How to sell a franchise?

[dominict]

Hi Everyone,

I am hoping someone might be able to point me in the right direction, I sell hot food at events and farmers markets, but tend to not stray too far from home for various reasons.

I got to thinking that I could possibly sell franchises in my business to cover areas that I cant, so for example I do most of my shows and events in the Kent area, so there is plenty of space for a franchisee to do shows and events in anywhere North of me really!

So for a start where could I make it known I am selling franchises? Also I have added up the cost of equipment, and everything someone would need to get started and it comes to just shy of £2500, but I would also include a list of suppliers, recipies, events guides, basically a big information pack that in my opinion provides invaluable advice, and I would also be willing to be on hand for a few months to provide support if needed. Could anyone suggest a price for this?

I look forward to any replies.

 

[IANL]

Hi There,

There are a number of specialist companies and consultants that will put your business into a franchising model. It is not cheap though if you do it properly, I suggest you do as their are a lot of legal cases (case law) around people taking on franchises based on false promises (in other words over egging the financial models) and then suing the franchisor for mis-representation.

For your franchise to be approved by the banks for franchisee funding you will need to go down this route.

You will should use a specialist franchising expert lawyer, which the consultants know very well.

if you send me a PM I can introduce you to one who has extensive experience.
You could also go to some presentations these people hold.

Ian

 

[selfprofessedguru]

For a franchise to work, you need to be selling a a brand and a set of procedures and possibly location.

I am struggling to see what you are really offering at the moment which adds any real value. Now, if you could procure vending sites you might be on to something, or if your product / production was something special you might be able to latch onto that.

There is a substantial cost to setting up franchise arrangements and the real money comes from ongoing fees rather than start-up fees. Your big threat is that anyone who did join would simply ddrop the franchise and go it alone.

 

[dominict]

Thank you for your quick reply, I didnt realise it would be so complex! All I was thinking of was being able to set someone up to do events catering in other parts of the country, maybe a franchise is not the right term?

Maybe im being ignorant but I was thinking someone gives me £10,000 I give them everything they need to set up, where to get supplies from and where to trade plus support?

Guess its more of a business oppourtunity (sp?!)

 

[akirk]

A franchise is a long term relationship building a common brand...
if you want to make it simpler sell a 'start-up' pack where they brand it as they wish...

the reason for the complexity with franchises is that you have to ensure that they don't damage the common brand - no point investing in building a brand if someone eating the brand food elsewhere finds it cold / chewy / disgusting / etc. because standards were not maintained - so the majority of the legalese is regarding that...

if you just wish to make some one-off money in advising, then a start-up pack not including your brans is simple and very much what you are thinking of...

Alasdair

 

[dominict]

Yes a start up pack, thats it! Sorry, obviously dont know much about franchises!

So my next question is how would I sell this to people?

 

[IANL]

Hi

For someone to buy this they would need to know what they are buying. Once again don't make any financial promises. If you are selling the kit and you also sell a manual on how to make money with the kit or include it.

If someone was marketing A mobile kitchen and said you could go and make money setting up in a field when an event is happening then it's my choice if I wanted to do that. I wouldn't do that, unless someone had a compelling reason for me to do this. Be it financial or another reason.

You still need to market the opportunity though. This is a professional marketers role.

 

[Rufford]

Hi There,

There are a number of specialist companies and consultants that will put your business into a franchising model. It is not cheap though if you do it properly, I suggest you do as their are a lot of legal cases (case law) around people taking on franchises based on false promises (in other words over egging the financial models) and then suing the franchisor for mis-representation.

For your franchise to be approved by the banks for franchisee funding you will need to go down this route.

You will should use a specialist franchising expert lawyer, which the consultants know very well.

if you send me a PM I can introduce you to one who has extensive experience.
You could also go to some presentations these people hold.

Ian

Advertise it here http://topfranchise.net for free and get the rest on the paperwork from there too. Secondly don't listen to rubbish from people who've never set one up.

 

[IANL]

Advertise it here http://topfranchise.net for free and get the rest on the paperwork from there too. Secondly don't listen to rubbish from people who've never set one up.

Sorry but can I clarify if you are saying I am talking Rubbish? If so we have franchised our business and have investigated franchising an additional business. If I am talking rubbish please advise which part of getting proper advice and a legal agreement is rubbish.

I can also point to many published case law publications that affirm my suggestions.

If I have misunderstood your comment then sorry but please clarify.

 

[Rufford]

Sorry but can I clarify if you are saying I am talking Rubbish? If so we have franchised our business and have investigated franchising an additional business. If I am talking rubbish please advise which part of getting proper advice and a legal agreement is rubbish.

I can also point to many published case law publications that affirm my suggestions.

If I have misunderstood your comment then sorry but please clarify.

Sorry - don't misunderstand. I'm not saying anyone here is talking rubbish; but I am saying that plenty do. To be candid mainly from the banking fraternity we kindly support and the legal eagles that charge £150+/hour for stuff that can be almost Googled..

Business plan is number one from the gentleman's (apology if otherwise) existing empirical business model... then scalability tests. Then the rest..

 

[IANL]

Sorry - don't misunderstand. I'm not saying anyone here is talking rubbish; but I am saying that plenty do. To be candid mainly from the banking fraternity we kindly support and the legal eagles that charge £150+/hour for stuff that can be almost Googled..

Business plan is number one from the gentleman's (apology if otherwise) existing empirical business model... then scalability tests. Then the rest..

Thanks for the clarification. I agree many, consultants do talk rubbish and also many lawyers want to charge excessive fees for, as you say, almost boiler plate clauses.

 

[Psl]

Hi Everyone,

I am hoping someone might be able to point me in the right direction, I sell hot food at events and farmers markets, but tend to not stray too far from home for various reasons.

I got to thinking that I could possibly sell franchises in my business to cover areas that I cant, so for example I do most of my shows and events in the Kent area, so there is plenty of space for a franchisee to do shows and events in anywhere North of me really!

So for a start where could I make it known I am selling franchises? Also I have added up the cost of equipment, and everything someone would need to get started and it comes to just shy of £2500, but I would also include a list of suppliers, recipies, events guides, basically a big information pack that in my opinion provides invaluable advice, and I would also be willing to be on hand for a few months to provide support if needed. Could anyone suggest a price for this?

I look forward to any replies.

So, you a have a successful business model and based on your experience and knowledge of the said business, you want to make money from selling a business opportunity/start up pack, based on your business?

If I wanted to start selling hot food at events, I would need to buy kit, find events, locate suplliers and decide what hot food to sell and get hygine/insurance certficates.

OK, Kit costs £2,500 and then cost of my time finding events and planning which events to attend in the next twelve months,locating suppliers,deciding what food to sell and sourcing the recipies, if needed, getting the correct hygine certificates and insurance in place, plus working capital.

So,
Option 1.
Do I go it alone and do my research on all the above? which could take months, what kit to buy/ is it the right kit? etc etc and risk getting it wrong and losing money?

or
Option 2.
Do I pay someone for advice and ongoing guidance on all the above, which if I followed the advice and guidance would reduce my financial risk, reduce the timescales. which inturn would start generating me revenue?

I would go for option 2.

How much does the Op charge for his knowledge of this market,ongoing guidance and support -As a figure, I would say it would have to be equal to 10% of what the OP's last years GP was, so GP last year was £30k=£3k.

So £2,500 + £3,000 = £5,000 total start up package costs.

 

[akirk]

That is a good summary above - I think that the discussion on franchises is the wrong focus - as described above it is a similar concept to selling 'a website in a box' / selling a 'idiot's guide to xyz' etc. - in fact there is a good opportunity - you could offer a templated website / business cards / flyers by linking in with a design company, you could set up links to an accountant / etc. etc.

often for those who go into this industry - they are not natural businessmen - so giving all that help all neatly laid out for them is a good business model...

Alasdair

 

[IANL]

Goods points made. The only thing is to make sure if you go down this route to get Professional Indemnity Insurence. Your are in effect selling professional advice and people are making seriouos investment decisions obased on that advice. This is not as complicated or dauntimg as it sounds.

 

[mike.davis]

Advertise it here http://topfranchise.net for free and get the rest on the paperwork from there too. Secondly don't listen to rubbish from people who've never set one up.

If you had bothered to read the thread it has become quite clear that the OP is not wishing to sell a franchise.

 

[dominict]

So, you a have a successful business model and based on your experience and knowledge of the said business, you want to make money from selling a business opportunity/start up pack, based on your business?

If I wanted to start selling hot food at events, I would need to buy kit, find events, locate suplliers and decide what hot food to sell and get hygine/insurance certficates.

OK, Kit costs £2,500 and then cost of my time finding events and planning which events to attend in the next twelve months,locating suppliers,deciding what food to sell and sourcing the recipies, if needed, getting the correct hygine certificates and insurance in place, plus working capital.

So,
Option 1.
Do I go it alone and do my research on all the above? which could take months, what kit to buy/ is it the right kit? etc etc and risk getting it wrong and losing money?

or
Option 2.
Do I pay someone for advice and ongoing guidance on all the above, which if I followed the advice and guidance would reduce my financial risk, reduce the timescales. which inturn would start generating me revenue?

I would go for option 2.

How much does the Op charge for his knowledge of this market,ongoing guidance and support -As a figure, I would say it would have to be equal to 10% of what the OP's last years GP was, so GP last year was £30k=£3k.

So £2,500 + £3,000 = £5,000 total start up package costs.

^This is exactly it, thank you! So how can I let anyone thinking of going into my line of business that I offer this kind of service?

 

[Psl]

^This is exactly it, thank you! So how can I let anyone thinking of going into my line of business that I offer this kind of service?

Firstly before you start advertising you need to set out exactly what you are prepared to offer the potential buyers. You sound like you already have a lot of information, now you just need to put it into an opperations manual.
Will you buy the kit first and then sell it onto the buyer or will you just act as a 'middle man'? I would sell them the complete package and kit for one price, add a small premium to the purchase and re-sale of the kit and that way it keeps it clean and simple.
Once you have done this you need to put together a sales pack, what the opportunity is, what they will get for their money, don't make potential earnings up use your own trading figures as an example, how the transaction will work, i.e. 50% deposit, this covers the purchase of the kit and the balance of 50% on completion of the transaction.Or you may get people just paying the full amount and wanting to start immediately? What time period will you offer advice and guidance for? What are the terms and conditions for using your recipes? Will you organise their first event booking for them?

You have had advice about indeminity insurance and you should take it, go buy some, once you have put everything together though.

It is difficult to give you any more advice as I don't know enough about your business but if you want you can PM me and I am more than happy to run through things with you.

Now advertising your opportunity. What is your advertising budget?Have a look a businessforsale.com, they are good and I have used them, other members may have other similar sites that they have used, have a look at them too. Have a look at the BFS site and see how other people present their opportunity, this is the research part!
If you advertise before you everything in place you may lose sales and don't give too much information away in the sales pack.

I hope that helps.

 

[akirk]

One of the best ways you can possibly advertise is with a sign by your business - your sector is not the type where men in suits will go to websites / companies selling businesses - they are a bit more non-conformist and more likely to see what you do - see the food and be inspired...

so use your business as the lever to persuade others to buy into the idea - 'you too can do this - I will show you how...'

Alasdair

 

[IANL]

Sorry about previous typos - was on my iPad and after a few glasses of the red stuff.

Don't forget amongst all the great advice others are giving you to use Social Media - Twitter, Facebook, Linkedin etc.

Only when you have the info. Also get someone you trust/know to read your manual and sales patter, someone who doesn't know your business. Maybe other forum members who's advice you value. You will want real constructive advice.

You have the gem of great idea.

Remember it all about the marketing.

Good luck

Ian

 

[Psl]

One of the best ways you can possibly advertise is with a sign by your business - your sector is not the type where men in suits will go to websites / companies selling businesses - they are a bit more non-conformist and more likely to see what you do - see the food and be inspired...

so use your business as the lever to persuade others to buy into the idea - 'you too can do this - I will show you how...'

Alasdair

But the OP stated that he wanted to offer the business opportunity to people outside of his area, Kent. The only people that would see the sign would be people attending the shows/events that the OP already works, local people = local competition!

I am certain that most people looking for a business opportunity would start their search using the internet and looking at business for sale/business opportunity type websites.What 'men in suits' has to do with anything, I don't know? and why is the sector 'non-conformist'?

 

[dominict]

That is my problem, my first thought was to stick a sign where ever I go, which I might still do, as the events I attend, do attract tourists, holiday makers etc.

Although I could probably push it on facebook, I dont really know how twitter works, I have to admit I dont know what linkedin is I shall have a look.

I undertand putting everything together is going to take me time, I have a few months before events start again so plenty of that on my hands at the moment, but figuring out how to reach the right kind of people is my first hurdle! The other thing is convincing people its a good idea, as me personally would think "ill do it all myself" and like I did at first make a shed load of mistakes which cost me time and money!

Thanks for all the great advice on here, its been really helpful so far.

 

[akirk]

These events have people coming from all over the country, so wanting to grow the business outside his area - advertising at the events is not a problem. - I know a number of people operating in this world - and they are very much not the kind of people who set up businesses by using the internet / etc. as perhaps we might -it is much more likely that they will see something they like the look of at another show...

One person I know in this industry, when considering setting up went around the country studying how was doing what, and who were the best - that was the inspiration for their business... had someone they respected indicated that they could help them set up for ££££ then they would have considered that very strongly - the most challenging thing for many in this industry is that they understand the business offer, they understand the business customer, but they are not necessarily all that interested in understanding the business / or in having those skills - so a neat package could be very tempting...

Alasdair

 

[Psl]

I would put your business opportunity/starter pack togther now and advertise before the events season starts.Otherwise you may be too busy to do this when the events season starts. It should also enable you to get a few enquiries before the season starts and be able to deal with them and then make any changes needed to the 'opportunity'.When the season does start meet any enquiries at an event you're doing and pitch them 'on the job' so to speak.

I take the point about visitors and holiday makers visiting events.

 

[akirk]

When the season does start meet any enquiries at an event you're doing and pitch them 'on the job' so to speak.

Good thinking - no point in trying to sell the concept outside the season - the deal is more likely to happen if folks can see evidence of the goods in action...

Alasdair