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Cheat Sheet

Franchising For Dummies

From Franchising For Dummies, 2nd Edition by Michael Seid, Dave Thomas

If you’re starting a franchise, you'll want to study your franchise agreement and understand the laws that protect both you and the franchisor. Once your franchise is running, make sure you network with not only your franchisor but others for fresh ideas. The key to your success is keeping your staff happy and maintaining your outside interest and personal life.

How to Avoid Franchising Legal Pitfalls

If you’re considering starting a franchise, or already have, remember to do your homework regarding franchise law. You don’t want to get stuck in a franchise agreement without knowing the facts and where to go for help, if needed. Use these tips to avoid falling into legal problems:

  • Seek advice from only those franchise lawyers and consultants who have a serious depth of experience in franchising. Avoid working with the franchise packaging firms that offer you a one-stop shop of services, which may include preparing your legal agreements, and make it seem that the process of becoming a franchise is simple and always successful. Franchising can be extraordinarily successful if you work with professionals throughout the process.

  • Don't assume you have any rights not stated under the franchise agreement. If the franchisor hasn’t given you rights, then you’relikely not entitled to them.

  • Consider your exit strategy. When the relationship is over, operating independently may not be an option if you’re bound by a post-termination non-competition agreement.

  • Be careful of what you may guarantee. Often the guaranty you may be asked to sign will make you personally liable not only for past-due royalties and advertising fees but also for damages resulting from any early termination of the franchise relationship or for any obligations under the franchise agreement.

  • Know a franchisor’s rules before investing if you want to own a separate business. You may own your own business as a franchisee, but you will need to follow many of the instructions of the franchisor even when you may not agree with them.

  • Get everything in writing from the get-go. If you’re relying on any promises made by the franchisor or his or her sales personnel or brokers in making your franchise investment decision, get them in writing as part of the franchise agreement.

  • Carefully read Item 11 in the FDD. You need to know in advance the services you’re entitled to receive from the franchisor. Those are the ones they are obligated to provide you with.

  • Make sure you understand the boilerplate in the agreement. If times get rough between you and your franchisor, that’s the language you’ll be living with.

  • Know the difference between a franchise broker and a consultant or advisor. Nowadays, many franchise brokers call themselves consultants or advisors. Find out whether the advisor you’re working with gets a commission from a franchisor for introducing you as a candidate for their franchise — brokers work for the franchisor, not you.

How to Network with Your Colleagues

Although a lot of great advice you get to be successful will come from your franchisor, it’s a good idea to stay connected and find new people and new ideas to benefit your franchise business and your personal life. Try these networking tips:

  • Join the International Franchise Association. Whether you’re a franchisor or franchisee, be an active member. The IFA has programs for franchisors and franchisees that will benefit your business, such as online courses and the members of the supplier. (See www.franchise.org for contact info.)

  • Attend the IFA regional meetings, the Franchise Business Network hosted in many markets around the United States. Meeting with other franchisors, franchisees, and suppliers will give you a resource network that you can rely on.

  • Attend Franchise Appreciation Day in Washington, D.C. every fall. If you do, you get a chance to visit with your state representatives and meet with franchisors, franchisees, and suppliers to the industry from around the nation. You may also find grass-roots events in your home state to attend.

  • Take classes your franchisor offers. Besides the helpful information you get at these classes, you also get to know your franchisor’s staff and other franchisees.

  • Attend your franchisor’s annual convention and regional meetings.

  • Get active in your franchise system’s Franchise Advisory Council.

How to Keep Your Franchise Staff Happy

After you’ve taken the time to gather and train your employees, you need to figure out how to hold onto them. The success of your franchise depends on keeping good employees. Use these tricks of the trade to keep your staff happy:

  • Be on time for interviews with them and let them know how much you value their time.

  • Select people who you like and will fit in with your other employees.

  • Start off with honesty (and maintain it, of course). When you promise an employee a raise, a day off, or a special shift, keep your word.

  • Treat your staff with respect. They not only your employees, they’re also your ambassadors to your customers.

  • Make sure your instructions are clear and consistent. Not even your mother could read your mind.

  • Don’t take the pressure of the day out on your staff.

  • Don’t ask your staff to do personal favors for you such as babysitting your children — that’s not what you hired them to do.

  • Don’t gossip with your staff about anything personal, and don’t allow them to gossip about anyone else.

  • Be as generous as you can afford with a menu of benefits that your staff can use — tuition assistance, time off for studying during midterms and finals, tickets to a baseball game or concert, a performance bonus for doing something special, or anything else that suits your fancy.

  • Say thank you — it costs you nothing.

  • Pay them on time and what the market requires (and then a tad more).

  • Extend their employee discount to their families.

Managing Your Personal Life as a Franchisee

Starting a franchise is hard work and the pressure can sometimes affect you and your family. The support of your loved ones is important so put time aside to spend with your family. Remember that you have a life outside of your business and follow these simple rules:

  • Never miss events in your kids’ lives — no matter how insignificant they seem. Don’t skip out on your kid’s ballet, baseball game, or parent teacher meeting, because family should always come before business, even for the busy franchisor or -ee. It’s possible to be successful as a businessperson and still be a devoted parent — both of your authors did it! If you’re swamped at work, let your manager and assistant manager spell you for the hour or two.

  • Plan your vacation to the same degree you plan your business. Every week when you pay your staff, put something aside for the fun that you and your family deserve.

  • Play golf, take up tennis, go to the gym — whatever you need to keep your blood pumping. Running a business is stressful, so you need to keep your energy and your stamina up.

  • Don’t risk everything you own getting into franchising. Keep some money in reserve for both your new business and your family — you’ll sleep better.

  • Brings the kids to work often. They’ll enjoy getting involved it the business, love the time they get to spend with you, and they may even like it enough to take over when you’re ready to retire.

  • Remember, your business is your business, not your home. No one can sustain 100-hour weeks and still be pleasant when he or she gets home — if everyone at home hasn’t yet moved away, that is. Shoot for a 60-hour work week — if you train your staff well, that time requirement is definitely doable.

  • Become friends with the other franchisees in your area. On occasion, every one of you will hit a problem, and a local support group of people who share your brand is a terrific thing to have.

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