Transcript The U.S. Franchise Industry

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
 Evaluate strength of franchisor
 Call existing and former franchisees
 Hire a lawyer or accountant familiar with
franchising
 Read the Franchise Disclosure Document, or
FDD – thoroughly
 Check the FDD for earnings claims or financial
performance estimates

FDD Highlights
Experience of franchise management
Bankruptcy and litigation history
Initial and ongoing fees
Territory rights (if any are granted)
Contact list of current and former franchisees
Supply and sourcing arrangements (if any required)
Franchise Agreement you will be required to sign
Fred DeLuca – 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 DeLuca & 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
[email protected]
IFA website:
www.franchise.org