The Evolving Franchise System How to Guide an Emerging System from “Baby Steps” to a “Grown Up” System Moderator: Kay Marie Ainsley, CFE Managing Director Michael H. Seid & Associates, LLC Speakers: Debra A. Harrison Partner McDermott, Will & Emery LLP David W. Koch Partner Plave Koch PLC

“Gestation” and “Infant” Years – Test the business model – Franchisor “improvements” – Economic model – Commit resources – Be prepared to change or suspend

“Gestation” and “Infant” Years – Expect knock-offs – Second-mover advantage – Other problems: – Territory too big or small – Development method – Design with these in mind

The “Pre-School” Years – Franchise program documents – Tracking systems – Training – Investor profile – Due diligence – Compliance tools – Incentives

The “Big Kid” Years – Balanced growth – Outsourcing sales – Unexpected inquiries – Keeping perspective – Financial performance information

The “Teenage” Years – Communication channels – Sources of angst – Earning the royalty – Tough love

The “Adult” Years – Exemptions – International expansion – Sophisticated franchisees – Modernization/system changes – Exit strategies