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site information and any brochures and videos they send you. and pay cash for a business. Some still use home equity but there Ask yourself, are the materials professional and up-to-date? aren’t many banks willing to loan money. Most people are rolling Are you treated courteously by a friendly and knowledgeable their 401K into a C corp borrowing from themselves and paying member of the corporate office? Are your questions and concerns themselves back rather than a bank. Some rely on partnerships answered to your satisfaction? and investors while others use unsecured lines of credit. The SBA Your next step is to read the company’s FDD (Franchise Dis- is also a viable option for larger loans. There are experts willing to closure Document), a document required by the Federal Trade give free advice; listen to them and shop around so that you can Commission. The franchise agreement is the legal, written docu- compare and contrast. ment that governs the relationship and specifies the terms of the franchise purchase. The FDD will give you the history of the com- Thelast step in the process is Discovery Day (an on-site meeting pany, the business experience of its officers, directors and execu- with a franchisor). At this meeting you will be introduced to the tives, the training and marketing programs, and what costs, royal- top people in the home office and perhaps visit a local franchisee. ties and fees you will be required to pay. Discovery Days are very interesting and exciting. When you Many franchisors will provide an Item 19 (earnings claim) in the leave, you will have a good understanding of the franchise. Don’t FDD that will help you estimate the potential of the business. They forget that this is a two-way street. They’ll be evaluating you as aren’t written consistently but do provide great information. It is thoroughly as you evaluate their business. also important to interview random franchisees asking questions The last step, of course, is making the final decision. Like about expenses and earning so that a pro-forma can be built. any major decision, you will be filled with anticipation and The FDD clearly explains the responsibilities of the franchisee anxiety, excitement and fear. These are very normal feel- and the franchisor. Some warning signs of a franchise that is fac- ings, experienced by almost everyone, but if you’ve done your homework and followed the steps as out- Destiny is no matter of chance. it is your decision. Congratulations – you’relined, you should be very comfortable with a matter of choice. it is not a thing ready to be a franchisee! to be waited for; it is a thing to be Patty Norman is passionate about helping achieved. –william jennings bryan business ownership is an ideal vehicle for thepeople realize their dreams. She believes that right people to reach their goals and enjoys ing challenges are extensive litigation with franchisees or a clos- sharing with others the knowledge she has gained on her own en- ing rate of units greater than what’s being opened. trepreneurial journey. Where the rubber meets the road is when you start talking to In October of 1992, Patty decided to get into the franchise the franchisees. They are the best source of information for find- business and became the first franchisee for a restaurant that ing out what really happens in a business on a day-to-day basis. featured American cuisine and a bakery. She created several sub- Every franchisee is listed in the FDD with their phone numbers sidiary businesses associated with the café, including a catering so you can call as you want. It is important to talk to franchisees and retail gift business. While under her leadership her store had hitting the ball out of the park as well as those not doing well. Find the top revenue per square footage in the chain. Her involvement out about their backgrounds and opinions, what do they think of included hiring, payroll, daily operational accounting and coordi- the marketing provided by the franchisor? Did they leave training nating a television marketing campaign. She negotiated the pur- ready to rock in roll or did they scratch their head and say to them- chase of the franchise as well as the sale of the business. selves; ah oh, now what? How good is the support of the franchi- Prior to owning her own restaurant, Patty worked in the cor- sor and the relationship between the franchisor and franchisees? porate setting for Marion Merrill Dow as a sales executive selling What about purchasing power, total investment and bottom line pharmaceuticals. After college, Patty spent 12 years as an educa- numbers? My favorite question; if you had it to do over, would you tor and coach. As an educator, Patty led a campaign with key busi- decide to get into this business again? Why and why not? ness leaders and the Chamber of Commerce to develop programs that assisted young adults to gain a higher level of understanding Your next step is to narrow down your choices. Okay, maybe it’s of business in the real world. not all that easy. Let’s review what you’ve done so far: From 2004 to 2006, Patty was a Consultant Development Man- F Made a list of your strengths, ager for FranChoice. She focused on the development of the Fran- experiences and needs Choice independent consultant base, teaching them the systems F While keeping an open mind, found and materials as they acclimated to the business and their new con- some companies that look promising sultant role. Patty also coached experienced consultants and fran- F Requested information chisors, helping them maximize their potential and effectiveness. F Reviewed the FDD Today Patty is thrilled to be an Independent Consultant with F Talked with existing franchisees FranChoice and uses her extensive knowledge and background to advise candidates on franchise opportunities nationwide. She re- As you are gathering information about the franchise systems sides in Excelsior, Minnesota with her husband Jim, and she can you should also simultaneously be gathering information about be reached by email at PNorman@FranChoice.com or by calling how to pay for “the one”. Few people can afford to write a check 952-285-7664. www.OpportunityWorld.com Opportunity World • November/December 2012 21


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