EVSU-COBE| 2024

CONSIDERATIONS FOR A.
LOCATION AND SITE SELECTION
• Understand the concept of your Franchise.
• Research.
• Be in contact with your Franchisor.
• Sign the contract with Professional Supervisor.
• Easy access to the home of the Franchisee.
• Not too large, not too small.
• Demographic to say no instead of yes.

EVSU-COBE | 2024
Reference: Nikaein, S., & Nikaein, S. (2021, September 25). Simple step by step franchise site selection Checklist - Maptize. Mapchise. https://mapchise.com/blog/what-to-consider-before-

franchise-site-selection/
 B.
GEOGRAPHIC LOCATION

Franchise Territory is the geographic area a franchisor

authorizes a franchisee to establish and operate a franchise
business. It offers protection and exclusivity for a market
area you own and have control to develop as a franchisee.

EVSU-COBE | 2024
Reference: Evans, R. (2022, August 30). How do franchise territories work? https://www.linkedin.com/pulse/how-do-franchise-territories-work-rachel-evans
 B.
GEOGRAPHIC LOCATION

Involves the franchisor protecting Franchisors will not provide any

the franchisee from other protection and instead allow
competitors such as other crossovers from one franchisee to
franchisees within the area. another.

EVSU-COBE | 2024
Reference: Amd4dm1n. (2021, December 8). Franchising 101: What are franchise territories? Fransmart. https://fransmart.com/franchising-101-what-are-franchise-territories/
 B.
GEOGRAPHIC LOCATION

1 Market Analysis
2 Site Selection
3 Regional Compatibility
4 Economic Conditions
5 Legal and Regulatory Environment

EVSU-COBE | 2024
Reference: Evans, R. (2022b, August 30). How do franchise territories work? https://www.linkedin.com/pulse/how-do-franchise-territories-work-rachel-evans
 C.
FRANCHISE SITE SELECTION

Site Selection refers to the process of choosing the ideal

location for a franchised business. It incorporates a range
of considerations, including demographics, traffic
patterns, customer buying habits, market traits, wage and
employment trends, zoning and other land-use
regulations, and real estate dynamics.

EVSU-COBE | 2024
Reference: Site selection | Learn 2 Franchise. (n.d.). https://www.learn2franchise.com/glossary/site-selection
 C.
FRANCHISE SITE SELECTION

The location of a business can significantly

influence its accessibility, visibility, and
ability to attract customers.

EVSU-COBE | 2024
Reference: Site selection | Learn 2 Franchise. (n.d.). https://www.learn2franchise.com/glossary/site-selection
 C.
FRANCHISE SITE SELECTION

1 What Market am I trying to reach?

2 What’s my Territory, and is it Exclusive?
3 How does the Local Community affects franchise Site Location?
4 Will the Franchise Location Selection be right in the future?
5 How much does the Franchise site cost?

EVSU-COBE | 2024
Reference: topfiremedia. (2023, July 31). Franchise site selection: 5 key factors success [2024]. Hotshots Sports Bar Franchise. https://hotshotsnet.com/franchising/blog/franchise-site-

selection-success/
 D.
INVESTIGATING FRANCHISE OPPORTUNITIES

It is to collect franchise opportunities and from there, you got

to select which one would be the best for you.
A franchisor will also determine if you can be a good fit to own
their franchise.

EVSU-COBE | 2024
Reference: Goldman, A. (2024, March 6). Investigate a franchise in 6 key steps | Franchise Coach. Franchise Coach. https://www.franchisecoach.net/investigation-procedure/
 D.
INVESTIGATING FRANCHISE OPPORTUNITIES

1 Do a background check of the company.

2 Familiarize the Franchise Disclosure Document (FDD)
3 Investigate and know the franchise system.
4 Call or meet existing Franchisees
5 Don’t miss the discovery day
6 Decide based on your research
EVSU-COBE | 2024
Reference: Goldman, A. (2024, March 6). Investigate a franchise in 6 key steps | Franchise Coach. Franchise Coach. https://www.franchisecoach.net/investigation-procedure/
 E.
BECOMING A FRANCHISEE

• Evaluate Opportunities
• Call Existing and Former Franchisees
• Draft Business Plan/Projections
• Legal Review of the FDD and Franchise Agreement
• Attend Discovery Day
• Confirm Financing
• Finalize Entity Choice and Ownership Percentages
• Sign the Franchise Agreement and Pay the Franchise Fee
EVSU-COBE | 2024
Reference: Steps & Timeline of becoming a franchisee - Spadea Lignana. (2021, February 12). Spadea Lignana. https://www.spadealaw.com/resources/becoming-a-franchiseehisee
 F.
FINANCING YOUR FRANCHISE BUSINESS

Franchise Financing is how franchisees pay for franchise fees and

other business start-up expenses. Franchise financing helps
aspiring franchisees secure the necessary capital to start and
operate their franchised businesses.

EVSU-COBE | 2024
Reference: ADP (2024). Franchise financing – How to fund a franchise. https://www.adp.com/resources/articles-and-insights/articles/f/franchise-financing.aspx
 F.
FINANCING YOUR FRANCHISE BUSINESS

Franchise Financing can be used for various purposes, including:

Initial franchise fees. Real estate and leasehold improvements.
Equipment purchase. Working capital for day-to-day operations.
Marketing and advertising expenses.

EVSU-COBE | 2024
Reference: ADP (2024). Franchise financing – How to fund a franchise. https://www.adp.com/resources/articles-and-insights/articles/f/franchise-financing.aspx
 G.
FINANCIAL OBLIGATION OF FRANCHISEES
1 Initial Franchise Fee
2 Territory Fee
3 Training Fee
4 Royalty Fee
5 Marketing or Advertising Fee
6 Renewal Fee

EVSU-COBE | 2024
Reference: Brandsitetedev. (2023, May 22). Franchise fees: beyond the initial investment - FranChoice. FranChoice. https://www.franchoice.com/franchise-fees-beyond-initial-investment//
 H.
OTHER FINANCIAL REQUIREMENTS

Entrepreneurs who qualify for franchise financing generally have

positive net worth, or more assets than debts. Becoming a franchise
owner is a business investment, you will have to meet minimum
franchise requirements concerning your financial background.

EVSU-COBE | 2024
Reference: Martin, J. (2023, January 12). Understanding franchise capital requirements. Tenet Financial Group. https://tenetfinancialgroup.com/franchise-capital/'
 H.
OTHER FINANCIAL REQUIREMENTS
1. Financial Background - Extensive check on a Franchisee’s finances. This
is the income-debt ratio.
2. Liquid Capital - Liquid capital refers to the total amount of cash or other
easily converted assets a Franchisee will need on hand in order to enter
the franchise contract.
3. Net Worth - Many franchises set a net worth requirement as way to
prove that a potential Franchisee is financially fit enough to bear the risk
of business ownership.
4. Credit Score - Some franchises may also verify that a Franchisee’s credit
score is above a certain limit and credit history before they can invest.
EVSU-COBE | 2024
Reference: Franchise Requirements for Buying into a Franchise. (n.d.). https://mysobol.com/franchise-requirements-for-buying-into-a-franchise/
 I.
FRANCHISE FRANCHISING AGREEMENT

• A legally binding contract between a franchisor and

a franchisee.
• Defines the rights and responsibilities of each party.
• Establishes the framework for operating a
franchised business.

EVSU-COBE | 2024
Reference: Firm, I. L. (2022, June 11). The franchise agreement defined. The Internicola Law Firm. https://www.franchiselawsolutions.com/learn/franchise-your-business/franchise-agreements
 I.
FRANCHISE FRANCHISING AGREEMENT

• Single-Unit Franchise
• Multi-Unit Franchise
• Area Development Franchise
• Master Franchise

EVSU-COBE | 2024
Reference: Types of franchise arrangements. (2023, February 28). FranCity. https://francity.com/about-franchising/types-of-franchise-arrangements/
 J.
FINANCIAL RESOURCES OF FRANCHISEES

1 Traditional Bank Loans or Lender Financing - Franchisees can apply for a

commercial loan with a bank of their choice. Approval usually requires a good
credit rating and a detailed business plan. Ex., LANDBANK Franchising Lending
Program.
2 Franchisor Financing - Some franchisors offer financing or incentives to help
prospective franchisees get started. Some franchisors also offer rebates or
incentives if you reach certain goals when your business is up and running
successfully.
EVSU-COBE | 2024
Reference: ADP (2024). Franchise financing – How to fund a franchise. https://www.adp.com/resources/articles-and-insights/articles/f/franchise-financing.aspx
 J.
FINANCIAL RESOURCES OF FRANCHISEES

3 Personal Assets - Savings accounts, severance packages from previous

employers and home equity and retirement savings plans are sometimes
used to help finance a franchise.
4 Rollovers As Business Startup (ROBS) or Retirement Funding - A Rollover
as Business Startup allows you to roll retirement savings into funding a
business tax-free.

EVSU-COBE | 2024
Reference: Waters, J. (2023, November 8). Franchise financing: types, features and benefits. https://www.linkedin.com/pulse/franchise-financing-types-features-benefits-joe-waters-e709c
 J.
FINANCIAL RESOURCES OF FRANCHISEES

5 Home Equity Funding - A home equity loan is money that is borrowed

against the appraised value of your home.

6 Borrowing from Friends and Family - This can be a good option compared
with banks, as your friends or family may offer you better conditions on
the loan. Also, if someone close to you has offered you the money, they will
not ask for the same proof and documents that a bank will.

EVSU-COBE | 2024
Reference: Team, F. (2022, March 1). How to finance a franchise business – Sources of funding. Fantastic Franchise UK. https://fantasticfranchise.com/blog/how-to-finance-a-franchise-

business-sources-of-funding/
 J.
FINANCIAL RESOURCES OF FRANCHISEES

1. Alternative Lenders
2. Crowdfunding
3. Partnerships
4. Local Grants and Other Funding

EVSU-COBE | 2024
Reference: HIREYOURSELF.com. (n.d.). Franchise Loans and Funding - All your options to invest. https://www.hireyourself.com/franchise-

funding#shouldigetapartnertohelpwiththefundingofafranchise
 LOCATION K.
Franchise Location means the address of the space
that holds the Franchised Business.

1 Franchise Characteristics And Your

Targeted Customers
2 Be Aware Of All The Standard Business Practices
And Local Laws In The Area
3 Demographics Is Important

EVSU-COBE | 2024
Reference: Admin. (2019, June 14). How to choose a good location for your franchisee business. Franchise Insitute. https://thefranchiseinstitute.com.au/choosing-good-location-for-your-

franchise-business
 L.
PREPARING FINANCIAL PACKAGE

Entrepreneurs who qualify for franchise

financing generally have positive net worth, or
more assets than debts.

EVSU-COBE | 2024
Reference: Basic Financial Package - what to have ready in order to get money. (n.d.). https://www.businessownersideacafe.com/financing/basic_finance_package.php
 L.
PREPARING FINANCIAL PACKAGE

Financial Package means the financing package indicating

the total capital cost of the Project and the means of
presenting financial data that helps prospective franchisees
understand the costs, investment requirements, and
potential profitability of a franchise opportunity.

EVSU-COBE | 2024
Reference: Basic Financial Package - what to have ready in order to get money. (n.d.). https://www.businessownersideacafe.com/financing/basic_finance_package.php
 L.
PREPARING FINANCIAL PACKAGE

Some of the Financial Packages includes:

1. Franchise disclosure document (FDD)
2. Franchise financial statement
3. Return on Investment (ROI) Analysis

EVSU-COBE | 2024
Reference: Basic Financial Package - what to have ready in order to get money. (n.d.). https://www.businessownersideacafe.com/financing/basic_finance_package.php
 M.
LEASING
means all leases, subleases and other
agreements or Contracts pursuant to which the Company or any of
its Subsidiaries has granted a Franchisee the right to lease, use or
occupy any Real Estate Property.

- The Franchisee locates the premises, negotiates the

lease with the landlord directly and holds the lease in its name;
- The Franchisor locates the premises, negotiates and
enters into the lease, and then licenses occupation to the
franchisee or sublease.

EVSU-COBE | 2024
Reference: Franchise Leases Definition | Law Insider. (n.d.). Law Insider. https://www.lawinsider.com/dictionary/franchise-

leases#:~:text=Franchise%20Leases%20means%20all%20leases,not%20include%20any%20Franchise%20Agreements.
 M.
LEASING

The following factors will ultimately drive the leasing method which the
franchisor often decides unilaterally:
• Nature of the franchise system and the policies and procedures of
the franchisor;
• risks that each party is prepared to take; and
• The level of control that a franchisor wishes to retain over the
premises/site of the business.

EVSU-COBE | 2024
Reference: Leasing the Franchise Premises: What a Franchisee needs to know - Business Franchise Australia. (2023, March 15). Business Franchise Australia.

https://www.businessfranchiseaustralia.com.au/expert-advice/leasing-franchise-premises-what-franchisee-needs-know/
 M.
LEASING

The FRANCHISEE locates the premises,

negotiates the lease and holds the lease.
• Use of the Premises
• Lease Term and Options
• Handover Date
• Commencement Date
• Option to Renew
• Outgoings

EVSU-COBE | 2024
Reference: Leasing the Franchise Premises: What a Franchisee needs to know - Business Franchise Australia. (2023, March 15). Business Franchise Australia.

https://www.businessfranchiseaustralia.com.au/expert-advice/leasing-franchise-premises-what-franchisee-needs-know/
 M.
LEASING
Franchisee Lease Key Commercial Issues:

• Plans for redevelopment that may exist at the time of signing, outgoings
expenses,
• Personal guarantees, and
• Lease make good expenses. It is also worthwhile chatting to:
• Existing tenants nearby to see what trading conditions exist and
• Whether they are aware of plans for the area; and
• Existing franchisees in the franchise system to determine if they are happy
with the franchise.
EVSU-COBE | 2024
Reference: Leasing the Franchise Premises: What a Franchisee needs to know - Business Franchise Australia. (2023, March 15). Business Franchise Australia.

https://www.businessfranchiseaustralia.com.au/expert-advice/leasing-franchise-premises-what-franchisee-needs-know/
 M.
LEASING

The FRANCHISOR locates the premises,

negotiates and enters into the lease, and licenses
occupation to the franchisee.
Lease Incentive - The license Costs - Franchisees should also investigate
to occupy and any other the costs of any premises security deposit,
associated documentation upfront rent, fit out, and other business
must be very clear as to who establishment costs to better budget for
will receive this benefit. their franchise.

EVSU-COBE | 2024
Reference: Leasing the Franchise Premises: What a Franchisee needs to know - Business Franchise Australia. (2023, March 15). Business Franchise Australia.

https://www.businessfranchiseaustralia.com.au/expert-advice/leasing-franchise-premises-what-franchisee-needs-know/
 M.
LEASING

A franchise lease addendum is a common

way that a franchisor can tackle the issue of
location control, without subjecting itself
to the liabilities associated with owning
real property.

EVSU-COBE | 2024
Reference: What is a Franchise Lease Addendum and Why is it Necessary? (n.d.). Franchise.Law. https://franchise.law/entrepreneurs/north-carolina-franchise-agreements/what-is-a-franchise-

lease-addendum/
 EVSU-COBE| 2024

Presented By : GROUP 3 | BSE 3A