater than 50%, is paid to a traditional broker.. None of that money is going into your business. FRANSAVE changes that model. Once you pay your franchise fee, FRANSAVE will be paid the same referral fee as a traditional broker. However, we will award to you, within days of signing your franchise agreement, our FRANSAVE Reward. That puts money back into your pocket, thus helping you build a better business faster.

What are other common fees I need to understand?

Quite simply you need to understand ALL of the fees, not just the common ones, such as franchise fee, training fee, marketing fee, and royalties. The FDD is a good start for understanding the fees, but you should also ask other franchisees in the brand in which you are interested about fees as well as asking the franchisor. You want to know not just the fees you will have to pay, but also every expense you will incur when running the business.

Does FRANSAVE really give me money back?

Yes! We award you a portion of your initial franchise fee. We pay that to you within days of our collecting the referral fee. The money you get awarded from us is a significant amount, and increases the probability of your success. Your success is part of our business model!

Can't I just work with a Brand directly?

Yes, you can, but by law the franchisor cannot give you any of the franchise fee back directly. They are also required to charge you the same franchise fee they charge everyone else. So…why would you give away money by working directly with a Brand when you can get significant dollars back into your pocket working with FRANSAVE?

Can you walk me through the process of buying a franchise end to end?

Franchises are offered for sale to qualifying candidates. The process, while important to get right, is not as complex as many represent. There are generally four steps:

  1. Deciding you want to start a business by using an existing framework to improve your chances of success rather than creating your own model from scratch. It’s important to understand your financial needs while getting your business started, because having enough money to start a business is critical. This is exactly why FRANSAVE awards a portion of your initial franchise fee back to you. That additional capital puts you in a stronger financial position within days of starting your business.
  2. Matching your skills, personality, needs, wants, goals, and finances to a qualifying franchise—this is exactly why FRANSAVE uses an interactive process and predictive technology. It allows us to use hard data provided by both you and our portfolio of franchisors to find the best match for both of you. Critical to this step is thinking about the business you will create, rather than focusing on a brand whose name you like.
  3. Having discussions with select franchisors to understand their business model, the commitment they require, and how you can be successful implementing their business model as your business. This is often done directly with the franchisors via either a Discovery Day, where you visit the franchisor’s headquarters, or via a web cast called a Virtual Discovery Day. You should also plan on doing your own due diligence, which includes reading their Franchise Disclosure Document (FDD), having your attorney and accountant review the FDD, talking with existing franchisees about their experience with the franchisor, etc.
  4. Signing the contract, paying your franchise fee, and getting to work. This is when FRANSAVE will award you a portion of our referral fee in the form of our Reward. At this point, you will schedule training if necessary, and start building the infrastructure necessary for your business.
Should I be preapproved for a loan?
  • Yes. It never hurts to have access to a loan. Being prequalified helps differentiate you to franchisors. Whether or not you need a loan is driven by your personal financial position, and the type of franchise you want to operate. At FRANSAVE we can easily help in getting you prequalified during our interactive process.
  • Can you tell me what it means that FRANSAVE is a Beta release?

    FRANSAVE’s initial launch is a beta release.

    Our mission to save you money on your franchise compelled us to get to market as soon as we could offer savings and an advantage to future franchisees. The beta allows us to collect the data needed to perform a match for eligible franchisors. You can, as a result, both save money and get the franchise of your dreams. That is why we released a beta version. However, we envision it becoming even easier as we continue to improve the process, exploit our underlying technology platform, train our highly experienced consultants and learn how potential franchisees go though the process of buying a franchise and fulfilling their dreams.

    If you encounter any problems as you work with us, please report them here,. We hope you do not let them prevent you from getting the franchise of your dreams. Contact us at (844) 476-7776 if you have any questions. We appreciate your allowing us to help you in this journey.

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