Tom’s Franchise Information Blog

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Let me be blunt- Heck no. Sometimes I hear the strangest things from people. I was talking with someone a few days ago, who stated that she has been told by several sources that in order to franchise her business she must have a minimum of one million dollars. I would like to know who is feeding this woman with false delusions. I am here to say this is misleading - let me explain.

It is true that in order to Franchise Your Business you must have the concept operational (at least for one year- this is a no brainer) and yes there needs to be sufficient funds to support future Franchisees and show financial strength, but the total is no where near one million dollars. If you have the passion to duplicate your model, people have shown in interest in your business and you know other people can achieve success with your concept in other areas then you will be surprised at the cost. The cost to Franchise Your Business is minimal and simply consists of:

Creating an Entity for the Parent Company

Funding the Parent Company- simply establish a bank account and transfer funds to show a balance (recommended minimum is $50K the more the better- shows financial strength).

Registering your trademark with USPTO- logo and word mark

Determine the structure of your Franchise system - Disclosure Documents prepared. Financial Statements prepared by CPA- a required exhibit with Disclosure Documents.

Fees to have the UFOC (Disclosure Documents) created.

Fees for a Franchise attorney to review, make changes and file these Disclosure Documents in your home State.

Fees to file your Disclosure Documents in other States (I recommend you stay in your home State at first- then slowly go into other States).

Resource Materials- Operations and Pre Opening Manuals necessary to present your procedures, systems and proprietary information.

Marketing and advertising budget to offer sale of Franchises once approved (optional at first depending on how aggressive you want to be).

Web site development- portals for various functions that will be available to Franchisees

Develop a Discovery Day program and Training/Orientation program for Franchisees.

That is it. Do you need a large staff for the parent company, no. Obviously you want to start out slow and expand as your Franchise business dictates. I always recommend that you begin to offer Franchises in your own State for the first year- keep things at an arms length distance. So what is the minimum cost to you for the items mentioned above- as low as $90K. This includes a minimum of $50K to fund your Parent company. Are you surprised??

It is funny that most entrepreneurs (including yourself) do not realize that the pieces needed to successfully Franchise already exist. I may be crazy, but our philosophy is that a competent Franchise consultant must be aware of this and rather than spending your money to Franchise, your money is better spent on items that will further strengthen your system and add value for future Franchisees.

So forget about finding Angel Investors or VC Funding to raise $1MM. Even the most aggressive entrepreneurs who start to Franchise and pay top dollar to do so (companies out there who charge a ridiculous amount just to Franchise Your Business) and register in every State don’t even spend of that amount.

PIR and Associates, Inc., The Franchise Maker is led by entrepreneur and experienced businessman, David R. Waldman, who has spent the last fifteen years working with franchise organizations. The Franchise Maker’s competitive edge provides an arsenal of resources and the virtual infrastructure to turn businesses into a franchise system. Services are custom tailored to help clients through the entire franchise process and beyond. For more information, visit http://www.TheFranchiseMaker.com .

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That's when taking out a short term loan can come in handy.