Franchise Development
History:
Franchising has been around in various forms for over 100 years. It gained strength in the early 1900's when General Motors started franchising dealerships. In the 1950's the business concepts we still see today began to expand and become formalized. By the mid 1950's over 100 companies sold business opportunities through a franchise program. By 1979 the Federal Trade Commission began imposing regulatory guidelines. During the 1980's and 1990's stricter enforcement and additional regulations by both federal and state government began to emerge. By 2000 and ongoing today; the legal challenges and complexity of developing a franchise have become enormous. This burden has not stopped the rapid growth of franchise concepts.

Franchising has significant value. A franchise has a higher probability of succeeding over ten years than a non-franchised business. The FTC tells us that while only 18% of independently owned and operated companies are still in business after ten years, 91% of franchised businesses are still operating.

What is Franchising?

There is still confusion about what a franchise is by individuals reading their state regulations. Franchising law is still a federally controlled regulation with a broad number of state specific rules; do not expose yourself to the liability of thinking a business opportunity, a license agreement, dealership or a chain of partnerships is not a franchise just because your state has not properly described the national scope of regulations.

In addition, a concept will be held subject to a series of other tests based on the state and FTC such as distribution, method of growth, marketing, employment, and capital acquisition.

For the franchisor, franchising is a method for a company to expand using other individuals' capital. For the franchisee, purchasing a franchise allows them to buy into a proven business model and eliminate the cost and risk of a pure start-up, having the support of a team, having the value of a brand name upon their exit strategy, having the strength of numbers and gained experience and knowledge leveraged from the greater experience of numerous owners. In addition, a franchise program has the regulatory oversight of government agencies.

The primary document used in franchising is called a FDD. A FDD IS REQUIRED TO FRANCHISE A BUSINESS IN THE UNITED STATES. This document is only the foundation of numerous legal and operational documents needed in the franchise process.
Franchising is not a black box, nor is it a mystery. In fact franchising is relatively easy if you follow the rules, follow the systems and procedures of good business practices, use a an experienced franchise attorney and have a successful and replicable business model with a product or service that people want.

Legal and Operational Issues

Perhaps the greatest issue that any business owner has is taking his or her business model, which has been successful, and expands it using outside investors. What do you do when these investors buy into the concept, replicate the model in some fashion, and do it without proper regulatory documents then fail to meet their goals or expectations? There are far too many cases where a court sees the life-savings of a family drained and concludes the business they bought into was indeed a franchise concept and that the business was either not properly registered or the agreements and terms of the contracts not fulfilled. They often find in favor of the family, leaving the parent company in financial ruin and exposed to years of extensive legal actions from anyone they have done business with.

In addition to the registered FDD regulatory requirements, the parent company needs to have a system that can be replicated, a good business plan, a good financial plan, accurate operating manuals, knowledge of local regulatory requirements, trademarks and other intellectual property developed and protected, agreements with and between all parties involved, non-compete agreements and franchise agreements that outline all aspects of the relationship.

The BDG Partners Difference

We are seasoned business consulting professionals. We are not attorneys, We use experienced attorneys and connect you to the best people in the industry allowing you to get advise without a conflict of interest, think of this as a second opinion. We have owned and operated other company's franchise concepts and have owned, developed and operated our own concepts. We have worked with the franchise industry for over 30 years. Our fees are low; our approach to helping you develop your concept or in using our consulting services is based on flexibility and on proven systems. We do not reinvent the wheel for you each time and drive up your costs. We choose to work with only a few franchise concepts at any time, giving you more attention and reducing the time it takes to start-up, stabilize or expand your concept.

Our goals are to help you increase your profit potential, reduce your managerial problems, lower your capital and on-going expenses, rapidly expand and stakeout territories before the competition, gain economies of scale and utilize size for marketing advantages.

What are the Costs?

We want you to know our fees upfront because they are very competitive they are lower by up to 75% from the top franchise development firms in the United States. Our fees are based on the time we spend building documentation and technology. With your input to provide operational and business details your project fees can be greatly reduced.

Before we do anything, we will give you a quote that outlines what we believe your cost will be. Because we do not do the state by state registrations or final legal documentation (that is done by your attorney or one we may suggest to you), you will have fees with us that can range from as little as $15,000 to as high as $75,000. Your legal costs for outside counsel will run from as little as $12,000 to as high as $50,000. Working together we can show you how to keep the costs under control. If you plan to utilize our services going forward, our hourly fees range from $45 per hour to $200 per hour (about the same or less than a CPA or attorney). While most of the franchise development consultants are using just out of school business majors, we are using our experienced partners and, proven databases, network and contacts with a host of experienced providers. We just spend fewer hours getting the job done and doing it well while others are charging as you build their learning curve.