Rick Grossmann with Michael J. Katz Esq
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1 Entrepreneur FRANCHISE BIBLE How to Buy a Franchise or Franchise Your Own Business EIGHTH EDITION Rick Grossmann with Michael J. Katz Esq
2 Contents Foreword Preface XV XXII PART I: Buying and Operating a Franchise (Becoming a Franchise Owner) Chapter 1: The Basics of Franchising and the Changing Landscape of Franchise Marketing and Recruiting 3 What Franchising is Today 4 Why Choose Franchising? 5 The Changing Landscape of Franchise Marketing and Recruiting 9 The Five Pillars of Marketing 10 The Sixth Pillar: The Internet 14 Internet and Social Media 17 Conclusion 22 Chapter 2: Choosing the Right Franchise Opportunity 25 Why Buy a Franchise Instead of Going It Alone? 26 Am I a Good Franchise Candidate? 27 The Discovery Process 32 Interviewing Existing Franchise Owners (Franchisees) 35 Quit the Team and join the Party 37 Buying An Existing Franchise 38 Conclusion 38 Chapter 3: Legal Considerations 39 Understanding the Franchise Documents 40 Setting Up Your Business Entity 77 Other Contracts 91 VIII
3 FRANCHISE BIBLE Employees 104 Conclusiori 109 Chapter 4: Franchise Funding and Finance 111 Obtaining Start Up Financing or Funding 112 General Financing Options 114 Creative Financing Options 115 Committo Financial Literacy 117 Conclusion 120 Chapter 5: Location, Location, Location 121 Real Estate Leases 122 The Best Location for Your New Business 132 Partially Equipped Locations 134 Tenant Improvement Dollars (Tl) and Free Rent From the Landlord.135 Choosing a Commercial Real Estate Broker 136 Conclusion 136 Chapter 6: Build-out and Construction Team 137 Choosing Your Project Manager 138 Choosing Your Architect 139 Choosing Your General Contractor 139 Dealing With Permits and Inspections 139 Build-Out Budget and Timeline 139 Franchisor Requirements 140 Conclusion 140 IX
4 FRANCHISE BIBL.E Chapter 7: Building a Winning Team 141 Recruiting Applicants 142 Keeping Good Records & HR Support 142 Compensation, Bonuses, Benefits and Incentives 143 Legal Considerations 144 Payroll and Payroll Tax management 144 Company Culture and Managing Staff 145 Conclusion 145 Chapter 8: Launch, Grow, Thrive! 147 Marketing Your Franchise 148 Making the Most of Your Franchise 148 Owner's Advisory Panel 149 Leadership Opportunities 150 Structure Optoins Within Franchising to Consider 151 Conclusion 153 PART II: Franchise Your Business (Becoming a Franchisor) Chapter 9: Franchising Fundamentals 157 Starting a Whole New Business 158 Business Expansion Options 158 Structure Options within Franchising 160 Advantages and Disadvantages of Franchising 161 Can Your Business Be Franchised? 163 The Final Decision to Franchise 166 Working Capital Considerations 167 Conclusion 169 X
5 FRANCHISE BIBLE Chapter 10: Franchise Law Considerations 171 Franchise Discloser Document and Franchise Agreement 173 Federal Law 176 State Law 178 Trademarks 179 Financial Performance Representation 181 Audited Financial Statement Requirements 182 Three Franchise Decision Lens Philosophy 182 Disciplinary Actions 183 Transfer, Renewal, and Termination Clauses 184 Operations Manual 185 Conclusion 191 Chapter 11: Building a Strong Franchise Organization 193 Company Infrastructure 194 Why Buy Your Franchise? 196 Buying Power, Approved Suppliers and Other Revenue Sources Facility Evaluation and Selecting Your Central Office 196 Growth and Staffing Plan 197 Conclusion 200 Chapter 12: Strategize to Thrivel 201 You Can't Just "Try" Franchising 202 Choosing the Best Franchise Owners 202 Happy Franchise Owners Make More Money 203 Inspiration vs. Motivation 205 Choosing Franchise Experts 205 Registration State Strategy 208 Conclusion 209 XI
6 k. FRANCHISE BIBLE Chapter 13: Building Your Franchise Community 211 Creating Your Franchise Support Systems and Team 212 Avoid the "Franchise Doldrums" 215 Become a Great Event Coordinator 215 Creating and Hosting Discovery/Decision Day Events 216 Forming and Managing Your Owner's Advisory Committee 216 Offering Franchise Rewards and Incentive Programs 217 Conclusion 217 Chapter 14: Franchise Marketing 219 Decades of Traditional Marketing 220 Game Changer the Internet and Beyond 220 Back to the Basics: Regaining the Discovery Process 221 Leveling the Playing Field 222 Redefining the Basics of Marketing the Five Pillars of Marketing..222 Internet Technology: the Sixth Pillar 226 Conclusion 236 Chapter 15: Final Thoughts on Franchising Your Business 237 Can You Afford The Franchising Process? 238 Impounds and Deferred Fee Collection Stipulations 238 Multistate Franchise Taxes and Accounting 239 Franchise Associations and Advertising Councils 240 Franchise Discovery Process 241 Avoiding Litigation and Arbitration 242 Franchise Fees, Royalties, and Other Fees 244 Making the Decision to Franchise 245 Conclusion 246 XII
7 FRANCHISE BIBLE PART III: Franchise Ten Commandments Thou Shalt Thrivel Franchisor's Ten Commandments 250 Franchise Owner's Ten Commandments 252 Conclusion 254 Resources 255 Glossary Franchise Nomenclature 257 About the Authors 269 Index 271 XIII
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