Why choose a franchise over a non-franchised business?
The most attractive benefits of owning a business within a franchise network are the opportunity to achieve brand recognition and having access to proven systems that have been historically profitable. Trademarks, systems, franchisor support, and market advantages are the most common reasons for opening a franchised business as opposed to a non-franchised business.
Can you summarize the franchise process?
The process of opening a franchise can take years or maybe just a few weeks to complete. The first step is choosing an industry and a business model that interest you. After all, isn’t this what it’s all about – making an exciting change? Once you have identified a marketplace, consider the geographical boundaries or territories that work best for you.
Assuming the territory has not been developed, you can then proceed to the discovery phase with the franchisor to learn more about their systems, their best practices, and the expected initial investment. For Pink Zebra Moving, the average discovery process takes approximately 60-90 days before we’re able to award development rights to a franchise candidate.
How can you trust that a franchised brand is legit?
Franchising is regulated by the FTC , with many states electing to also regulate the industry. Franchisors are required to comply with both federal and state franchise laws and regulations related to the offering and sale of franchises. You will find that all compliant franchise companies follow similar paths in introducing prospective franchisees to their franchise. For example, you must receive the franchisor’s Franchise Disclosure Document (FDD) at least 14 days prior to signing the Agreement or paying any money to the franchise company.
The FDD includes the Disclosure, Franchise Agreement, and additional Exhibits. The FDD also provides information about the franchise company and various contractual provisions contained in the franchise agreement. You will learn a great deal about the company and the franchise business through your careful review of these documents.
How do I read the FDD?
Every section within the FDD is important but some sections carry more weight than others. Read the entire document, and absorb everything contained within it so that you can fully understand the investment, the business, and the risk.
The sections are divided into “Items,” and each item has its own unique purpose. A typical FDD can comprise 100+ pages so it’s difficult to dive into each item here. However, here are some helpful tips when reviewing the FDD, as it contains several items that should provide you with specific information on the expected investment and possible return based on real data from current franchisees within the system:
- Items 5, 6 and 7 detail the required investment along with any regular fees that will be incurred after you open the business. Dig deep into these items and be prepared to ask questions.
- Item 8 is extremely important because it provides details on the list of approved and/or required vendors. In some cases, a franchisor may benefit from the relationship via rebates or group discounts. Pay special attention to this section because you will be expected to comply and use these vendors once the franchise agreement is executed.
- Item 19 is one of the most important sections of most Franchisor FDDs. In our case, Item 19 contains real data from any location that has been open for at least one year. Our goal is to educate the potential franchisee on the cash flow realities and opportunities of their investment. While franchisors are not obligated to provide this information, we choose to highlight our franchisees’ success so that franchise candidates can receive as much information as possible.
What qualifications are required to become a franchisee?
We are actively seeking individuals who want to use our business model to radically change their lives. Whether you’re sick of corporate America or want to diversify your investment portfolio, our main focus regarding your qualifications come down to two things: your personal financial situation and your reason for wanting to own a small business. There’s no need to understand the specifics of moving, packing, and driving the Big Truck. We offer a business opportunity, and we can teach you the technical skills you’ll need to properly learn the technicalities of moving, from loading a sofa to hiring the crew you need. We’ll coach you all along the way.
However, we can’t teach passion. That’ll be exactly what we’re looking for once we have an opportunity to meet with you. If you have access to the required capital and have a desire to shake up the moving industry, then we want to partner with you.
How large is a franchise territory? Will I have an exclusive territory in which to operate?
You will own exclusive rights to your territory upon execution of the franchise agreement. Typically, our minimum territory will be comprised of at least 50,000 US census households with the maximum size of 300,000 US census households. Of course, there may be exceptions based on the demographic breakdown of a territory that allows for a smaller or larger territory than our minimum or maximum designations. The average territory is comprised of approximately 160,000 US census households.
How long does it take to begin operating a franchise?
We estimate that the typical length of time between signing the Franchise Agreement and your grand opening is approximately 90 days. We help you schedule a timeline for completing our initial franchise training programs, procuring your trucks, finding and setting up your office, marketing your business, and hiring and training Team Members.
Do you recommend that I visit the home office?
Yes, we actually require a visit to our corporate headquarters, where your initial training will happen. You’ll meet our corporate staff members and view our operations in person.
We also periodically schedule Discovery Days inside our home office in Birmingham, AL. The purpose of the day is to educate you on our story and inform you on the investment potential. Please contact us to learn more about available Discovery Day openings.
Can I talk with other franchise owners?
Yes. In fact, we require it. We will not award a franchise unless the candidate has spoken to multiple franchisees within our system. We know you will have a million questions to ask a current franchisee. Do you enjoy the experience? Is your business growing? What’s your best and worst opinion of the franchise? Would you do it again? Do you want to buy more franchise territories? No one knows better than a current franchisee what your future life is going to look like, and we want you to have those conversations prior to making any decision.
Can I be an absentee owner?
Yes, sort of. We do not offer fully absentee ownership, but we do offer a semi-absentee investment option. Approximately 50% of our current franchises are owned by semi-absentee owners. In each case, a semi-absentee owner must have flexibility in their daily schedule so they can focus on the business. Some of the requirements are physical in nature while other requirements may be more strategic.
For example, a semi-absentee may need to assist with a business if a manager is not present. Other examples include general oversight of the business, meeting with employees and/or providing customer support.
Typically, a semi-absent franchisee is needed to monitor the business’s vision, workplace culture, management direction, financial support, and contractual obligations associated with the franchise agreement. It’s a realistic, achievable goal to build a successful franchise as a semi-absent owner, but it’s important to remember that a business owner cannot own a business passively. In our network, our most successful semi-absentee franchisees dedicate anywhere from 15-30 hours per week towards the business.