Franchising Package

Does anyone have or is anyone willing to share a franchising package a potential franchisee would receive if they were to make application. I do understand that this could be considered sensitive material and I am not asking anyone to share what they are not aloud to do.
We get no less than 5 inquiries a week right now and have had four people want to put money upfront so my wife and I have decided to accept two of the applicants. I would appreciate any help.

As far as I know you should have a lawyer draw up a package for you, this isnt a cheap investment. As far as I can figure. I, from the beginning set my business up so that let’s say I die in a car accident tomorrow, someone can come in and run the place from morning till night based on 5 binders I have set up in the restaurant, it is a run down of every procedure I do, every vendor, every…well everything. Are you set up like this? That is what a restaurant MUST have to franchise itself. If you have done this, they call around to a couple lawyers in the phone book, find one that does franchise docs and see what the costs are. If you truly want to be a franchise. Can you just sell your training and expertise, yes, you can, but collecting weekly franchise fees will be impossible if you dont have the proper legal docs to back you up.

A decent franchiseing package will cost you tens of thousands to have written. If you hope to keep control of your company, spend the money before accepting any money, sharing any trade secrets, allowing use of your name/logo ect. Stop and look at the big picture. A 3% royalty collected from these two stores will pay for the up front documents within a few years. No documents means you are extremely unlikely to collect royalties long term and there is more to a franchise agreement than just whiting out someone elses name and inserting yours. You are talking about a contract that you hope will generate hundreds of thousands of dollars over the years, don’t cheap out on this.

You have to register with the FTC and every state has it’s own laws regarding franchising. You have to register in each state which you plan to sell franchises… every year. You’ll need a lawyer to draw up the Uniform Franchise Offering Circular (which lists things like your business experience, pending litigation, bankruptcies, initial franchising fee and about 20 other things) and the actual agreement itself. I think our business lawyer put the whole thing together for about $12,000 when we did it 5-6 years ago. Also, the FTC will require that your business undergo a full audit annually by a proper accounting firm - the 1st couple are pricey but after that it should only cost a few thousand/year. Also, do you have a full operations manual written up - the franchisee will want that.

AND you should have the money on hand to purchase a franchise location back from a franchisee that is not “toeing the line”! After having gone through this whole process and pulled the plug on it when I owned 3 stores, I now believe that a company should have something like 20 stores and piles upon piles of cash laying around before attempting franchising. And if I ever get to that point, I won’t try and grow my business through franchising again… it’s definitely not for everyone.

If all you want to do is get a bit of cash for use of your name and concept, perhaps a licensing agreement might be the way to go. Almost no control but WAY less cost for you.

Folks this appear to be in British Columbia so US laws will not apply…And BC is one of the most franchise friendly provinces in that you do not need to specifically register a franchise…But it is still quite an undertaking…

Hi Cheezy Tomato:

You are encountering a rather common phenomenon.

There appears to be a large number of people who think they would like to be in the pizza business. Most have contacted all the major and not so major franchisers about opening a pizza shop in their home area. Usually they found that the groups they contact already have all the shops they believe the area can support.

As the above folks do not wish to move to some area sparsely covered by the major chains but want to stay in there home town they began contacting the apparently successful independent operators about franchising.

If you think there is a larger market for your pizza I would suggest you do it your self a couple of times before considering franchising.

George Mills

I don’t get the impression he’s wanting to be told whether to franchise or not. I think he’s trying to find out whether he should even consider it or not, based on what other franchises pay, how they’re set up, who does what, etc.