I am a seller of franchise stores, so I feel like I must chip in here. The original thought of whether or not to franchise, is missing volumes of information.First and foremost, to evaluate the situation, we would need to know exactly what is in your franchise package as far as real property, training, and support. And then the two largest issues, buying power, and area of protection.
When you purchase that franchise, how far away can the home company legally place another franchisee?
What can you buy as a franchisee, that independents cannot buy. And if independents can buy the same things, how much cheaper can you buy it, being a franchisee.
Our franchises bear a major difference to the sign business. I think I can offer a fair comparison, because we have done both for quite sometime. I sell franchises because I can provide goods to a franchisee, that they most oftentimes cannot obtain themselves. I'm talking
about Rawlings, Russell, DeLong, Louisville Slugger, Wilson and on an on and on. Major sporting goods and garment companies simply will not open smaller dealers. Many of these companies required an initial order of $25,000.00 or more, and require a given dollar amount 3 times per year for us to remain qualified with them.
Secondly we will do all embroidery, tackle twill, pro-print, lasering an so on for the franchisee, so he/she does not have to invest in all of the equipment and labor to do so. We sell those services to the franchisee at a wholesale rate, so that they remain competitive at the retail level.
We have a complete webstore. We scan our daily sales. Any purchase that was made from the postal code of a franchisee, goes to that franchisee. We pack and ship the item, and pay the franchisee accordingly.
Lastly, we sell our franchises by population within a postal code area. A franchisee can protect as little or great an area as he or she decides. If later the franchisee wants to expand the area, they can do so at any time. If you are an existing franchise of ours, and we get a prospect in a postal code contiguous to yours, you have the right of first refusal to that area, before we would sell it. We charge .50 per capita
to buy a franchise. In other words, if there are
20,000 people in the area you wish to purchase, your one and only fee with us is $10,000.00. You will never be charged or assessed again. You can buy as many of our goods and services as you like, no minimums, no maximums.
Sorry for the long explanation, but I need to offer that information to compare it to sign franchise. If you are only purchasing equipment, and their basic "know how", you are buying something you can do yourself, probably cheaper and better.
Ask yourself what can I obtain through this franchise, that I cannot obtain without them?
And if not that, how much money will I save buying
vinyl, blades, substrates...whatever through the franchise as opposed to picking up a supplier book and buying it myself. If you can't answer one or both of these convincingly, you are not buying anything of value.
And lastly, I must tell you respectfully, that a customer database of 300 is laughable. Now if 100 of those is under a volume based, dated contract, that has time remaining on it, and it is legally transferable to you, it's worth something.
Take heed to the advise about the economy. I currently will not sell a franchise. Our weekly sales prior to the attack were around $60,000.00. It dipped to about $17,500.00 per week for two weeks after the attack. Sales are again up. If they stay up through the end of the month, I will let a couple of pending franchise deals go through. I have not had a franchisee that didn't do well. I want to keep it that way.
Good Luck!
Dan
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Danny Palmer
Punta Gorda, Florida
Edge II - Embroidery & Digitizing
Wholesale to the industry.