2015 Guide to Today's Top Franchises

SPECIAL REPORT: Top Franchises
Start Up (ROBS). To qualify for ROBS you
must have at least $50k in eligible retirement
accounts such as an IRA, 401(k), or 403(b).
Your retirement funds can be combined with a
spouse’s, partner’s or traditional business loans.
“ROBS arrangements often enable a
franchisee to start their business without
debt, which increases their chances of being
profitable sooner,” says David Nilssen, CEO of
Guidant Financial, which specializes in guiding
entrepreneurs through the ROBS process.
“Profits can be retained for growth rather than
being sent to a bank in the form of interest
payments.”
Another option is a security-backed loan,
which enables you to take a loan using a financial
portfolio, such as a mutual fund, as
collateral. There are several potential advantages
to doing so. First, you can leave your
portfolio in place, which enables it to grow.
Second, because the loan is backed by your
portfolio’s value, the interest charged will be
lower than for an unsecured loan. It is important
to note that the risk of borrowing against the
value of your securities is that if your investments
fall in value, the money borrowed will
emphasize your losses.
A handful of franchisors also offer internal
financing to approved potential franchisees.
Those that do not often put candidates in touch
with an established loan broker, who guides
them through the process of building a professional,
lender-ready package and connects
them with potential lenders. Loan brokers
typically charge borrowers an upfront $1,000
– $2,500 packaging fee that varies according
to the complexity of the deal. Online loan brokers
offer a variety of differently priced plans.
In addition, since online brokers’ networks
consist of thousands of local and nationwide
lenders, it is possible that companies will
compete for your loan, which in turn can yield
better terms for you, the borrower.
“We do not take a one-size-fits-all
approach to helping our franchisees obtain
financing. Instead, we constantly work with
our financing partners to provide a variety of
options,” says Jeff Dudan, Founder and CEO
of AdvantaClean.
DO YOU NEED PROFESSIONAL ADVICE?
If you wish to expedite the process of identifying
the franchise that best fits your personal
and financial objectives, as well as your budget
Franchise lawyers, like most lawyers, can be costly. The investment, however, is well worth it
since a skilled one will protect your interests. He or she has the in-depth experience regarding
franchisors, Franchise Disclosure Documents (FDD) and franchise agreements necessary to
ensure that the franchise terms are the most beneficial to you.
With so many franchise lawyers out there, how do you determine if the one you are considering
is among the best? Ask him the following questions, which were prepared by franchise lawyer
Richard L. Rosen of Richard L. Rosen Law Firm:
• What is your experience with franchise law?
• What honors or awards have you received?
• How do your clients perceive you?
• How do other attorneys perceive you?
• How do you approach a franchise review (communication, discussions, negotiations, etc.)?
• Can you help with my business analysis?
• Do you represent franchisors and franchisees? What is the breakdown?
• Have you ever dealt with X (fill in the name of the franchise you are considering here)? What
experience do you have with litigation? With arbitration? With mediation?
• Are you familiar with the X (fill in the industry of the franchise you are considering here)
industry?
• What is your fee structure?
How to Vet a Franchise Lawyer
• What should I expect from this process and experience?
and skill set, an established franchise consultant
can help. They can also assist you with
getting a franchisor’s attention as a result of
their connections and to complete and understand
all the paperwork involved.
“I support my clients in all aspects of
the franchise process including choosing a
best-fit franchise, understanding the FDD
and ensuring that their interactions with the
franchisor go smoothly”, says Rick Bisio, who
has been assisting new franchisee candidates
for 22 years and is the author of The Educated
Franchisee.
Whether you use a franchise consultant or
not, after meeting a franchise company’s initial
candidate criteria, you’ll be provided with their
FDD. It is crucial to hire an attorney with
extensive franchise experience to review the
FDD before you sign the Franchise Agreement.
An experienced franchise attorney understands
all the elements of a Franchise Agreement—
what you might be able to negotiate or
not—and how each element affects another.
Areas to focus on in particular within an
FDD, according to Richard Rosen, who has
been practicing franchise law for over 35 Years
and is principal at the Richard L. Rosen Law
Firm, include:
• Territory & Market: How do the territory
terms impact your market? How will
renewal affect your territory?
• Transfer: How can you avoid the right to
transfer being too restrictive or costly?
• Default and Termination Procedures: Are
the terms regarding buying back your
equipment or lease transfer favorable?
• Non-Compete: Do the terms enable you
to be able to make a living after leaving
the franchise?
HOW WILL YOUR LIFE CHANGE?
If you are used to working full-time, your
hours probably will not change much when
you own a franchise. According to our
research, franchisees work an average of
40-50 hours per week across all industries.
Forty-four percent reported working more
than 50 hours per week, while 30% reported
For more information on this report, visit: www.FranchiseBusinessReview.com | 19