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Franchise Your Business

If you are a successful and independent business owner, you may not realize that you have overcome some big odds. The facts are that less than half of independent businesses are still operating after 7 years. (resource SBA) Now that you have a thriving business with a healthy track record, how do you grow your business from here?

Franchise Your Business

FOUR PRIMARY WAYS TO GROW YOUR BUSINESS:

  • 1st, Use your Company’s cash flow. This can take a lot of time and you will be responsible for all aspects of the business and there could be limitations on how quickly you can grow.
  • 2nd, Traditional financing, generally requires a personal guarantee that the debt will be paid back and you may be limited in terms of what you can finance.
  • 3rd, Equity financing involves bringing on partners or investors who will have an equity stake in your business.
  • 4th, Franchising… Franchising is a revolutionary way to duplicate your business’s success very quickly. According to a recent study by PricewaterhouseCoopers, franchise businesses are responsible for 40% of all retail sales in the U.S., generating almost $1 trillion in annual sales. One in every 12 businesses in the US is a franchise and there are over 300 franchises that are sold every week.

WHY FRANCHISE YOUR BUSINESS? THE FRANCHISE ADVANTAGE

  • Franchising can help your company grow rapidly using capital invested by individual franchise owners, other people’s money (OPM).
  • Franchise locations statistically operate more profitably than “company-owned” units through vested ownership. Because franchises are owned by individuals or franchisees who have invested their own money, you can count on the franchisees to put time and effort into making the location profitable while growing your brand.
  • Multiple locations increase the company’s competitive advantage over similar types of businesses and build ‘top of the mind’ awareness and brand loyalty.
  • You are able to grow in areas that you may not have considered before. For the right business model, you can replicate your model countless times nationally or in some cases internationally.

FRANCHISING IS ALSO A TRUE INCOME, WEALTH, AND EQUITY BUILDER:

  • Franchising provides multiple and reoccurring revenue streams while growing your business. The two primary revenue streams are Franchise Fees and on-going Royalties paid by franchisees in exchange for using your proven system and providing them with on-going support.
  • Here is an example based on a single unit Franchise Fee of $35,000, a royalty rate of 5% with an annual average Gross Sales of $500,000 per unit.
$35,000

FRANCHISE FEE

5%

ROYALTY

$500,000

GROSS SALES

Franchise Advantage
Franchise

IF A FRANCHISER ONLY SOLD 5 FRANCHISES A YEAR FOR 5 YEARS FOR A TOTAL OF 25 UNITS, his/her NUMBERS WOULD LOOK LIKE:

$875,000

FRANCHISE FEES COLLECTED

$1,875,000

ROYALTY FEES COLLECTED

$2,750,000

TOTAL EARNED IN 5 YEARS

Franchise Fees Collected = $875,000(based on single-unit sales only, this could increase dramatically if you include Area Development & Multi-Unit Franchise Fees that are generally higher than single unit fees.)

Royalty Income Collected = $1,875,000 (in only 5 years)

Note: This is for illustrative purposes only. There are no guarantees that your company will achieve these results as results can vary due to a number of unpredictable variables.

  • Franchising can increase the valuation of your company. Generally, profitable independent businesses will be valued at 1-2 times the earnings. Franchises may be valued at 3-4 times the earnings. Franchisers earning $1 million a year+ could bump the valuation of their company to 6-8 times in earnings!

THE BENEFITS OF FRANCHISING

People DO NOT invest in franchises, they invest in the benefits of franchising, which can help them achieve their financial and career goals. For many, the advantages are clear, especially when it comes to minimizing risk when compared to opening an independent business.

Here are some of the key benefits and reasons why people invest in franchises:

IS YOUR BRAND FRANCHISABLE?

If you are interested in franchising your business, the first step is to determine if your business is franchisable. Not every business model is well-suited for the franchise structure. Franchising isn’t a good strategy for getting your company out of a financial bind. It’s also not good for ideas that can’t be replicated easily across a wider market or do not produce a healthy return on investment.

Minimum Requirements and Expectations to Consider:

WE SELL GYMS – WHAT WE DO

If we determine that your brand is franchisable, WE SELL GYMSS’ commitment and value proposition is to provide our development partners true added value and costs savings that will save substantial time and money, while helping you avoid costly mistakes.

To develop your business model into a franchise, initial costs can range from $80,000 to over $200,000 with other professional service providers. This does not include costs involved in marketing and promoting your brand once you have franchised your business model. As your development and consulting partner, our franchise development costs are substantially less expensive, therefore, saving you thousands of dollars while setting your company up to be a successful franchiser.

We take a personalized approach to implement tailor-made solutions to give you the best options for “speed to market” and solidify your position as a world-class franchise system in your industry. WE SELL GYMS has a proven five-phase process to grow your brand. The first four phases are focused on ensuring that your brand is strategically ready to launch and that you are in compliance with the important legal requirements prior to selling franchises. Phase five is the implementation stage to market and promote your franchise brand to prospective franchisees.

Our comprehensive process is tailored to walk you through every step, from ideation and legal necessities to branding and sustainable growth:

Phase I: Formalizing Your Business Concept.

Phase II: Complete the Franchise Legal Process.

Phase III: Establish Your Franchise Systems & Processes.

Phase IV: Packaging and Marketing Your Brand.

Phase V: Promoting and Growing Your Brand

Your company will benefit from over a century’s worth of experience in the franchising industry. In addition to providing our development partners with extensive added value and resources, you will have access to our vast network of the “Best of the Best” key franchiser support that is required to ensure that you are set up for success prior to launching your new franchise brand.

To ensure that your business is strategically ready to launch we work hand-in-hand with you during the first Phase:

GOAL-DRIVEN MODELING:

  • GOAL: Sell company for $10 M in 5 years
  • AVG. SELLING PRICE: *6.5 times the earnings
  • YEAR 5 EARNINGS: $10 M / 6.5 = $1.5 M
  • AVG. ROYALTIES: $30 K per franchise
  • NET ROYALTIES: $25 K per franchise annually
  • NEED TO SELL: 60 FRANCHISES = $1.5 M / $25,000
Goal Driven Modeling

Statistical earnings multiple vs. independent business

Note: This is for illustrative purposes only. There are no guarantees that your company will achieve these results as results can vary due to a number of unpredictable variables.

Our franchise legal experts help ensure you are in compliance with all of the franchising legal requirements including:

  • Preparing the FTC-required Franchise Disclosure Document (FDD)
  • Manage the state registration process by ensuring you are properly registered as required or needed.
  • Creating and preparing your various Franchise Agreements and Area Development or Master Franchise Agreements if applicable.

In Phase III our team provides advisement and resources to help you establish or improve critical systems and processes. Some examples of this include preparing your operational and training manuals and developing your franchisee intranet which provides for key communication and document sharing with your franchisees. These are important factors to “set your franchisees up for success.”

Growing Brand

LAUNCHING AND GROWING YOUR NEW FRANCHISE BRAND

One of the most important elements of a successful franchise system is growing the brand. Growth not only adds to your company’s and franchisee’s value, but creates brand awareness, market share, enthusiastic franchisees, and most importantly, revenue. In short, this is WHY you franchised your business, to begin with!

The most difficult challenge faced by many franchisers is the ability to recruit a sufficient number of high-quality new franchisees to help create the critical mass necessary to meet their financial and growth goals. After we have worked with you through the initial three phases of getting your business ready to franchise, we then focus on Phase IV & V, i.e. marketing and promoting your franchise opportunity. As your development partner, we provide the consultation and the necessary services to strategically and effectively grow your brand through franchise marketing, recruitment, and sales activities.

WHAT MAKES WE SELL GYMS DIFFERENT?

WE SELL GYMS believes that entrepreneurs have the right to learn and understand if their vision of being the founder of the next great brand can become a reality through franchising.

TO LEARN MORE, CONTACT US DIRECTLY. There is never a cost or an obligation to contact us for an initial consultation so we can learn more about you and your business model to determine if we can help grow your brand together.

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