Intro to Franchising IG - International Franchise Association

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Things you want to see on a franchisor’s income statement: ◆ increasing profit ◆ more revenue derived from royalties and system income than from selling franchises ◆ increasing revenue trends, usually > 15% ◆ increasing net income trends, usually > 15% ◆ increasing net income per share trend, usually > 15% ◆ a profitable franchisor! What you should know about these financial statements: ◆ The financial statements should be audited financial statements. ◆ The statements should contain two to three years of financial date. WHERE CAN I GET HELP? You should take these to an accountant experienced in franchising for evaluation! ✔ International Franchise Association (IFA), 202-628-8000, www.franchise.org ✔ American Bar Association’s Forum on Franchising, www.abanet.org ☞ forums ☞ franchising ✔ IFA’s Supplier Forum publishes a list of firms that specialize in franchising law, www.franchise.org ✔ recommendations from other franchisees 30 An Introduction To Franchising THE IFA EDUCATIONAL FOUNDATION
UNIT 3: NAVIGATING THE PAPER TRAIL WORKSHEET Activity 1: Use the disclosure documents and franchise agreements you received to complete: Evaluation Criteria Franchisor 1 Franchisor 2 Initial Investment ____________________ ____________________ Royalty % ____________________ ____________________ Franchisor Obligations ____________________ ____________________ Franchisee Obligations ____________________ ____________________ Term (Duration) of Franchise ____________________ ____________________ Renewal Possible? ____________________ ____________________ Earnings Claims ____________________ ____________________ [OPTIONAL] Activity 2: Use the two balance sheets to complete: Yes or No? Franchisor 1 Franchisor 2 Increasing Total Assets? ____________________ ____________________ Increasing Stockholders’ Equity? ____________________ ____________________ Cash > Long-Term Debt ____________________ ____________________ Total Debt (current and long-term) ____________________ ____________________ < 1/2 Total Assets Current Debt < 1/3 Stockholders’ Equity____________________ ____________________ THE IFA EDUCATIONAL FOUNDATION An Introduction To Franchising 31
Page 1 and 2: An Introduction to Franchising IFA
Page 3 and 4: An Introduction to Franchising IFA
Page 5 and 6: Chapter 1: An Introduction To Franc
Page 7 and 8: Restaurants KFC McDonald’s Pizza
Page 9 and 10: WHAT ARE THE ALTERNATIVES TO FRANCH
Page 11 and 12: Disadvantages: ✔ The franchisee i
Page 13 and 14: UNIT 1: AN INTRODUCTION TO FRANCHIS
Page 15 and 16: Chapter 2: Beginning Your Search Wh
Page 17 and 18: What Business Should You Start? “
Page 19 and 20: Determine If You Can Make Enough Mo
Page 21 and 22: ✔ Carefully study and obtain prof
Page 23 and 24: UNIT 2: BEGINNING YOUR SEARCH WORKS
Page 25 and 26: Chapter 3: Navigating the Paper Tra
Page 27 and 28: ✔ Item 2: Business experience. Th
Page 29 and 30: ✔ Be sure you know what services
Page 31 and 32: THE IFA EDUCATIONAL FOUNDATION SAMP
Page 33: SAMPLE INCOME STATEMENT ABC SLEEPWE
Page 37 and 38: Chapter 4: Evaluating a Franchise--
Page 39 and 40: About training: ✔ What are the lo
Page 41 and 42: ✔ Are the manuals updated on a re
Page 43 and 44: Entrepreneurial self-assessment: St
Page 45 and 46: Do I Have What It Takes To Be A Fra
Page 47 and 48: ■ Does the franchisor staff atten
Page 49 and 50: ✔ Watch the details. ■ Success
Page 51 and 52: Chapter 5: Writing A Business Plan
Page 53 and 54: III. WHAT DOES A BUSINESS PLAN LOOK
Page 55 and 56: ✔ Summarize the entire Plan ✔ B
Page 57 and 58: 5. Establish a marketing budget. If
Page 59 and 60: REVIEW QUIZ Match term on left with

Intro to Franchising IG - International Franchise Association

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