Introduction to Franchising John Reynolds CFE President IFA

Introduction to Franchising John Reynolds, CFE President, IFA Educational Foundation

International Franchise Association • Founded in 1960, IFA is the world's oldest and largest organization representing franchising worldwide. • IFA’s Mission: to protect, enhance and promote franchising. • IFA members include franchise companies in over 300 different business sectors, individual franchisees, and businesses that provide products and services to the industry such as marketing, law, and business development.

International Franchise Association Based in Washington, D. C. $14 million annual budget 30 Members - Professional Staff Government Relations, Conferences, Media Relations, Membership, Marketing, and Administration

IFA Website – www. franchise. org

The U. S. Franchise Industry • Job Creators – Nearly 18 million jobs • 1 out of every 12 private sector jobs • $304. 2 billion in payroll (direct) (2007 Economic Census. )

Franchises in Job Creation

The U. S. Franchise Industry • Revenue Generators – $2. 1 trillion in economic output • $802 billion in direct output/ 9 percent of total economic output • 3. 9 percent of all private sector GDP (direct)/ 9 percent of total • 3. 4 percent of all GDP (including government & farm sector)

American Franchising Video

What is Franchising? A marketing method in which the owner of a product or service, known as the “franchisor”, offers the right to operate and manage his product & service to others, the “franchisees”, in return for a fee and ongoing royalty payments. Franchisor Franchisee - Know-How - Support - Trademark - Initial Fee - Royalty, - Infrastructure

How To Investigate A Franchise Conduct market research q Evaluate strength of franchisor q Call existing and former franchisees q Hire a lawyer or accountant familiar with franchising q Read the Franchise Disclosure Document, or FDD – thoroughly q Check the FDD for earnings claims or financial performance estimates q

FDD Highlights q. Experience of franchise management q. Bankruptcy and litigation history q. Initial and ongoing fees q. Territory rights (if any are granted) q. Contact list of current and former franchisees q. Supply and sourcing arrangements (if any required) q. Franchise Agreement you will be required to sign

Fred De. Luca – worked in the first Subway restaurant in 1965 to earn money to go to college. Now he and his franchise partners own more than 36, 000 restaurants in 85 countries.

Start Small Finish Big By Fred De. Luca & John Hayes 15 Key Lessons to Start – and Run – Your Own Successful Business

Two Men And A Truck – 1985 to 2012 Started by two brothers in high school with $350 and one truck, now 200+ locations across the U. S. and development rights in a number of foreign countries.

Started business in 1950 selling coffee and donuts off the back of a catering truck in factory parking lots. Now more than 9, 000 locations world-wide. Bill Rosenberg, founder of Dunkin’ Donuts, with his book Time To Make The Donuts

For more information: John Reynolds jreynolds@franchise. org IFA website: www. franchise. org