THREE THINGS TO KNOW BEFORE YOU BECOME A FIRST-TIME FRANCHISEE
THREE QUESTION THURSDAY:
1. What would you recommend for a first-time franchisee to do before purchasing a license?
2. What are the limitations, expectations and property choices for a first-time franchisee?
3. Why do people typically purchase a Franchise License rather than launching their own unique brand?
(Transcription of video)
Oliva: Hey there Keyser Community and welcome to Three Question Thursday!
I have Chase Wilson here with me today he’s a retail expert.
So–for the three questions today we’re going to focus a little bit on, advice for franchisees.
So–if you were to give advice to a franchisee, with their first-time franchise purchase, what would you recommend for them to do before purchasing that license?
Chase: Oh, I would make sure that all of your financials are worked out ahead of time.
So as much financial detail as you can get.
That includes the cost for the build-out, the cost for fixtures, furniture, and equipment.
That includes the cost for the license itself.
There’s architectural drawings that you’re going to have to pay for, there’s a lot of detail.
So–as much detail as you can put together, get a really clear understanding of what it is going to cost you and how you are going to fund the project.
Olivia: Definitely, you got to make sure you cross your t’s and dot your i’s.
Thinking about, if I were a franchisee and I want to purchase a Franchise License for let’s say McDonald's.
What are the limitations?
What can I expect?
Can I choose my own property?
Chase: Yeah so by way of example McDonald's would be extremely strict as to where you could go, and when you open.
They would be one of the much more strict concepts if you had a McDonald's license.
Depending on the concept, it’ll be much looser.
So–there’s something called a Franchise Disclosure Document, that a franchisor will provide, and all the details about space, about demographics, about where you are located, your territory will be spelled out in the disclosure document.
Olivia: So, that’s going to vary depending on what brand you choose?
And last question…
Why do people typically purchase a Franchise License rather than launching their own unique brand?
Chase: The reason you’d want to purchase a license over a startup would be that a franchise has a proven system that’s working.
That’s been proven to be successful and thrive.
Most small businesses and startups just flat out don’t make it.
So–a very small percentage, my understanding is that 4% actually living past ten years.
And that’s just living past ten years, right?
That’s not necessarily thriving in business, at that time.
So–the idea is they have a proven concept in place.
They will provide you with everything you need.
Everything to an operations manual, to how the people are dressed, to how the HR works.
To–every single detail of the company down to how the place is kept clean, at the end of the day.
That’s how much detail franchisors should be providing their franchisees.
Olivia: Ok, well good.
It sounds like you have a lot of support when you franchise–when you purchase a Franchise Licenses.
So–if you need any support on the Commercial Real Estate end, our retail team here at Keyser is more than willing to help you guys.
Have a great week and we’ll see you next time, on Three Question Thursday!
Questions about the commercial real estate industry, the life of a broker, tips on your lease negotiation, or anything else? Let us know, we would love to feature your questions in an upcoming episode of Three Question Thursday.