5 Factors to Consider Before Becoming a Franchisor

The idea of owning your very own franchise operation can feel daunting, to say the least. So let’s break it down together! A successful franchisor is first and foremost an informed one. We are here to let you in on all the essential tips and tricks of the trade. 

A quick look at these fast facts can get you up to speed on everything you need to know before considering franchising your business. Let this list be your guide to learning the fundamental ins and outs of franchise development.

1. Build a Strong Foundation

A primary consideration when thinking about ways to build up your franchise is your foundation! What does the basis of your business look like? The model for franchising works to efficiently expand on exactly what is at the core of your enterprise. 

Creating a franchise development strategy based on a stable foundation is one of the most effective ways to grow your brand. Utilizing an expert franchise advisory service such as FMS Franchise can transform this promising groundwork into a thriving venture in no time. 

2. Know the Competition

Before taking your franchise to market, think about exactly who you’re competing against. Being able to identify and understand what has and hasn’t worked within the market will only serve to inform the way you structure your franchise business model. 

Take a good hard look at the industry surrounding your enterprise through primary and secondary research. FMS Franchise is integral in using these detailed figures to help create a solid and secure business plan. Remember, existing competition can change once you enter the franchise marketplace. 

3. Structure Your Franchise Business Model

Customization is essential! Finding the operating system that fits best for you will ultimately create a smoother and more successful business. A few important factors to consider incorporating are technology, professionalism, creativity, partnerships, and communication all to differing degrees. 

At FMS Franchise, we evaluate your business in order to figure out the exact amount of each element needed to create the recipe for your franchise success. From fee structure to territory sizing, there’s no detail too small for our team of experts. 

4. Create Brand Trust 

Building brand trust is a key factor for any successful franchisor. Consumers want to buy from a team that they know and trust and franchising expand your ability to communicate honestly with your customers. As such, it can become one of the highest values in the franchise business. 

FMS creates brand trust by ensuring that your values and mission as an enterprise are reflected in your marketing. It all begins with internal integrity and culminates in being a reliable service that your clients can always count on. Transparency can go a long way in earning confidence and credibility. 

5. Utilize Support 

Last, but probably most importantly, you won’t be alone! It’s proven that the most successful launches are done with comprehensive guidance along the way. With decades of experience, we’ve been able to help over 600 clients expand their businesses efficiently and effectively. 

You will have access to the expert guidance of our franchise development group every step of the way. Our industry specialists offer all the support needed to help build up your brand and reach your full financial potential. 

Now that you’re well versed in what to know before becoming a franchisor, you’re ready for a free consultation call. Visit today to take the next step. 

You’re in Good Company with FMS Franchise

FMS Franchise (FMS) is a strategic partner for new and existing franchise businesses. Through the creation, launch and execution of effective growth strategies, FMS Franchise helps ensure your success and legacy.

As a franchise consulting company developed by entrepreneurs and for entrepreneurs, we offer a range of services that provide marketing and sales support to FMS clients.

Whether you are looking to franchise your own business or sell your franchise business, our team is here to assist you. Offering far more than simply buying and selling, FMS Franchise takes an active role in research, conversion, metric tracking and more, giving you everything you need from one strategic partner.

With our focus to provide you with customized and effective franchise development services tailored to your business needs, there’s no need to go elsewhere.

FMS is Proud of What We Do

The clients we serve and the success we’ve helped others achieve. The numbers speak for themselves:

You’re in good company with FMS Franchise. The processes of developing, implementing and marketing a franchise system require expertise - one that comes with years of experience from people who are in the business of franchising.

Franchising is a tool to grow your business, giving you the ability to expand into new areas and achieve massive market penetration in a short period of time. By franchising your business, you can bring in investors without giving up control of the organization's direction or decision-making ability.

Franchising enables a company to swiftly and successfully create a brand and a sustainable competitive advantage.

Growing your business is made easier with the support and guidance of FMS, as you can unlock much more potential than you can with just one location. As you expand, you will increase your chances of becoming a reputable leader in your industry.

With the help of our marketing strategies and channels, we promote quick expansion and business growth. Our team is trained to assist with recruiting and training resources to jumpstart your franchise and lead to sustainable practices over time.

Working with FMS Franchise, you have consultants who have real experience in the field of franchise business development and we are the only full-service franchise consulting agency offering sales and marketing support to our clients, giving you the peace of mind that your business is in the best hands.

FMS Franchise - Working For You, With You

Looking to develop your franchise? Maybe looking to sell your franchise? You need a franchise management system to work for you, and with you. Since 2009, FMS Franchise has created and implemented franchise distribution models for hundreds of brands.

Our in-house franchise consultants make up a 28-member team to provide all of the resources required to execute a successful franchise model. From buying to selling, from supporting to launching, FMS Franchise has you covered for every aspect of the franchise business.

The fundamental premise of Franchise Marketing Systems is franchising a business effectively and profitably without large upfront fees or high overhead for your new or existing organization.

The FMS Franchise model is one of the most cost-effective franchise development options available in the franchise industry.

With more than 200 years of combined franchise expertise, FMS will assist you in every aspect of developing and managing a successful franchise business by creating a more profitable and efficient franchise model.

The franchise industry has thrived with more opportunities over the past twenty years than ever before. Those looking to enter into franchise development, or those looking to sell their franchise business, are on the cusp of fresh possibilities and propositions.

Franchising can help you expand your business. Partner with FMS to assist you in developing, defining, and structuring your franchise to launch new locations under your brand in new markets. Franchise expansion can quickly scale your brand with independent owner operators that believe in your approach and mission.

Are you ready to turn your business idea into a franchise? Our expert consultants will assist you to grow your business. Contact us today.

4 Diverse Revenue Stream Ideas While Franchising Your Business

Revenue streams allow businesses to earn better profits from multiple sources. During franchise development, plan on building various revenue streams that ensure you have a steady cash flow instead of relying on a single revenue stream.

You need to do your homework on what the industry average is in that market segment when it comes to franchise fees, royalties, advertising funds and local advertising investments.  However, you also need to be cautious and not overburden the franchisee with these so that he makes a  solid profit and is motivated to grow the business long term.  

These fees are not something you want to change often unless something dramatic changes that make you feel like you should reconsider the fees in place to keep it fair for both parties in a franchise agreement. Keep in mind, that changing any of these fees requires considerable franchisee notification and explanation, and should not be taken lightly.

Common Franchise Revenue Streams Options

Franchise revenue streams will generate your initial and ongoing income. You can divide the fee structure and build multiple revenue streams in the franchise  process. You should consider each stream as financial support that continues to grow your business while expanding it to new geographies.

Here are some common but diverse revenue stream ideas while franchising your business:

  1. Initial Franchise Fee
  2. Royalty Fees
  3. Supply Chain Mark-Ups
  4. Advertising Fees

1. Initial Franchise Fee

One of the most common revenue streams is taking initial franchise fees from the franchisee. After signing the franchise agreement and paying the franchise fees, you will shift your rights to the franchisee and allow them to sell your products and services under your brand name.

The average initial franchise fee ranges from $20,000 to $50,000. The franchise fee is a one-time payment and most investors are aware of this when they start considering franchises to acquire.

2. Royalty Fees

Your franchisee has to pay you the royalties on a weekly, bi-weekly or monthly basis, depending on the terms of the franchise agreement. You create the general payment structure of the royalty fees, either stipulating a percentage of gross sales or charging a flat-rate fee.

Create your royalty fee payment structure after assessing the market of your industry within the franchise geography. Moreover, consider the deal value and length of term to ensure you derive ample profits through the royalty fees without making the franchise look any less attractive as an investment.

3. Supply Chain Mark-Ups

The vendors your business works with can pay you a percentage of the total amount of purchases made by your franchises. This profit is called supply chain mark-up or rebates. To set up this revenue stream, you need to disclose the vendors on Franchise Disclosure Document (FDD) and how much rebate you will receive annually.

You and the franchisee are equally responsible for the franchise’s success. Therefore, don’t partner with vendors that sell highly expensive products. You might receive a high annual rebate but the franchisee will struggle to make the payment to vendors. It’s simply better to choose vendors that supply quality products at affordable prices.

4. Advertising Fees

In the advertising fee revenue system, the franchisee must pay you a specific amount of money to promote and market the brand. The advertising fee is a set percentage of gross sales and is calculated bi-weekly or monthly. 

You should keep the advertising fee management separate from royalties and other revenue streams because it is not part of your income. The advertising funds are provided “in trust” to market the brand on different platforms.

Conclusion

Every revenue stream you plan during your franchise strategy development should ideally bring long-term value to you and the franchisee. It should also be easy to execute and should not put a financial strain on your franchisee(s). You can invest the profits coming from cost structure and revenue streams at the core of your business to provide support to your franchises to make your business more sustainable and poised for future growth.

At FMS Franchise, our franchising and marketing specialists help franchisers by streamlining the process and assisting them throughout the process. Get in touch right and start to close your first franchise deal.

5 Key Factors of Successful Franchise Development

When any business owner with a growing business thinks about expanding into new markets, one of the avenues to consider is franchising. So, what is franchise development? The process of franchise development is a proven avenue for turning a successful business into a successful chain both regionally and globally.

There are many factors that go into the franchise development strategy. Imagine if you will, a complicated recipe at the heart of a strong recurring business. This recipe, when done correctly and with proven ingredients, will feature all the components necessary to make it repeatable and reproducible by others.

FMS's expert franchise consultants have identified these 5 key factors of successful franchise development:

  1. Drafting a Franchise Business Development Plan
  2. Completing the Franchise Legal Process
  3. Create Operations Manual & Training System
  4. Marketing In The Franchise Development Process
  5. Work With a Reputable Franchise Development Company

1. Drafting a Franchise Business Development Plan

Laying out your franchise business development plan and growth strategy is a very important process. This will help you and your investors to be able to visualize the direction that you want to take with the franchise. This is also something that you will be able to use when you are in negotiations with them so that you will already have all the statistics and information that they need.

A good overview of franchise strategy development should include the products and services that will be provided. The description of the buyer should include the details such as their income bracket, location and demographic details etc.

A detailed financial analysis will enable a business owner to get an idea about the feasibility of his business expansion program, and a franchisor should also prepare a detailed analysis to target potential franchisees in specific regions.

2. Completing the Franchise Legal Process

The second factor of the franchise process involves completing the legal processes necessary before filing for state registration with designated states. Franchising an existing business or starting a new business through franchising can take as little as a few months or as long as several years to complete for newly developed businesses. In either case, legalities must be followed. 

These legalities fall into place in multiple states, and it takes careful planning to address each requirement with care. Therefore, without any exception, you need to find yourself a professional who understands how to create your Franchise Disclosure Document (FDD) based on the standards set forth by the Federal Trade Commission.

This is not something that should be done solely by someone with experience in franchising, but also an attorney who is familiar with the UCC Code, FTC regulations and requirements, and writing FDDs and FAs.

The franchise legal process is essential in a successful franchise system. A strong foundation will lead to a strong franchise network with potentially solid revenue and profits for years to come. As with most things in life, it is all about being prepared for what is ahead, making sound decisions and staying organized.

3. Create Operations Manual & Training System

The Franchise Operations Manual and Training System​ provides a comprehensive way to create documentation and is necessary for training on a franchise level that is easily repeatable. While most franchisors develop their own operations manuals, many don't take the time or resources to make sure they are done properly.

Solid training is essential for franchisees to know about business operations. The franchisor is legally bound to create a well-documented guide to ensure comprehensive franchisee training before the new franchise commences business. The franchisor also has to provide ongoing support and refresher training to ensure the chain has standardized products and services offered.  

Documentation, training, and operations manuals are necessary for the successful growth of any business that is franchising. If steps are not well documented, you can often run into problems that may hinder the development and operation of your franchise system.

4. Marketing In The Franchise Development Process

Marketing is an intangible element of franchising and is primarily based on your ability to sell the concept of franchising to franchise prospects, once the franchise process is complete.

The use of collateral materials including franchise websites, brochures, franchise presentations and flyers should be carefully crafted to pique the interest of potential franchise buyers and make them aware of all the advantages associated with owning a franchise business that offers products or services which are sold under the brand name of your company.

These materials will provide information on the number of units already in operation, locations where units can be found and contact information for those interested in owning one of these franchises.

5. Work With A Reputable Franchise Development Company

Working with a reputable franchise development company can make all the difference when learning how to franchise your business.  Franchise Marketing Systems has helped hundreds of companies start and develop their business models into franchises. 

The process can be intimidating, and FMS is here to help. We have put together a range of franchise services to offer our clients the best chance for success – whether you’re looking to build your own franchise or sell your franchise business. 

Call Franchise Marketing Systems today and find out what an experienced franchise consulting group can do for your business.

5 Key Factors of Successful Franchise Development
5 Key Factors of Successful Franchise Development

6 Best Reasons To Franchise Your Business

Are you a business owner looking for business growth opportunities? Have you thought about franchising but don't really know the Whats and Hows? Or rather, are you wondering why you should franchise your business in the first place?

If you answered “yes” to the questions above, you’re in the right place!

Franchising a business can seem like a daunting task, especially if you’re just dipping your toes in these waters. But what is franchising?

Franchising, simply put, is the act of selling the rights to another party for opening a new unit of your business (a shop, restaurant, spa, realty service provider, dog grooming service etc.). In turn, that party follows your already established business model and pays you a percentage of the gross sales as royalty.

First, Why Should You Franchise My Business?

If you want to expand your business to new areas, franchising will provide you with an opportunity to do just that using other people’s money and resources. There’s obviously a lot more to the benefits franchising your business brings. Let’s take a look at some of the major ones.

Now, let’s explore the 6 best reasons to franchise your business you should consider;

  1. Motivated Partners
  2. Increased Revenue
  3. Rapid Business Growth
  4. Boosted Business Value
  5. Better Market Coverage
  6. Higher Success-to-Risk Ratio

1. Motivated Partners

When you franchise, you get a partner that has invested a considerable amount of money into getting the rights to your brand as well as physically setting up the franchise. They are also ready to invest their time and effort into making the franchise a success. This gets them to work hard and take ownership of the profits and the losses and, in the process make sure you benefit as well.

2. Increased Revenue

As a franchisor, you will be tapping into an additional source of income. Each new franchise will add to your income by means of franchise fees, royalties, and markups on supplies. Additionally, you can negotiate vendor rebates when your franchisees purchase from the same vendors you do. Purchasing additional quantities from the same vendors also allows you to negotiate better prices, further increasing your net revenue.

3. Rapid Business Growth

This point extends from the one about increased revenue above. The revenue generated with every additional franchise - with little to no capital investment on your part - can be invested in your business’s progressive growth and development.

You can also grant rights to the franchisee(s) to own multiple franchises simultaneously.

4. Boosted Business Value

Each of your franchises is a symbol of your product or brand’s quality and authenticity. The more franchises there are, the more visibility they will get. This will generate new business in the form of new customers which will get new potential franchisees to reach out to you.

This will result in more franchises and the snowball effect will just keep on bringing on greater success and potentially more profits.

5. Better Market Coverage

Franchising provides the perfect opportunity for you to increase your market penetration. It makes this possible by allowing you to reach new locations and markets, effectively and rapidly. This in turn allows you to access larger demographics, effectively increasing the value your business generates. Additionally, there’s a chance that the franchisee themselves are quite well-established in their community even before they take up one of your franchises. This further lends credibility to the new franchise and thus your business.

6. Higher Success-to-Risk Ratio 

You shift a major portion of the risks associated with a new franchise over to the franchisee along with the capital cost that they are already bearing. Additionally, the franchisee also takes responsibility for the legal side of things for their franchise such as signing leases and employee contracts.

Research and experience have also shown that the chances of success associated with a new franchise of an existing brand are much higher than that of new, solo businesses.

Conclusion

As a franchisor, you have access to an additional revenue stream each time you engage in the establishment of a new franchise. Since your franchisees are investing their own capital and time, they will be working that much harder to ensure that the new outlet is a success. Increased revenue, greater business growth, and better market penetration then come as a natural progression of events.

Having the right franchise development team at your disposal can make this entire process much more streamlined for you. This is where FMS comes into the picture! We have an expert team of franchising and marketing specialists that will work with you and address your franchising needs from A to Z.

Get in touch to start your franchise today!

5 Essential Steps Before You Franchise Your Business

Business ownership is a long, sometimes treacherous, sometimes breathtaking, journey. From the first steps of figuring out how to make your ideas come to life, to the climb of streamlining operations, to the final hike towards the most rewarding view, the journey of business or franchise ownership keeps you on your toes. 

However, once you get to the top and your business reaches new heights, you will likely want to keep reaching and wanting more. 

Enter the franchise model. Once you feel like your business journey has reached its peak, you can start to explore even new territory and raise the bar by franchising. If your business is already successful, in demand, and can be replicated by anyone, anywhere, you may have the perfect opportunity for expansion.

Before you franchise, you should know the roadmap to grow your business. When you understand the below 5 essential steps before you franchise your business, you can prepare yourself for this new business venture;

  1. Decide If Your Business is Ready to Franchise
  2. Make Some Hard Decisions
  3. Secure All the Franchising Paperwork
  4. Recruit the Right People For Your Franchise
  5. Give Support to Your Franchisees

1. Decide If Your Business is Ready to Franchise

The first step may feel like the biggest. It requires you to be honest as you evaluate your business. You will need to consider a few factors to know if your business is ready to scale.

Scalability 

The framework of your business must be solid, and your model should be both easily understood and simple to replicate. If your business has built a strong, successful presence and the demand is there, people will be likely to jump on board.

Demand

Do some market research on your industry trends before you move to the franchise model. Even if people are knocking down your doors to get their hands on your products or use your services, you need to be sure that this is consistent with the demand in the industry. 

Financial Growth

Before you franchise, take a good look at your financial statements. Not only will you need to be transparent about these numbers you provide potential franchisees, but you will also need to be transparent with franchisees (within the legal boundaries) regarding financial expectations.

2. Make Some Hard Decisions

As a business owner, you are accustomed to making tough calls to drive your business forward. When franchising, it is no different. You need to sit down and answer some important questions to determine your franchise model.

By asking yourself the hard questions before you move forward, you can choose everything from your business model to your training program materials to your financial requirements for franchisees.

3. Secure All the Franchising Paperwork

Once all the decisions are made, they need to be written and disclosed to the Franchisee. This is done through the legal documents (the Franchise Disclosure Document and the Franchise Agreement) which are binding for both you and the franchisee.  In some States within the US, you will be required to submit the Franchise Disclosure Document for registration. 

Once this is done, take a deep breath, sit back, and wait for their approval.

4. Recruit the Right People For Your Franchise

Once your Franchise Disclosure Document has received the necessary approvals for franchising, you are ready to start recruiting. Consider ways to spread the word about your new, exciting franchise opportunity. Create marketing resources, go to trade shows, and talk to your most loyal and trustworthy customers and employees.

You just may be surprised at how people respond to the chance to join your team and start their own business journey under your guidance.

5. Give Support to Your Franchisees

Remember: when your franchisees are successful, YOU are successful. You have already chosen the right training program and educational resources to onboard your team, but now is the time to make sure they work. Giving ongoing support can ensure that your franchisees have access to the resources they need to be successful.

Are you ready to start those first steps to your business franchise journey? Contact our FMS Franchise Consultants to set up a meeting and learn more about how we can support you through this exciting opportunity! Contact us today at.

Royalty in Franchise Your Business - The Power of Royalties

There are so many great benefits to a business owner when you franchise your business model.  Opening up access to capital through franchisee's investment, inviting dedicated owner-operators into your brand, scaling your brand's presence exponentially, and increasing the valuation of your business to the tune of 15 to 20 times earnings valuations all are very exciting elements that come with a well-executed franchise development model.

It's the Royalty Model that really makes franchising shine though, none of these positive elements compares to the excitement around the royalty model that franchising offers the business owner.

Royalties may not seem like much at first glance as they typically are 5-10% of Gross Sales collected by the Franchisor for the continued right to use the brand and the intellectual property.  Royalty fees are collected monthly in most service franchise offerings and weekly for most retail or food-based franchise systems.

The Royalty fee is paid by the Franchisee to the Franchisor for rights to the brand and business model and constitutes the primary compensation for most Franchisors.  They are the definition of a residual, compounding revenue model, and much like Dividends paid from cash flow producing stocks, they are incredibly powerful cash flow producing machines when a franchise system is working at full speed.

Let's walk through some basic numbers to illustrate the power of the royalty fee model as a franchise system expands even at the early stages of growth.  First, let's assume the business "unit" generates $750,000 in annual revenues and the Franchisor collects an 8% Royalty on Gross Sales.  This equates to $60,000 in annual Royalty Fees paid to the Franchisor. 

If you expand the term of the franchise agreement to ten years, this single Franchisee will produce $600,000 in Royalties for the first term of that franchise engagement. 

Now, let's assume we sell 10 franchise units per year over a ten-year time period as the franchise model picks up momentum and scales into new markets:

As the Franchisor in this model, the first year of Royalty Revenue is $600,000 with the ten units open. In year two, that number increases to $1,200,000 and in Year three to $1,800,000, bye Year ten, the model is producing $6,000,000 in annual Royalty Revenue and in total during the ten years has produced $33,000,000 in Royalty Revenue.

The opportunity in franchising comes from replicating success, not just selling units and the Royalty model here showcases how successful operating units create much more financial opportunity for the Franchisor than just the fees collected upfront for selling the franchise unit.

To further this point, the valuation of franchise systems is largely based on the residual revenue, not the transactional upfront revenue generated through Franchise Fees. Many businesses franchise their company in order to one day achieve an exit and franchising absolutely creates that possibility with franchise brands consistently capturing enormous valuation ratios up to 25 X Earnings.

The majority of this valuation comes from the Royalty model as it is the highest margin revenue a franchise system will generate pushing more profit to the bottom line and having the most consistent, repeatable revenue structure.

Think about it, if you were buying a business, what would you rather purchase, one-time fees which are reliant on a transaction or monthly residuals which are collected through auto-debited accounts tied to POS systems in the franchised stores?

The Power of the Franchise Royalty Model is real, focus on what will drive growth in Royalties and your franchise system will win along with the franchisees who have committed themselves to your brand.

For more information on how to Franchise Your Business, contact us.

Growth in Women Owned Franchising

First, let’s get a feeling of the size of the overall expansion in women-owned businesses, the numbers are exciting and stunning in some cases.  According to Fundera, 12.3 Million U.S. businesses are owned by women entrepreneurs and generate in excess of $1.8 Trillion in revenues.  In 2020, the women started 1,821 new businesses every single day!

What’s even more fantastic is that of the new businesses started, 64% of them were owned by women of colour in 2020 showing the growth not only in female business ownership but also in minority-owned business ownership.  In the ten years between 1997 and 2007, women-owned businesses created over 500,000 new jobs and opportunities for employment.

With all this growth and expansion in the overall business market for women, the growth in women-owned franchises and franchise brands should be no surprise.

The undeniable growth and expansion in women-owned businesses around the United States and the world is underway and some of the statistics both in franchising and in small business ownership.

This rising tide for female business ownership is a very good thing for our overall economy as this demographic has historically been a much lower percentage of the business market which means growth and opportunity for women and also growth for the entire economy with new ideas, new perspective and new business initiatives from female-owned firms.

Next, let’s dig into the franchise industry specifically and the impact women have had on the franchise market.  Women have created new brands, developed franchises and defined entirely new market segments while paving the way for entire markets through the franchise business model.

Let’s point to a few specific brands and businesses which are led by strong, innovative women business leaders.  Some of the great new women-owned franchise brands include The Bundt Shoppe, which was founded by Ms. Amina Ahmed, and is a unique and high-margin retail baked goods franchise brand based in the Colorado market.

The business model is beginning to grow quickly in Colorado and surrounding markets.  Kika Stretch is a wonderful example of women-owned franchise systems doing exceptionally well in part because of the female perspective and creative energy supplied by Kika DuBose Wise.

This brand has opened almost thirty stretch studios from its New Jersey headquarters to sunny California markets and has defined an entirely new market segment under her leadership.  Ms. Taria Ramos, the founder of Inspired Cravings, a fantastic Vegan Bakery model is beginning to develop the franchise system from the Virginia Headquarters to throughout the Mid-Atlantic markets and throughout the Southeastern U.S.

Ms. Ramos saw a need and a significant market segment that needed representation in a vegan baked goods brand that customers could trust and enjoy, so she took the first steps and launched Inspired Cravings.

Many of the franchise industry’s biggest brands and most established franchise systems have been developed by women-owned franchisors, but the increasing trend of franchises being owned by women is also undeniable and proving to be one of the richest opportunities for growing franchise brands.

According to the Wall Street Journal, by 2019, women owned over 265,000 franchise businesses in the United States which comprises over 35 per cent of all franchises, this is an increase of 24 per cent from a decade prior.  Stunning growth and a market segment that has pushed many franchise brands to shift their marketing and recruitment efforts to not only include women but to focus on targeting women franchise owners.

This transition has also helped support the growth of many traditionally women-oriented businesses now entering the franchise market and seeing opportunities to scale their brand through franchising.

The Meta Frequency Franchise, a healing and wellness franchise founded by Lysa Bozel has created a business model selling crystals and personal development services that were launched in the last year in the Tampa, Florida market. Fetewell Events, an event venue services franchise has been developed by Ms. Kate Ansari, an influential and fantastically creative entrepreneur in the Washington D.C. area markets.

The model is beginning to franchise throughout the region and expand into the Mid-Atlantic markets.  KemSkin Beauty is a beauty services brand founded by Ms. Natiya Hood which offers a wide range of skincare, waxing and beauty services it was brought to market recently and offers a fantastic beauty services franchise.

Harlem Zen, a beauty services brand focused on women of colour was franchised in 2019 by Ms. Angela McTair in Atlanta.  The brand was innovative, the first of its kind to offer services specifically tailored to women in this demographic and has been enormously well received in a very short time period.

All of these franchise systems and more are part of this fantastic growth in female-owned franchise growth.  Today, more than ever in history, women are a force in the business community and the impact they have is growing every day.  If you are franchising your business, you cannot ignore the opportunity to make your franchise appealing and welcoming to women-owned franchise brands.

FMS Franchise is a full-service franchise development firm with many more great women-owned franchise models, for information on any of these brands, contact us!

Franchise Your Business With Solid Funding Options

Franchise your business with FMS. FMS began its journey in franchise development in 2009, which in some ways had many similarities to the current marketplace for franchising which has been obviously impacted by COVID and the Pandemic. The irony of the franchise industry is that in many ways, the franchise business does better when the general economy is having trouble. Almost like an inverse relationship between the job market and the entrepreneur market.

When people lose jobs or have some difficulties finding employment at the level they would like or be accustomed to, they are more willing to accept the risk of becoming a business owner. So, back in 2009, the market was obviously incomplete turmoil with the financial and real estate collapse in full effect and the job market was about as bad as it could get.

From 2009 to 2012, the franchise industry saw some of the best growth percentages it had ever seen with the recovery taking place and also the amount of talented, high-calibre franchise investors entering the market.

It hit me one day as we sold a flower retail franchise to a former pharmaceutical executive. When the market was good for jobs, he would have probably laughed me off the phone offering him a flower business, but in 2010, he was investing in 9 locations of this particular franchise.

Today, during COVID, there are many of the same attributes in place and so many incredibly talented franchise investors who are entering business ownership due to fewer opportunities in the employment market.

What is different about the COVID economy vs. the 2009 economy is the access to capital. In 2009, virtually no one could get a loan for anything as banks and lending institutions were licking their wounds from a horrendous collapse of the financial industry and in COVID times, just about anyone can get a loan for anything. Joking of course, but the general situation isn’t that far off as recently as last year, FMS had sold one multi-unit franchise to a group that purchased a $4 million investment, which included real estate, for a senior care franchise system and put $0 down on the entire deal.

A transaction that would have been about as believable in 2009 as meeting a group of aliens landing in your neighbourhood some evening. One big change between the two markets is the SBA Funding element, the government is throwing money into the market in a variety of ways and one of those is supporting Small Business Loans through the SBA.

Most franchises, if they have the right mix of operator involvement and a few other characteristics can qualify for what is called the SBA Franchise Directory which is an approval for a franchise brand by the SBA which then makes the funding process quicker, easier and faster for a new franchise buyer if the brand is on this SBA Franchise Directory.

When FMS launches a brand, this is something we do for every new franchise. It’s not only important, it’s critical to being able to fund new franchise investments in a system.

SBA financing isn’t the only option for funding new franchise growth, there is a variety and all should be taken into account. Here would be my list to consider for offering funding to franchise buyers to your brand:

  1. SBA Loans: These loans are backed by the Small Business Administration and if the buyer qualifies, they will generally be the lowest interest rates and the best cost for the buyer to obtain funding.
  2. Commercial Bank Loans: Every franchise buyer has the option to just go to their local bank or lending institution. I would recommend developing a couple of solid relationships with lending groups to offer referrals and a direct option to a lending group with the buyers.
  3. Creative Lenders: There are other lending options for a buyer which come through different channels than banks and in some cases these can be incredibly effective. These are basically private lending groups which in some cases have easier qualifications to close a loan but can be more costly to the franchisee in higher interest rates, etc.
  4. Family and Friends: The one I would always suggest that sometimes is overlooked or just not addressed is many times one of the best ways to help fund a franchise sale. Suggest to the buyer that they present the investment opportunity to their friends and connections. So many times this ends up being the best option for them and they have more resources at their fingertips than they realized and this tends to be the easiest way to fund a deal in many cases.
  5. Franchisor funding the deal: Last but not least would be the deals, the Franchisor would provide lending options, many times the easiest way to offer this is some sort of financing of the franchise fee which allows the franchisee to make payments on the fee over a specified time period. This needs to be disclosed in Item 10 of your FDD, but it can make a big difference in your ability to close some franchise sales.

Every franchise system needs to have lending figured out in order to successfully develop its network and franchise the business model. It isn’t a “nice to have”, it’s a “need to have” for any brand getting into the franchise market and selling their franchise platform.

For more information on franchise lending options or on how to franchise your business, contact us.