The Franchise Document

Some may argue that franchise companies are made or broken on the strength of their documents. Any franchise document that does not encourage an optimal franchisor-franchisee relationship will undermine franchising success. Hence, it is critical for franchisors to take care when putting together the franchise documents. Franchisees should obviously take as much care formulating their franchise applications and negotiating the terms in the documents drawn up by the franchisors.

In the Unites States, the terms of at least one franchise document are dictated by a party other than the franchisor or the franchisee. This is the Franchise Disclosure Document or FDD. The FDD entails a disclosure by any prospective franchisor about the earnings of his or her business, past and present, and the earnings forecast for the future. In addition, the FDD should indicate any aliases by which the prospective franchisor has ever gone as well as the details of any trademarks associated with him or her. It should also indicate any implication of the prospective franchisor and his or her directors in fraud charges or in bankruptcy filings. All the information contained in the FDD is designed to protect any franchisees from being taken advantage of by unscrupulous franchisors. The party that defines the terms of the FDD is the Federal Trade Commission. Hence its terms are sure to be objective.

 

The Template-Based Franchise Document

 

There are plenty of other documents relevant to the franchising relationship. Many of them can be drawn up and modified by franchisors who have access to business franchise templates. Drawing up a franchise document from a business franchise template ultimately costs less money than hiring professionals to assist you to do the same. The distinction between a document from one of these templates and one drawn up by a professional for a specific franchise company is that the latter caters more specifically to the needs of the franchise company.

That said, it is important to note that a prospective franchisor who has made the effort to research the franchising process in depth can modify a franchise document from one of these templates and come up with an end product that addresses his or her needs adequately. This makes it clear that some individuals are able to make franchising work for them, even though they have limited budgets and cannot afford to hire professionals to guide them through the entire process. At the end of the day, having these templates as a resource is cost effective, and it helps provide many prospective franchisors with much needed guidance.

Don’t spend time resenting time spent preparing each franchise document because the experience can become vital preparation time as well.

Each franchise document that has to be prepared serves an important purpose in the preparation that you and those who would buy your franchises must go through. As the company who will offer franchises to eager investors, it is up to you to prepare each and every franchise document well before you get out there and start selling those franchises aggressively.  It is easy to want to put together the marketing campaign to the many excited future franchise owners all of whom are clutching big handfuls of money to sink into buying a franchise from you.

Resist that urge to rush to the recruitment stage to quickly. That will be the exciting part but use that future excitement as incentive to take your time and put together rock solid franchise documents that will serve you well when the time comes to get active in your quest to franchise your business.  The good news is that with few exceptions, you will only have to prepare each franchise document once. From then on out, you can use that vault full of great franchise documents to bring on hundreds of productive franchise owners to help you expand your business rapidly.

When the space program gets astronauts ready for space travel, they use flight simulators so they can imagine what it will be like out there.  In a way, preparing each franchise document can serve as a form of flight simulation to get ready for you to launch into the stratosphere of franchising.  When you prepare the franchise disclosure document, you have to brainstorm every possible thing that must be disclosed to a future franchise owner so they will come to the table ready and equipped to sign the franchise documents and hit the ground running making their new franchise a profit generating machine.

In other ways, preparation of the franchise agreement and even the franchise operating manual all force you to think about every detail of how it will be for the franchise owner to be part of your organization and what that new partner will need to be a massive success out there and send massive franchise royalties back to you.

Creating a franchise document qualifies as “on the job training” time for going live as a growing franchise business.

The good thing about working through a franchise document is that it forces you to slow down and think into the future about how your relationship with your franchise owners will work. It is impossible to get in a hurry and do a good job of putting together quality franchise documents that will stand up when you get into the fray of creating a new franchise chain from the ground up.  Each franchise document is a significant undertaking that will require good advice and research. You will be called upon to do some serious business planning on how your franchise will operate, what you want to happen in every one of your many franchises and what should never happen as well.

Don’t try to create each franchise document by yourself.  Calling in the Calvary is not only allowed, it is advised. You have a business full of experts in every aspect of how to be a success.  It is that team that has brought you this far. Depend on them to give you insights on what should go into each franchise document to take your success to the next level.

Don’t be afraid to tap the wisdom of great minds of franchising. Be aggressive in learning what very successful franchise gurus know about each franchise document.  The internet can help a great deal with that quest but don’t overlook your network of business associates.  Buried in that network may be some real franchising experts who can give you insights that should go right into those franchise documents.

If you put this kind of tender loving care into the franchise documents, the end result will be that you will go into this adventure of starting a franchise fully prepared.  Your franchise documents will look great and you will feel confident in them.  That feeling that you are prepared and confident will ooze out of you as you stand up in front of that first meeting of excited future franchise owners and get the ball rolling recruiting your army of franchisors to turn your business into the next big franchising success story.

Every franchise document that must be signed is a step toward your success and happiness as a future franchise owner

Each franchise document is just as much of the dream of owning your own franchise as the rewards you seek. The image you might have in your mind about owning a franchise may be a vision of opening the doors to your wildly successful business with customers forcing their way in with money clenched in hand to spend in your store. But the reality is that there are some details to cover along the way. Above all, to get from here to there, you need plenty of franchise information so you know what you are doing when you fork over your hard earned money to buy your own franchise business. Each franchise document that you must review will give you the clues to the puzzle to how to become a big winner in the game of owning your own franchise business.

There are a couple franchise documents that may seem dry and dull but understanding them can make you a happy camper in the franchising world.  You can learn about franchise operations by sitting around a McDonalds and taking notes. But looking at each franchise document is a smarter way to go and a better use of your time to boot.

An important franchise document with a strange name is the Uniform Franchise Offering Circular because it makes it sound like junk mail you get from your grocery store. Instead, the UFOC represents one of the most detailed documents you will get that lays out in plain English not only what you and the franchising company must do to make your partnership fly like an eagle but exactly how much it is all going to cost.  The number crunchers in the accounting department will like that.

The franchise agreement is a franchise document that means the day you open your doors of your own small business is right around the corner.

Next to the UFOC, the franchise document that can most change your life is the franchise agreement. Look at this document like the marriage license in terms of its importance. There is no romance here but when you and the franchisor sign the franchise agreement, your franchise relationship is set in stone and you are ready to make some serious money.

You can expect both the UFOC and the franchise agreement to be delivered to you in the two weeks before the franchise partnership is about to become a reality. Yes, you can believe it that each franchise document is important. It is important because they will change you from a casual observer into a full fledged franchisee.  But they are also legal documents that you and the franchisor will sign that puts the relationship into motion.

So that is why they are like a marriage license without the cake or the “kiss the bride” part.  But you can stage a big celebration and bring your own cake because once you have mastered and signed every franchise document, your new business will be ready to go for the gold.  That is worth a cake and a kiss from somebody to be sure.