Your Comprehensive Guide to Franchise Success: Identify, Research, Decide

By Jimmy St. Louis

• Demonstrates a systematic process for picking the perfect franchise 
• Explains the franchise industry in simple terms 
• Includes expertise from leaders in franchise selection
• Provides a simple “How-To” workbook
• Describes how to orchestrate a business within the first 90 days 

• Language: English
• Publisher: Morgan James Publishing
• Release date: Jan 10, 2023
• ISBN: 9781631959486

Jimmy St. Louis

Jimmy St. Louis is an American businessman, successful entrepreneur, and competitive athlete. Throughout his career, he has focused on innovating and changing the health and technology industries.  Jimmy has recently turned his focus on innovating and advancing the industry of franchising through a combination of technological advancements, as well as new operational and team efficiencies. As the founder of Franchise123, his goal is to create simple and open market connections between franchise buyers and sellers, to advance and improve the success of franchisees and franchisors. Formerly, Jimmy was the founder and CEO of Regenerative Medicine Solutions, a leading medical company with a focus on cellular therapy and a mission to treat patients who were previously untreatable. His business career also includes five years as COO of the Laser Spine Institute, an organization that grew from nine employees to over 1,000 and had an annual revenue of over $200 million per year. Following LSI, Jimmy and his partners started Advanced Healthcare Partners, a health care management and consulting agency for specialized medical services and technologies. In addition to his business endeavors, Jimmy played football professionally for the NFL’s Tennessee Titans as a tight end, was a multi-sport athlete at Auburn University, and most recently was a member of the 2016 United States Rowing Team.  As an early adopter of new procedures, medical treatments, and overall health, Jimmy is a lifelong advocate of a life dedicated to wellness, innovation, and growth. 

Book preview

PREFACE

WHY DID WE CREATE FRANCHISE123™?

The franchise industry’s success depends on two key factors: franchisees properly selecting the right franchise to invest in and franchisors supporting the franchisees during selection and beyond. Each year 300+ franchise systems are created. However, in the same light, nearly the same number of franchise systems fail.

Franchising accounts for 10.5% of all businesses in the world and spreads across 295 different industry sectors. There are over 775,000 franchises operational. The two-year survival rate is 8% higher than that of a start-up business. Yet, 50% of franchise systems fail within five years. Over nine years, more than 25% of all franchise investors who took out an SBA loan failed.

These success and failure rates are due to many factors, including management, funding, and successful business planning, but ultimately, it depends on assembling the right match of franchisees and franchisors.

However, franchising can also be an incredible business journey. With the right selection process, you can rest assured that you are making a good investment for your future.

Franchise123™ was created to bridge the gap between franchisors and franchisees, with a singular focus on significantly increasing the success of both parties. We do this by providing a proven and successful process for choosing the right franchise for you.

See the below passage from the Office of Senator Cortez Masto, Strategies to Improve the Franchise Model: Preventing Unfair and Deceptive Franchise Practices.

Most people, especially prospective franchise owners, believe franchises are heavily regulated. Franchise corporations encourage this belief by promoting the different ways governments regulate and support franchises. The Federal Trade Commission (FTC) is widely recognized as overseeing franchise businesses. The Small Business Administration (SBA) publishes a Franchise Registry and provides loan guarantees through the 7(a) and 504 loan programs. The Department of Veterans Affairs (VA) promotes the franchise model to service members through its Transition Assistance Program. In addition, nineteen states have some oversight over franchise corporations. However, government oversight is quite weak, which leaves franchise owners vulnerable to unfair practices by some franchise corporations.

THE PROBLEM

We created Franchise123™ because we are disappointed in the current state of the industry of franchise sales. Two well-established business models currently corner the franchise sales industry. However, these models are full of misaligned interests and in need of change.

There are two primary components of the franchise sales process that must change:

Franchisors need better ways to find the highest qualified buyers for their franchise.

Future franchisees deserve a better investing and buying experience.

Addressing these two issues significantly improves the likelihood of success for both the franchisor and the franchisee.

There are also two main flaws in the franchisee sales industry:

Broker networks and franchise consultant networks

Franchise lead generation portals

Broker networks and franchise consultants are touted as experts in helping future franchisees find the best franchise to invest in. They are seen as a trusted resource for franchise buyers to turn to for advice and guidance on all things franchising. Franchise lead generation portals currently dominate the franchise sales industry but fail to be an effective tool for franchisees and franchisors alike. There are nuances that must be addressed to align the interests of all parties. As we go into this discussion, our objective is to bring the issues of these methods into light and provide alternative solutions.

It is common for a franchise consultant to work with a group of franchisors, sometimes broad and sometimes limited. It is also common for franchise consultants to charge smaller, emerging brands with less established reputations a larger commission for representing their brand. This is often because the brand does not yet have the credibility to allow its reputation to speak for itself.

As is common in franchising, young and emerging brands must rely on revenue from their franchise fees to support their operations while on their path to royalty sufficiency.

When brokers or consultants charge disproportionately larger commissions, there is little left from the franchise fee to help an emerging franchise brand meet its goals. Franchise brokers and franchise consultants often charge a commission of 50–80% of the initial franchise fee (for a $50,000 franchise fee, they may take as much as $40,000 for their commission). Emerging companies depend on franchise fees to support their operation and growth. This kind of commission setup makes it very difficult for emerging brands to move forward.

That doesn’t sound like a recipe for aligned interests. It is also common for franchise consultants to encourage individuals to buy more reputable franchises that are an easier sale, even if it isn’t the right fit for the franchisee. Neither of these scenarios is in the best interest of the franchisee. When there is a lower likelihood of success for the franchisee, there is a lower likelihood of success for the franchisor.

When a franchise broker or franchise consultant encourages a franchisee to invest in multiple units, there is a higher upfront cost. This higher upfront cost often goes directly to the franchise consultant, but only 40% of individuals that pre-purchase multi-unit franchises end up opening all of the units they committed to. In either case, the broker still keeps the full commission.

Simply put, when a franchise consultant guides a future franchisee toward a brand, interests are often misaligned.

THE SOLUTION

The solution to this problem is quite simple: we must be completely transparent, provide an open marketplace for competition, and align interests between franchisor and franchisee.

To provide this transparency and an open marketplace for competition, and align all parties’ interests, we created Franchise123™. Prospective buyers and future franchisees can now create an account and shop over 4,000 franchisors, with full access to their franchise disclosure documents, company key performance indicators, and company profile. The Franchise123™ model is simple and creates a solution for the problems the franchise sales industry is currently facing.

Transparency:We provide the largest amount of franchise disclosure documents (4000+), company profiles (5000+), and company KPIs (50,000+) on the globe, and equal access to all franchise opportunities.

Open Marketplace:We provide complete and unrestricted access for buyers to directly see and engage with all brands and compare franchisors side by side. We want future franchisees to find the brand that is a perfect fit for them. We also give franchisors the chance to accurately represent themselves and manage their data without an intermediary.

Aligned Interests:Franchise123™ aligns interests by providing a system for future franchisees to find the best fit and for franchisors to connect with the most qualified franchise operators, ensuring a much higher likelihood of success of the industry whole. We only win when the buyer

AND the seller win.

Franchise123™ provides the most extensive global marketplace to buy and sell franchises. With over 4,000 brands on our platform, you can identify any and all franchise opportunities you are interested in, research the details of the franchises (including legal documents), and decide on the right franchise to invest in. You can do all of this online with Franchise123™.

INTRODUCTION

Welcome to Your Comprehensive Guide to Franchise Success, brought to you by Franchise123™. Our mission is to help you successfully determine the right franchise for you and help you prepare for success as a franchise owner and operator. The sole focus of this book is to set you, your partners, your family, and the franchisor up for ultimate success. We’ve broken this process down into a simple, easy-to-follow method throughout the next 18 chapters.

Franchising brings entrepreneurial spirit to a sophisticated business infrastructure. Unlike starting your own business from the ground up, you will have the support of a well-established business and years of operating principles and experience behind you. Frequently, these companies are household names, but thousands of newly emerging brands also offer a substantial opportunity for growth. These younger, emerging brands also provide an opportunity to be a founding franchisee.

Every franchise success story has a similar pattern. The franchisee properly chose and partnered with the right organization. Regardless of what the right match is, we are here to help you find it.

We believe in guiding through simplicity. Buying a franchise can be done in our three definitive steps: Identify, Research, and Decide. Whether you are looking to gain financial independence, have always dreamed of owning your own business, or are expanding your portfolio, investing in a franchise is an incredible experience and a big decision to make. We’ll help you identify if franchising is right for you, research the options that best suit your needs, and decide on the best franchise match. As you navigate through this guide, we recommend completing the exercises in this book along the way to further narrow down what you are looking for and can realistically achieve.

You may have a winner at any of these steps but we encourage you to complete the exercises.

Owning a franchise can be a fun, rewarding, and challenging experience. It will undoubtedly be hard work, but if you are willing to put in the effort, you can reap significant rewards. The franchise model offers a gateway into business ownership and sets you up for profitability by providing a clear road map and a built-in support system. Set yourself up for a successful career and a once-in-a-lifetime experience by using this guide as your go-to resource for all things franchising. We’ll show you how to start strong, stay on track with your goals, and achieve the long-term success you are looking for.

As you make your way through Your Comprehensive Guide to Franchise Success, follow along with the exercises below. As you go through each step, don’t forget to track your progress in the chart below.

YOUR FRANCHISING CHECKLIST

OPENING

Personal History

Your Vision

Personal Preferences

Assess Your Entrepreneurial Skills

Business Attributes Assessment

Business Skills Assessment

Reflection

SECTION 1: IDENTIFY

Am I Right for Franchising?

Net Worth Calculator

Non-negotiables

Key Performance Indicators

SECTION 2: RESEARCH

Top Ten Franchisors

FDD Comparison Chart

FDD Review Tracker

Franchisor Contact Information

Franchisor Engagement Tracker

Initial Interview Questions

Top Five Franchisors

Additional Questions for the Franchisor

Top Three Franchisors

Franchise Model Assessment

Marketing Assessment

Competitive Analysis

Financial Modeling for ROI

Pros and Cons Tracker

Top Two Franchisors

SECTION 3: DECIDE

Due Diligence Checklist

Validation

Franchisee Interviews

Calculate Revenue Projections

Expense Calculations

Financial Goals

Financial Worksheet

Monthly Budget

Financial Ranking System

Winning Franchise

SECTION 4: LAUNCH, GROW, AND THRIVE

Site Selection

Develop Your Culture

Hiring Your Team

Launch Checklist

Local Marketing Tool Kit

Your 90-Day Plan

FRANCHISING 101

Before we begin our process of identifying, researching, and deciding