1. Is my business or concept ready to franchise or expand further?
The real question is: Would YOU pay $20 - $50K for your “system”, support, and brand? Is your business duplicable without YOU being directly involved at the unit level? How much expansion do you really want—Regional, National, International? Are you funded enough to support growth?
2. What should my franchise cost?
The cost of your franchise will depend on various factors, including what industry your business is in, how much support you plan to offer your franchisees, and what level of training you will provide. Usually, $25-$50K for a single unit franchise fee is average. There will also be initial start-up costs that vary depending on the concept.
3. What about ongoing royalties and fees?
Royalties and other fees are determined primarily by the type and extent of franchisee support that you, as a franchisor, are prepared to offer. Will you use Regional Developers to offer localized support? If so, then the royalty will likely be in the 6-10% range. National Ad funds are often 1-2%. Depending on your concept, you may need to charge for additional training of other employees, managers, etc.
4. What type of franchise documents do I need?
At a minimum, you will need a UFDD (Uniform Franchise Disclosure Document), Franchise Agreement, Regional Developer Agreement (if applicable), Operations Manuals, and Marketing Manuals.
5. What is a UFDD?
A Uniform Franchise Disclosure Document is a document written in a specified format to provide details about the franchise system to prospective franchisees. The contents, language, and format of the UFDD are regulated by the Federal Trade Commission.
6. Do you draft the UFDD?
Although we do not draft the UFDD, we help to determine the details of your franchise system that will be disclosed in the UFDD. Once these details are established, we turn the information over to our retained franchise attorneys to draft the actual document.
7. How much does a UFDD cost to draft?
The cost of the UFDD depends greatly on the complexity of the concept, but usually lands in the range of $20-40K. There are states, such as California, New York and Illinois, that require additional registration of the UFDD; those fees are extra.
8. What type of franchise materials do I need?
You will need brochures to display at franchised locations and to send to interested prospects (paper and electronic). Similar materials should also be available on the portion of your website dedicated to the franchise aspect of your business.
9. Do you develop these franchise materials?
Yes, our experienced franchise sales material writers can draft all of your necessary documentation.
10. Where do I find potential franchisees?
Business Brokers and Franchise Consultants are the best sources. Internet leads and Franchise Opportunity meetings at your locations are also useful. PowerHouse will help you determine your best sources to optimize the lead-generation process.
11. Do you help with the leads generated?
Yes, in addition to PowerHouse Franchising providing our own leads, we will analyze and follow through with the leads you generate as well.
12. Do you help with franchise sales?
Yes, PowerHouse Franchising provides COMPLETE sales assistance. We work with your current sales staff to increase the intensity and productivity of your sales effort.
13. How do you work with our existing franchise sales staff?
We qualify prospects, disclose your franchise offering, assist with validations, escort prospects to and from Discovery Day, assist with contract negotiations, and present qualified candidates for franchisor approval. After disclosure, we work with your sales staff to help with continuing validations, etc.
14. How do we participate in the sales process?
We will need you to designate a point person to participate in conference calls, discovery day, and other key elements of the process.
15. How do we compensate you for your services?
PowerHouse is paid a retainer fee and commissions, which are all performance based – you don’t pay if we don’t produce. Our Franchise Development services are quoted individually.
16. What kind of sales performance should I expect?
Usually, we like to see 5-8 Regions awarded within the first year, which directly results in an exponential increase of single unit sales.
17. What’s my return on investment?
The ROI for Regional Development sales is with only 1-2 Regions sold.
18. What marketing do we need to do and how are we involved in lead generation?
PowerHouse generates the bulk of it’s qualified leads thru our relationship with business brokers and franchise consultants across the country, however you should continue to market via print – like Entrepreneur Magazine, Craigslist, and other online methods, such as web optimization, which we can discuss with you.
19. What is the length of a typical franchise contract?
The length of a typical franchise contract is initially 5-10 years, with options to extend.