Franchise Foundations - How To Franchise

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• Franchise (Licensing) Feasibility Analysis
Assessing whether franchising (or licensing) is an appropriate expansion strategy, given the viability of the concept in the marketplace and historical financial performance. Franchising vs. licensing is a topic that merits consideration of legal as well as long-term business considerations. An on-site analysis of the firms financial, operational, marketing and legal profiles is the best practice approach for conducting any franchise feasibility analysis. The on-site analysis is followed by research and then a detailed report of feasibility findings and recommendations. For firms that want an affordable franchise feasibility analysis without having to pay the travel, etc. costs of an on-site visit, call or email for details.

• Franchise Organizational Structure & Franchise Management Planning
Developing the appropriate franchise organizational structure to operate the franchise entity; identifying franchise management skills and incremental staffing requirements for the expansion effort. Many emerging franchise entities fail to adopt the proper franchise organizational structure or use inappropriate and untrained personnel - creating current or future problems and franchise liability. Like a football team, a franchise organization is made up of people who must be properly organized and trained to be effective. Because it is highly adaptive, a functional franchise organizational structure is appropriate in many, but not all cases. These and other issues involve strategic planning to create a "blueprint" for successful expansion efforts based on blue ocean strategies. These types of strategic planning issues are not addressed by franchise packaging companies or franchise attorneys, yet play a vital role in the ultimate success (or failure) of the expansion effort. Ask them what kind of franchise organizational structure to use and they'll respond "a corporation or LLC." They just don't get it. Finally, how transactions are structured is another way to achieve tens of thousands of dollars of annual savings as the franchise program moves forward - another topic not addressed by franchise packaging companies or franchise attorneys.

• Competitive Analysis
Analysis of existing franchise competitors to determine relative strengths and weaknesses in order to properly position the franchise offering.

• Structuring Franchise Relationships
Structuring franchise fees, contractual provisions and other parameters of the franchise relationship for a “win-win” scenario that encourages timely payments and innovative ideas, as opposed to a rigid structure that causes early franchise relationship issues and invites future franchise litigation land mines.

• Franchise Positioning
Positioning your company based on a blue ocean strategy so that it stands out from the other 3,000+ companies operating in the franchise industry.

• Franchise Capitalization & FDD Auditing Issues
Determining the appropriate franchise capitalization amount and strategy for avoiding franchise fee impound conditions in franchise registration states. We also counsel in proven techniques to significantly reduce franchise FDD audit costs and work with your CPA firm to answer any FDD auditing questions.

• Franchise Disclosure Documents
Drafting and preparing the key document that forms the basis of the franchise program in the format of a Franchise Disclosure Document, as mandated by the Federal Trade Commission and the North American Securities Administrators Association. This document, with minor modifications for certain franchise registration states, can be used in every state throughout the United States. Doing it the right way now can keep your company out of the courtroom and the quicksands of litigation later.

• Franchise Agreements
Drafting state-of-the-art franchise agreements that incorporate all decisions made during the franchise strategic planning process, and provide for maximum flexibility and fairness throughout the course of the franchise relationship.

Master Franchise Agreements; International Franchising Strategy
Structuring and drafting master franchise development agreements for use in international franchising grants. In the typical international franchising scenario, a foreign master franchise (investor) is trained in the business model and then assumes responsibilities for selling, training and supporting individual or area franchisees in the target foreign country. In most cases, certain aspects of the business model must be refined for the target country. Selecting the appropriate international master franchise and strategy for the target country is critical.

• Franchise Registration & Franchise Registration Renewal Applications
Filing franchise registration applications (as well as franchise registration renewal and franchise amendment applications) in those 14 or so states that require a franchise registration process before franchises can be offered or sold. Our firm has three decades of experience filing in all franchise registration states and responding to comment letters issued by state examiners. This allows us to provide valuable strategic advice in how to reduce annual auditing costs, avoiding franchise fee impound conditions and ensuring an expedited review of all applications.

• License Agreements - Franchise vs. Licensing (Franchise vs. License) Analysis
For firms that elect to use a license vs. franchise agreement, drafting appropriate license agreements. A detailed analysis of the legal and business aspects of franchising vs. licensing decisions is also available.

• Trade Secret Protection Programs
Identifying proprietary intellectual property business assets, documenting confidentiality status, establishing protective procedures and policies, drafting protective agreements and implementing an ongoing trade secret protection program. In many cases these intangible assets, such as methods of operation, customer information, business techniques, recipes, etc. are the most valuable assets a firm owns - but without protection they can be easily lost.

• Trademark & Service Mark Registration Advice
Advice on protecting the mark used to sell the firms products (or services), including name, logo and tag lines. Registration protection is available at the state level, and if certain requirements are satisfied, stronger, nationwide protection is available at the federal level resulting in the privilege to use the ® symbol. It is absolutely critical to protect this intellectual property asset from use by others.

• Franchise Operations Manuals
Based on a review of existing operations, recommending and reviewing the preparation of franchise operations manuals that document all aspects of establishing and operating the business. Included in this editing process is eliminating chapters or topics in manuals that, while appropriate to use in a company-owned chain, are inappropriate and create significant liability issues in a franchise relationship. This is yet another company owned vs. franchised critical distinction that can have long-term consequences. Most franchising consulting groups do not understand or appreciate the legal risks inherent in franchise operations manuals and proceed blindly ahead, assuming a company-owned operations manual will work as a franchise operations manual. Unfortunately, this places the franchise company in a franchise legal pitfall from the very beginning. Fortunately, with competent advice based on decades of experience in avoiding the bullets of franchise litigation, these risks can be avoided. The end product is a professional, easy to use and update franchise operations manual based on two-plus decades experience drafting, reviewing and editing hundreds of franchise operations manuals. Whether or not a company ultimately franchises, the process of documenting and implementing standardized operating procedures and systems, like franchise companies do, will make any firm operate more efficiently and competitively. A series of logical pathways, with "if-then" decision points, coupled with prescribed, detailed steps, eliminates most of the uncertainty of business operations. For further tips and information about how to write your own franchise operations manuals visit the Franchise Operations Manual page of our website. We can show you how to write franchise operations manuals for your business (or edit existing operations manuals to adapt them for franchising) at a fraction of the $20,000 cost other firms charge for this relatively easy task. Call or click the email link at the bottom of this page for details.

• Franchise Policy Manuals
Drafting major policy statements and directives that pertain to business operations, reporting requirements, compliance with contractual obligations, and responsibilities for protecting proprietary business assets. This document becomes a very useful resource in defining franchise relationship responsibilities, so discussions remain at a business level where they belong, as opposed to a legal level requiring the introduction of franchise litigation attorneys, mediators, arbitrators, etc.

• Franchise Training Program Curriculum
Developing a training curriculum that sets forth the subjects taught, training materials, teaching methodology and depth of training provided to each trainee during the franchise training program. This curriculum approach helps ensure business operating skills are retained and reinforced.

• Training Program Testing
Designing a series of tests to be used in determining whether or not trainees have successfully completed the franchise training program.

• Franchise Marketing Materials
Recommending and reviewing the preparation of media plans, press releases, advertising, brochures and application forms that are used in the franchise marketing effort.

• Franchise Interview Questions For Franchise Applicants - Psychological Profile Questionnaires
Developing a set of franchise interview questions to ask franchise applicants. More than just background interview questions, these are sophisticated psychological questionnaires to use with franchise applicants (or even employees) that provide critical information about their profit motivation, attitude towards task delegation, ability to tolerate uncertainty and other key personality traits. Our psychological profile questionnaires have been successfully used for three decades.

A number of optional programs, management instruction and franchise workshops are available based on three decades of excellence in the franchise industry, to give your company a path to follow and ongoing, as needed advice, as it enters and grows within the franchise industry:

• Franchise Management Training In Effective Operation of Franchise Companies
The key to becoming a successful franchise company is realizing you’re operating a new business, offering entirely different services (training, start-up and ongoing support) to entirely different customers (business owner-operators). Different skills, abilities and expertise are required, and the organization needs to adopt the appropriate franchise organizational structure and management interfaces. We’ll train your personnel in adopting the appropriate organizational structure (who does what, who reports to who, etc.), developing a franchise infrastructure, as well as a host of systems, procedures and standards for effective management of your franchise company and network.

• Franchise Marketing 101
Many new franchise companies who use a law firm to enter franchising discover they have difficulty selling franchises. That's because they have not been schooled in the art of franchise marketing. One mistake is attempting to compete head-to-head against large, established chains. The inevitable result – failure. With over 3,000-plus franchise companies spending hundreds of millions on advertising, the only way to score big is not to act big. Rather, your marketing program must be selective, concentrating on narrow targets. In a word, your company needs to position itself in a highly competitive arena. Use the experience and knowledge gained by hundreds of other franchise companies to guide your advertising decisions. Our franchise marketing workshops will show you how to do this and avoid advertising blunders that have cost other companies tens of thousands of dollars.

• Franchise Lead Processing Systems
As the saying goes, one bad apple can spoil the entire barrel. For a franchise company this can and does lead to franchise lawsuits. All franchise organizations have a lead processing system, either by deliberate planning or by default. For the unsuccessful ones, it’s by default where the only requirement for franchise membership is whether the prospect’s check clears the bank. Instead of this risky approach, only the cream of the crop should be allowed to join the franchise network. Our customized Franchise Lead Processing System is tailored to the specifics of your company’s personality and values, includes instructing key personnel in:

(1) defining the profile characteristics of the best franchise owner for your particular business;

(2) developing interviewing checklists, procedures and techniques;

(3) proven ways to reduce franchise media costs;

(4) developing a franchise application form and brochures;

(5) how to process franchise leads and conduct franchise Discovery Days;

(6) using a series of tests and other measures to ensure that inappropriate candidates are disqualified before they join the franchise network; and

(7) detecting (and then avoiding) red flags that arise during franchise marketing efforts.

• Franchise Sales Control System
Our Franchise Sales Control System is designed with a variety of contact reports and feedback mechanisms to monitor performance and retrieve pertinent information that can be reviewed by management. This increases the effectiveness of franchise marketing sales efforts. It also significantly reduces the possibility of sales personnel not following established procedures in selling franchises, thereby reducing franchise liability risk. Finally, our Franchise Sales Control System creates a solid back up file for every franchise sold that will qualify as business record evidence in the event a future dispute takes place. This also satisfies the requirement of various states requiring franchise companies to maintain a complete set of records, books and accounts of franchise sales. Because most of the legal risk in franchising happens during the marketing phase when franchises are sold, a comprehensive Franchise Sales Control System is the best protection against the quicksand of franchise lawsuits, franchise litigation and franchise liability.

• Franchise Legal Compliance Programs
Inconsistent or misleading communications when a franchise is sold can form the basis for future franchise problems. It is just about impossible to avoid potential franchise problems unless a program of education and instruction is given to marketing personnel as well as middle and executive management. An integrated Franchise Disclosure Compliance Program specifies rules and expectations, manages franchise disclosure documents and controls the dissemination of all information is obviously essential. It is also perhaps the best investments your franchise company will ever make. And, you'll learn the essentials from Mr. Franchise, Kevin B. Murphy, whose experience as a franchise expert witness allows him to share invaluable knowledge gained in the trenches of franchise litigation and franchise lawsuits. Knowing where the bullets of franchise litigation come from, and avoiding them, is considerably less expensive than falling into the quicksand of a franchise lawsuit that consumes time and money. His experiences as a past franchise owner also gives him a unique, balancing perspective. Our Franchise Disclosure and Legal Compliance programs were developed in the 1980's, long before others in the industry realized these were good ideas.

• Negotiating With Franchise Buyers
Your company should encourage, and even require that all prospective franchise buyers be represented by legal counsel. We can assist you in establishing a system for responding to letters drafted by their franchise attorneys requesting changes or negotiations to the contract.

• Updating Franchise Operations Manuals & Training Programs
Your franchise operations manual and training program should be reviewed each year to ensure you’re offering what’s best and most current for your industry. Because the operations manual is incorporated by reference in the franchise agreement it is a living, legal document that requires oversight, review and updating by a competent franchise attorney.

• Franchise Relationships
Advice in structuring and implementing proven techniques that foster support, two-way feedback, sharing ideas, trust and the development of good franchise relationships that improve outcomes for both parties.

• Franchisor Mentor (sm)
For an affordable monthly retainer, your company can access our two-plus decades of successful franchise industry and franchise expert knowledge to provide ongoing advice in operating the franchise company and managing franchise relationships. Each mentoring program is tailored to your company’s specific needs, given its stage of development in the franchise industry and can be structured to include many (or all) of the programs and services listed above. For example, a company that has just started franchise efforts needs mentoring efforts focused on training its personnel, gaining franchise marketing-evaluation skills and abilities as well as developing Franchise Sales Control and Legal Compliance Programs. Companies that have sold franchises need mentoring efforts focused on effective training, start-up procedures and implementing effective franchise relationships. Our experienced franchise attorney and testifyng franchise expert witness has also worked on numerous franchise litigation cases. His wealth of practical knowledge about litigation avoidance can help you find the "legal time bombs" that may be ticking in your franchise business. Getting competent advice from a franchise attorney expert about how to avoid being sued in a franchise lawsuit is just as important as getting insurance against the risk of fire, especially in today’s litigious environment.

A comprehensive spectrum of buying a franchise services are offered so intelligent franchise investment decisions can be made with an objective, professional reality check before BEFORE funds are invested and long term ten to twenty-year contracts and leases are signed. We do not receive commissions from any franchise company or other special interest group. Whether you're buying a new franchise or purchasing an existing franchise, professional, objective due diligence is an important, critical step. Our franchise research and franchise disclosure document evaluation services include:

• FDD EVALUATOR (sm)
If you have the franchise company’s Franchise Disclosure Document (FDD) and want a thumbs up or down, FDD EVALUATOR is the perfect choice. We review the disclosures in the Franchise Disclosure Document and major franchise contract provisions to give you a reality check and thumbs up or down as well as highlight red flags and provisions in the contract you definitely should negotiate or consider further. The key here is realizing something the franchise companies don't tell you. When it comes to franchise agreements, you don’t get what you deserve or even what’s fair – you only get what you negotiate. If you decide to move forward with the franchise, you can either negotiate directly with the company (which many of our clients do). Or you can retain Mr. Franchise to represent you in contract negotiations. It’s entirely your choice. Investing in FDD EVALUATOR (sm) before signing long-term, ten to twenty-year franchise agreements, spending large amounts of money up-front, and an even greater amount during the course of a ten to twenty-year franchise relationship, is good business sense. For a limited time, FDD EVALUATOR is a flat $600 for FDD's of 100 pages or less. Included is a short teleconference call reviewing the FDD Evaluator notes and findings. For FDD's with more than 100 pages, additional charges apply. For FDD's that have more than just a single unit franchise agreement, such as an area development contract, or franchise agreement attachments, like promissory notes, guarantees, etc., review of these is at an additional charge. An estimate of additional charges for reviewing these will be given after FDD evaluator is completed. How much do other franchise lawyers attorneys charge to review an FDD? They charge a "retainer" (meaning pay the retainer now, and more later) of $1,000 to $3,000 applied towards franchise lawyer attorney hourly rates of $300 to $600 per hour to review the FDD, relay their findings, etc. The Odds are they haven't reviewed over 500 FDD's, are not MBA's and haven't operated a successful franchise before. Perhaps that's why they charge so much more? Don't miss the opportunity to join the smart franchise buyers who have used our eye-opening FDD EVALUATOR service.

• PERSONAL FRANCHISE PROFILE
An invaluable phone consultation with our franchise attorney, franchise expert to review your goals, interests, background, financial and personal situation. It also includes some focused personality testing based on Mr. Franchise's ownership of a successful franchise. This assessment will:

• Help you decide if a franchising is something you should forget about entirely or consider further. Franchise relationships work for some people, but they are definitely inappropriate for others. Pursuing a franchise if this isn't in your cards will only spell disaster. This is not something you'll learn from the franchise company or from franchise brokers.

• Educate you about franchise relationships, franchise discovery days and how franchise companies operate based on our 30 years of experience in the franchise industry.

• Coach you about common franchise interview questions asked during the franchise interviewing process.

The Personal Franchise Profile is based on Mr. Franchise's experience owning a very successful franchise as well as his three decades experience advising new and existing franchise owners. Call or email for appointment information. The cost of the Personal Franchise Profile is $600.

• FRANCHISE FINDER (sm)
A comprehensive list of franchise companies in a particular category, such as the ones predicted to do well in 2009: senior care, pets, fitness, education, personal care, frozen yogurt, children’s services, and green, eco-friendly franchises. Call or email for pricing details.

• FRANCHISE CHECKER (sm)
An in-depth investigation and analysis of a specific franchise company that includes interviewing existing and departed franchise owners, a very detailed analysis of the Franchise Disclosure Document (FDD) and examining all franchise agreement provisions. Franchise Checker (sm) is also a great way to evaluate high investment franchises as well as an existing franchise that's for sale by the franchise owner or the franchise company. Billed hourly at $500 per hour.

• FRANCHISE RESEARCH & REPORTING
On topics of interest to individuals, companies and law firms.

All franchise expert work is performed by the Director of Operations of Franchise Foundations, Kevin B. Murphy, known in the franchise industry as Mr. Franchise and a practicing franchise attorney. His franchise expert qualifications are listed in our Franchise Expert page. Mr. Murphy has testified and rendered opinions as a franchise expert in both court and arbitration proceedings on behalf of franchisors as well as franchisees. His publishing and teaching skills, coupled with two-plus decades of experience in the franchise industry as a franchise attorney, author and lecturer, create a most favorable impression in deposition and trial testimony. His background as a former franchise owner gives him a unique and balanced perspective. In consulting with franchise litigation attorneys, he often develops arguments or strategic approaches that were never considered, based on his review of the case. His arguments and case interpretation have been quoted verbatim by arbitrators in reaching their decisions.

Franchise MBA Level Training Franchise MBA level management training and courses for firms and individuals wanting to learn about how to effectively manage and operate franchise companies, franchise marketing 101, avoiding legal pitfalls in franchising, implementing a disclosure compliance program, drafting a franchise operations manual, franchising a business, franchising vs. licensing and other topics are also offered. These topics are offered individually or as part of an extensive package.

Currently franchise MBA level management training courses and the Franchise MCLE how to franchise courses and franchise seminars are given at at the Franchise Foundations executive retreat located in the California's famous Napa Valley Wine Country located approximately 70 miles north of San Francisco. Private franchise seminars, franchise courses and franchise workshops at your corporate office are also available. While traveling to present training courses, Mr. Franchise flies business class and charges a reduced portal-to-portal hourly fee. Call or email for further details and information.

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