1. New Opportunities in Franchising Presented by: Marcelo Alvarez At Ideas to Profits Business Conference November 7, 2014

2. What is Franchising? Franchising: –Is NOT a business or an industry. –Is a method of distributing products and services to consumers. –Utilizes a network of local owners (“locally owned and operated”) operating under a shared brand. Franchisees: – Pay the franchisor for the right to do business under the shared brand –Operate under a specified, controlled business method or format Franchisors: –Provide significant initial and on-going support

3. Franchises aren’t just about Burgers & Subs There are over 6000 franchises in 75 different industries Not Starbucks. Home based, vehicle based and retail based From a $30K investment to $2.5MM+ investments

4. Franchise Structures & Examples StructureOwner’s RoleLocationOtherExamples Self Employment Individual ContributorHome basedMost Flexible ServiceHire and manage service providers Home or office based Scale up over time Small BoxHire and manage employees Strip malls or standalone Location is KEY Semi- Absentee Manage a managerStrip malls or standalone Multi-unit Master/Area Developer Oversee and develop an area States or large metros Strategic role ConversionsBuy and convert existing business Retail or office Leverage existing cash flow

5. Common Franchising Terms Franchise Fee – one time fee paid at signing Total Investment – the amount you will spend to open business Royalties – % of gross or flat fee Ad Fund – % of gross or flat fee Term – # of years of agreement Renewal – terms outlined in agreement License Transfer – selling your franchise FDD – Franchise Disclosure Document

6. Advantages & Disadvantages for Franchisee Advantages Proven System On-going support Training Constant Improvements Purchasing Power Disadvantages Following someone else’s rules Upfront fee On-going royalty No guarantees

7. Is Franchising right for you? Are you willing to leverage a proven system? –Mavericks need not apply, however, still room for franchisee creativity Are you willing and able to make a 5-10 year commitment? –Financially –Emotionally/family support –Work hard, especially 1 st couple of years Are your goals consistent with business ownership? –Tradeoff between freedom/control and “steady paycheck” –Willing to run as a business, not be the person who “makes the donuts”

8. What is today’s HOT franchise? There is no such thing!

9. So how do you find the right business? Determine what you want the business to do for you Inputs: Experience Finances Time Goals: Lifestyle Professional Financial Business If you only consider things you “like” or have done before, you are boxing yourself in

10. An Open Mind & Objective Approach are Critical for Success in Researching/Finding a Franchise Step outside your comfort zone and explore concepts you are not drawn to You don’t need to love a product/service to capitalize from it Most successful franchisees have no prior industry experience Focus on understanding the business and the role of the owner Stay objective and gather facts and information Information is the antidote to FEAR (False Evidence Appearing Real)

11. Ultimately you need to answer the following questions for yourself 1.Will I do and enjoy what is required of me as an owner of this business? 2.Will I be successful as an owner of this business? 3.Will this business allow me to meet my personal and professional goals? 4.Will this business provide the return on investment that I need? If so, you have found the right business! If not, keep looking!

12. Thank You! Marcelo Alvarez 530 Mark Lane Downers Grove, IL 60516 (630) 324-8293 Marcelo.esource@comcast.net http://www.theesource.com/Malvarez Questions?