Franchise Consulting, Development & Brokerage

FAQ

Franchise Consulting and Brokerage Services

who are our clients? – franchise buyers, franchisors and experienced business owners

We provide franchise consulting, brokerage and development services to first time buyers, experienced owners and existing franchise concepts.  Our clients consist of:

HELPING YOU PUT THE PIECES TOGETHER...

First time Owners – People looking for information and guidance on how to purchase a franchise.

Experienced Owners – People who have owned a business or franchise and want better access to options in the market.

New Franchise Concepts – Emerging concepts who have between 5 to 10 locations who need help in growing their business.

Existing Business/Franchise Owners – Business owners looking for coaching and consulting services to grow their business and increase profitability.

Buying a Franchise?  Questions on Franchise Consulting and Brokerage

i am looking to buy a franchise. do i have to use a broker?

No.  You do not have to use a broker to purchase a franchise.  The choice is a matter of personal preference.  Those with less experience in the industry are likely better served to work with an experienced broker to assist in the research process.  Whether you work with a broker, or on your own it’s important for you to be comfortable with the process.  Avoid situations where you feel pressure and/or heavy handed sales tactics.

is there an advantage in working with a franchise broker?

A good broker can have a number of advantages including:

- Identifying concepts aligned with your interests – Saves time to focus on concepts best suited on your investment, income and lifestyle goals.  A more targeted approach to expedite the process and reduce potential frustration.

- Provide access to important resources including legal and financial services – More information including financial and legal resources to help you get better economic terms.

- Present opportunities not widely advertised. – Learn about newest opportunities available and concepts you might not have considered.  Providing you with better options.

- Reduce the probability of a mistake. – More information will help you make a more informed decision.

if i work with a franchise broker what is the typical fee?

Brokers are typically paid a percentage of the franchise fee.  There is typically no additional commission for their services.  When working with a broker it’s important to have a CLEAR understanding regarding their compensation.  Get everything in writing.

Thousands of franchise options available... Which one is RIGHT for you?

what is franchise consulting? what is a franchise consultant?

Franchise consulting is a specialized category of professional services provided to franchise companies (franchisors).  The term is used liberally in the market today as some brokers refer to themselves as consultants.   Franchise consultants will provide more services than a tradition broker including marketing assistance, financial analysis, raising capital, sales training, strategic planning and development.  Franchise consultants will typically charge additional fees for these services.

should i work with a franchise consultant or broker?

That is a personal choice.  While we would love to say yes and would love to work with you, deciding whether to use a broker is simply a matter of how you want to proceed.  For experienced owners, the services of a broker are not always necessary.  For first time buyers with no experience, it may be an attractive option as they can help educate you on the process.  It’s important for you to be comfortable with your broker.  The process should be helpful, not pushy or have high pressure.  We also recommend working closely with your CPA and a qualified attorney.  They can help you review the legal and financial risks and help you with your decision.

Franchise Information and Research

what types of franchises are available to me?

There are an estimated 3000+ concepts available in United States today.   There are opportunities for almost every industry.  Options include the opportunity to work from home, an office, a retail or industrial location.  Some concepts require experience while others are simply looking for owners who are organized, professional and willing to follow their system.  For more information on different concepts available click this link.

how long should i spend researching a franchise?

The research process can be from 4 weeks to several months, depending on the concept and capital commitment.  We recommend taking all the time you need to make a decision.  Buying a business is a major commitment.  Take your time, work with your CPA, financial advisor and counsel.  Get all of your questions answered before signing your agreement and paying any fees.

what is the process when I buy a franchise?

Each concept has a different process when working with a potential buyer.  This will typically include:

- An introductory call to discuss the business model

- Review of their marketing material

- An application to determine your financial suitability

- Review of Franchise Disclosure Document (FDD, see below)

- A series of presentations about the business and their business model

- Interviews with the franchisor

- Validation calls with current and former franchisees

- Discovery Day (see below) to visit the company headquarters

- Signing the Franchise Agreement (see below) and paying the franchise fee

Read the fine print... Understand all documentation... Work with counsel

important franchise industry terms

Franchise Disclosure Document (FDD) - All franchises are required to provide you with an FDD.  This document provides valuable information regarding all aspects of the business including costs, responsibilities for you and the franchisor, etc.  It’s highly recommended you review the FDD with a qualified franchise attorney.

Franchise Agreement – This is the agreement you sign when you purchase a license to operate the business.  A copy of the agreement is included in the FDD.  It’s highly recommended you review the FDD with a qualified franchise attorney.

Discovery Day – This is when you visit company headquarters.  It’s an opportunity to meet the management, tour current locations and see if you are comfortable with the business.

Item 19 – Financial Performance Representation (FPR) - This is one of the most important items in the FDD.  This is the only place where a franchisor can provide any financial information regarding the performance of the business.  Franchisors are not required to provide and FPR.  It’s estimated that less than 30% of all franchise concepts make and FPR.

Franchise Fee – The initial fee paid to the franchisor for the right to operate their business model.

Royalty Fee – A royalty fee is an ongoing fee that the franchisee pays to the franchisor. This fee is usually paid monthly or quarterly and is typically calculated as a percentage of gross sales.

Advertising Fee – The advertising fee is the annual fee that is paid by the franchisee to the franchisor as his share of the corporate advertising expenditures.  The fees are typically placed in a fund and used to market the products and services of the franchise.

Business Plan – Before signing the agreement and paying your fees it’s highly recommended you write a detailed business plan.  This should include financial projections and a list of working capital needed to fund the business.  If you are not familiar in writing business plans there are many free resources available on the internet.  We also highly recommend you work closely with a qualified CPA, accountant and financial advisor to help review your business plan.

Want to Learn More About How Our Franchise Consulting Services Can Help You?

click here to arrange a free consultation and learn about our services

If you’re serious about buying a business and want to learn more about how our franchise consulting and brokerage services can help you please call 866 934 7167 or email us at info@sunshineconsultingltd.com.