Considering a Franchise

Advantages of Franchising Enables you to compete through the use of a well-known trademark or trade name Franchisor may provide you with assistance in such areas as site selection, equipment purchasing, national advertising, bookkeeping, the acquisition of supplies and materials, business counseling and employee training Reduced risk of failure May be able to take advantage of large-scale, centralized buying May have access to special financing and credit arrangements The opportunity to acquire a proven system that has already been developed, tested and refined

Disadvantages of Franchising The high degree of control which franchisors exercise over their franchisees Contractually required to report regularly to the franchisor and subject to frequent inspection and constant supervision The cost of the services provided to you by the franchisor is based on your total sales revenue, not your profitability Franchisor may add a mark-up to the supplies and equipment you are required to buy from them, thereby increasing your operating costs

Disadvantages of Franchising Must pay the franchisor an initial franchise fee as well as periodic royalty payments and advertising contributions The benefits available through franchising may not always materialize Termination policies of many franchisors give franchisees little or no security in many cases

Types of Franchises Product Distribution Arrangements Business Format Single-unit franchise Area franchise Master franchise Business Format Franchises

Top Ten Franchises in 2015 The results of Entrepreneur's 36th annual Franchise 500 reveal that franchises of all stripes are continuing to rapidly expand, with these top 10 franchises leading the pack. Here, we highlight their strategies for success and goals for the upcoming year. http://www.entrepreneur.com/slideshow/240719

The Top 10 Franchise for 2015 Hampton Hotels 2,000 hotels in 16 Countries It's aiming for 400 hotels over the next few years in China. Culture may not be the first thing you consider when choosing a hotel. But at Hampton Hotels, a culture of hospitality, aka “Hamptonality,”

The Top 10 Franchise for 2015 2. Anytime Fitness 2 Million members 3,000 Locations in 50 states and 20 counties. 2014 revenues of $900 Million

The Top 10 Franchise for 2015 3. Subway 42, 920 Locations in 107 Countries Moving into non-traditional locations such as hospitals New $6.00 menu

The Top 10 Franchise for 2015 4. Jack in the Box 80% of their 2,250 locations are franchisee owned Menu features tacos to egg rolls 2014 saw a new breakfast menu launch

The Top 10 Franchise for 2015 5 . SuperCuts 2,500 Locations most of the new franchisees don’t have salon backgrounds but are professionals in the corporate world who were attracted to Supercuts because of its strong fundamentals

The Top 10 Franchise for 2015 6. Jimmy John’s gourmet Sandwiches 2,100 Locations Its 8-inch sandwiches are made to order in just seconds.  But most impressive is that 80 percent of the company’s growth is coming from existing franchisees who continue to invest.

The Top 10 Franchise for 2015 7. ServPro 1,700 Franchise Units Here to Help Connection, a website that collects real-time data from DryBook to let homeowners know the projected time for their restoration.

The Top 10 Franchise for 2015 8. Denny’s 1,710 Locations At a new upscale location in New York’s Financial District, the first in Manhattan, it offered the $300 Grand Cru Slam: Grand Slam breakfast for two served with a bottle of Dom Pérignon.

The Top 10 Franchise for 2015 9. Pizza Hut 15% of US Pizza Market Pizza Hut also launched a line of Skinny Slices, each under 250 calories.

The Top 10 Franchise for 2015 10. 7-Eleven 54,500 Locations world wide In 2014, 330 units opened their doors in the U.S. and Canada, and a similar number will open this year.  

Articles in a Typical Franchise Agreement The full initial costs and what they cover Use of the franchisor’s trademarks by the franchisee Licensing fees Land purchase or lease requirements Building construction or renovation requirements Equipment needs Initial training provided Starting inventory requirements Promotional fees or allowances Use of operations manual Royalties payable

Articles in a Typical Franchise Agreement (Continued) Other payments that must be made to the franchisor Ongoing training requirements Cooperative advertising fees Insurance requirements Interest charges on financing Requirements regarding purchasing supplies from the franchisor and prices Restrictions that apply to competition with other franchisees Terms covering termination, renewal rights, sale of the franchise and similar topics

A Sampling of Canadian Franchisors Boston Pizza 1 100 $45,000 7% 2.5% $650-750,000 Dollar Rent-a-Car 56 96 $5-100,000 8% -- $60-250,000 Great Canadian Dollar Store -- 140 $15,000 4% -- $100,000 Molly Maid -- 160 $14,000 6% -- $14,000 plus $4,000 W.C. Dairy Queen Canada -- 520 $35,000 4% -- $450-1,200,000 We Care Home Health Services 2 51 $40,000 5% 2% $100,000 McDonald’s Restaurants of Canada 334 771 $45,000 17% -- $600-800,000 (including rent, service fees and advertising) Midas Muffler 20 230 $25,000 5% 5% $225,000 Domino’s Pizza -- 206 $25,000 5.5% 4% $150,000 Second Cup Coffee Co. 6 400 $25,000 9% 2% $300-350,000 Tim Hortons 145 1553 $50,000 3% -- $350-400,000 Shred-It 12 56 $55,000 5% 1.5% $350,000 Number Number of Approximate of Owned Franchisees Investment Units /Dealers Initial Fee Royalty Advertising Required Source: Adapted from The 2004 Franchise Annual, Info Franchise News Inc., 2004

What Does It Cost to Open a Franchise? Joey’s Only Seafood Restaurant Franchise fee Opening promotion fee Leasehold improvements Smallwares Furniture, fixtures and kitchen equipment Miscellaneous Food and supplies TJ Foods opening supplies Training and pre-opening expenses Deposits Total Estimated Cost to Open $25,000 $5,000 $90 - $130,000 $9,000 $105 - $120,000 $6,000 $11,000 $4 - $10,000 $277,000 - $338,000

Future Trends in Franchising Increasing emphasis on senior care Child care and education Technical support Spa Property Management Fitness Restaurants

Franchise Selection Open WWW.CFA.CA Select a franchise to purchase (Value 1) How much is the Franchise Fee? (Value 1) How much capital is required to open the Franchise? (Value 1) Why is the Franchise a good fit for you? (Value 2)

Canadian Franchise Association Members www.cfa.ca