Welcome to Today’s Webinar

Questions

• Attendees are in listen-only mode• This webinar is being recorded for future on-demand playback• Your participation represents acknowledgement that we are recording

• Tweet questions & comments to: #WelchFranchise

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Ground Rules

Presenters

Kathy Steffan, CPA, CAPartner, Welch LLPksteffan@welchllp.comwww.welchllp.comTwitter:@welchllpca.linkedin.com/in/kathysteffan

Ned LevittPartner, Dickinson Wright LLPnlevitt@dickinsonwright.comwww.dickinson-wright.comhttp://www.linkedin.com/in/nedlevitt

What We Will Cover Today

• What’s so great about franchising?

• What’s so great about buying a franchise?

• Reality Checks

• Is your business franchisable?

• What you will need

• Alternative methods

• Franchise marketing

• What professional support you will need

What’s so great about Franchising?

• Quick Growth

• Less Capital Requirements

• Better return on Capital

• Greater strength on securing preferred locations

What’s so great about Franchising?

• Easier expansion within a geographic area & foreign jurisdictions

• “Owners” more committed than “Managers”

• Preferential supplier deals

• Diversification of Risk

What’s so great about buying a Franchise?

Less risk than starting independent business

Fastest and safest way to become a business owner

Fantastic value in knowledge transfer

Preferred locations

Group buying power – supplies & advertising

Employment

Alternative to Entrepreneurship

Reality Check for Franchisor

• Putting a Successful Business at risk• Franchisor/owner must redirect time away

from the original business• More complicated & difficult financing• It’s a numbers game • License Fees not an alternative form of

financing; See Capital requirement

Is your Business Franchisable?

• Business must be solid & very successful

• Business shouldn’t rely on owners with unique personality traits or location

• Business success should be attributable to unique concept, system or method

• Not favorable if “know-how” is too technical or hard to teach/learn

What you will need…

“Clean” Accounting & Finance Records with record of profitability

Royalty Rate that will work Financing over and above

initial license fees Franchisee Pro-forma

(Budgets & Projections)

Trademark

Brand

What else you will need…

• Franchise Marketing Package

• Someone reliable to take your place in your original business

• Willing & able to undergo career change and develop new relationships

• Working Business Model

Alternative Distribution Methods to Franchising

• Sales Agent

• Dealerships

• Distributorships

• Licensing (Brand & “Know-how”)

Franchise Marketing

• Good Marketing = critical for success• Need someone reliable to

sell the Franchises• Franchise brokers = very

commission driven• Look at your network (family, friends,

employees)• Cost of Franchise Sales very high in

early years (50% of front-end fee)• Future trends: Digital Sales & fewer

trade shows

Professional Support you’ll Need

Attributes– Experience in Franchising– Entrepreneurial

RequirementsAccounting:– Pro-formas for Franchisee– Review Engagement or Audited Financial Statements– Develop Franchisee Reporting Model– Standardized Accounting, Bookkeeping &

Tax Solution for Franchisees– Due diligence & business support partner

Professional Support you’ll Need

Requirements

Legal:• Disclosure Documents• Business Structure• Agreements• Business Support Partner

Q & A

Kathy Steffan, CPA, CAPartner, Welch LLPksteffan@welchllp.comwww.welchllp.comTwitter:@welchllpca.linkedin.com/in/kathysteffan

Ned LevittPartner, Dickinson Wright LLPnlevitt@dickinsonwright.comwww.dickinson-wright.comhttp://www.linkedin.com/in/nedlevitt