Step 2: Franchise System Analysis

Your Franchise Disclosure Document is a roadmap with your franchisees: describing in detail the franchise system you have developed.

Entrepreneurial Stage
Stage 1
(0-8 Years)
Recovery stage
Stage 2
(9-16 Years)
Growth Stage
Stage 3
(17-24 Years)
Franchise Disclosure Document (FDD)

  1. The Franchisor
  2. Business Experience
  3. Litigation
  4. Bankruptcy
  5. Initial Fees
  6. Other Fees
  7. Estimated Initial Investment
  8. Restrictions on Sources of Products and Services
  9. Franchisee’s Obligations
  10. Financing
  11. Franchisor’s Assistance
  12. Territory
  13. Trademarks
  1. Patents, Copyrights
  2. Obligation to Participate in the Actual Operation
  3. Restrictions of What the Franchisee May Sell
  4. Renewal, Termination, Transfer and Dispute Resolution
  5. Public Figures
  6. Financial Performance Representations
  7. Outlets and Franchisee Information
  8. Financial Statements
  9. Contracts
  10. Receipts
  11. Franchise Agreement
  12. Area Development Agreement

Wrong People
Right Processes
Right People
Wrong Processes
Right People
Right Processes
Efficiency and 30% Profit

Stage 1: Entrepreneurial Stage

(Early Stage: 1-100 Franchise Units)

  1. Customer-Centric. As the founder and CEO of your company, you have developed a vision, passion and expertise within your core business. Your focus is customer-centric and seeking continuous innovation and new ways to attract and keep customers to increase your year-over-year revenue. This customer-centric value system must remain your core business while you are shifting your day-to-day responsibilities managing your franchise company. This will remain the heartbeat of your success as a franchisor. Without your relentless passion to attract and keep new customers, your franchisee unit-level revenue will rapidly decline, affecting the momentum of your system-wide franchise unit growth.
  2. Consultation. FGP will consult with you, utilizing our 12 proprietary and comprehensive learning modules. During this early stage as a franchisor, we will enhance your franchise development system, which allows you to accelerate your learning curve and profitability. More importantly, you will side-step franchisor marketing, sales, training, support and financial processes, which simply do not work! As an existing franchisor, we will together as a team deeply analyze and discuss your “business arrangement” with your franchisees as you have outlined in your Franchise Disclosure Document. This analysis will assist FGP in discovering your thought processes, current experiences and biggest obstacles.
  3. Methodology. As your strategic partner, we will help you analyze, understand, and improve the entire operational and financial structure you have outlined for your franchisees within your Franchise Disclosure Document. While important as a disclosure document, it also happens to be the best source on each aspect of your internal operations. Using the FDD as an outline FGP can diagnose problem areas to immediately improve franchisor and franchisee profitability. A complete review will result in dozens of important operational questions or issues for mutual discussion. These discussions will result in improved strategies and operational procedures for each of the following processes:

Franchise Organization

Marketing/Sales
  • Franchisor Marketing Strategy
  • Franchisee Recruitment and Sales Systems
  • Sales Department (Compensation, Training Certification, Performance Reporting)
  • Franchise Consultant Referral Fee Strategy
  • Resale System (Annual Turn-Over Rate)
  • Franchisee Funding System
  • Lease Negotiation System
  • Department Profitability

General/Administration
  • Legal and Compliance (Federal/State)
  • Research and Product Development Budget
  • Inventory Management
  • Management Information Systems (IT)
  • Leadership/Management
  • Corporate Team
  • Professional Fees
  • Outsourcing vs. In-house
  • Franchisee Relations

Operations
  • Training and Support Systems (New and Existing Franchisees)
  • Marketing Department (Brand Management)
  • Regional Field Support Program (Centralized, Decentralized)
  • Seminar and Events
  • Operations Department (Compensation, Training Certification, Performance Reporting)
  • Franchisee System-Wide Revenue Growth
  • Franchisee Marketing Programs (Local, Regional, National)
  • Franchisee Satisfaction
  • Royalty (Fixed vs. Percentage)
  • Royalty Collection
  • Cost of Service
  • Distribution (Products or Services)
  • Preferred Vendor and Supplier Programs
  • Department Profitability

Financial Management
  • Financial Reporting Systems
  • Financial Budgeting
  • Managing Debt
  • Cash vs. Accrued Reporting
  • Cash flow Management
  • Financial Audit

CEO Leadership Development™

Franchising is a craft and attempting to master it requires meticulous attention to detail over a prolonged period. CEOs leading at the highest level try to improve their leadership, operation systems and profitability on a constant basis.