Food Franchise

Posts Tagged ‘Franchisee’

Baja Fresh is a Mexican-Grill franchise which has become popular in many areas of the United States. This excellent opportunity for entrepreneurs was founded on the philosophy of being a convenient, yet “fresh”, alternative to the growing trend of processed fast food.

If you are thinking about taking the plunge to becoming an food service entrepreneur franchisee, have no interested in the traditional fast food venue and love Mexican style food, Baja Fresh might be the answer to your dreams in owning your own business. The company is continuously recruiting franchisees who are interested in becoming a part of their company.

COMPANY HISTORY

Born in 1990, Baja Fresh emerged with a solid philosophy in creating a healthier alternative to fast food. The goal was to offer fast service but sell fresh food. The company prides itself on quality products served fresh and offering optimal service with a firm commitment to meeting these goals consistently in every franchise.

They company has constructed a long term vision which strives to “become the leading national restaurant known as the defining standard for the highest quality and convenience in fresh Mexican food” (www.bajafresh.com). Their mission is to prepare this fresh food with the convenience of fast food, but with fresh ingredients and served in an aesthetically pleasing and clean environment.

Baja Fresh has also developed a set of values which include: teamwork, coaching, open and honest communication, team members doing their best, commitment, growth and spirit. The company seems to pride themselves on a team based environment.

FRANCHISE CRITERIA

Before you can go ahead and open your own Baja Fresh restaurant, you need to find out if you qualify. To do this you will need to demonstrate you meet specific criteria before you’ll be considered for approval.

The Baja Fresh qualifications require you have restaurant experience or have been an operating partner with at least 10% ownership to be considered. The financial requirements seem to be a bit on the high side because you’ll need to have $200,000 liquid cash to open the restaurant, and you must possess $1,000,000 net worth for each restaurant you plan to open.

Additionally, Baja Fresh requires franchisees to pay a $50,000 franchise fee per restaurant and royalty payments of 5%. The minimal time frame for the franchise agreement is 10 years.

SITE CRITERIA

There are two kinds of Baja Fresh restaurants you can open, the Express

Business franchising arrangements are usually conducted on the basis of a particular geographic area or territory. The franchisee breaks up the licensing of his business between different franchising territories, to ensure there’s no overlap of competition between franchises and to geographically grow the business nation wide or even world wide. Usually, the territory you are assigned is yours with exclusivity against any other business franchising agent that might otherwise move in to your area. This ensures your business franchising opportunity is given a chance to grow within your local area without having to compete with other franchisees. But how important are business franchising territories, and does it matter which territory you are assigned?

Business franchising territories are a handy way of dividing up franchising licenses. Rather than sending a dozen franchisees out into the world without consideration as to where they would operate would be difficult, and thus business franchising territories can be a great way to divide up the rights and responsibilities of each particular franchise. Business franchising territories are also beneficial for the franchisees, as a means of confirming their particular operating area and on their rights and responsibilities as regards that geographic area.

Business franchising territories, although obviously important from a practical point of view, are absolutely critical to the success of your business. If you were selling, say, cups of coffee to passing pedestrians, the territory you’ve been assigned will determine whether you can shift 100 or 10,000 cups every morning, depending on the physical number of people in the area – it’s that important to your business success. But in a number occasions, franchisees are given no choice over the exact territory of their business franchising agreement. In the event that there is a choice, it’s important to research which area would be most beneficial to the success of your business, and to come up with solid business reasons for selecting a particular territory.

Take this one step further, and before signing up to any business franchising agreement conduct some market research within the territory you will be assigned. Get down to the area and ask passers by whether or not they’d like to see your franchise in the area, and whether or not they’d be likely to make use of your franchise, were it located in that territory. That way, you can become more clued up about the potential market within your particular territory to determine whether or not your business franchising agreement will provide good value for money.

Business franchising territories are obviously an important part of the business franchising agreements, and they can also make a significant difference to the success or failure of your business. Where a choice of territories is available, it’s perhaps best to consider your options carefully, and it’s certainly a crucial consideration when reviewing any business franchising opportunities. However, provided there is a market available within your local area for the product or service offered by the business franchising license, you should be able to make the most of any territory to which you buy business franchising rights.

One of the greatest decisions of any entrepreneur is in the choice of franchise that you buy in to. Therefore, there is a lot of planning and researching that needs to go into the process before deciding on a final franchise.

You need to have goals to work towards. For example, think about why you want to start a business and what you expect to get out of it. You must also think about if you will have the commitment to the business throughout as it can be a long and hard process at times.

Buying info a franchise may cost more or less money than you originally expect so make sure you know what financial requirements are expected of you and if you can afford them. This includes franchise fees, royalty payment terms and other expenses that you may have to pay along the way.

In order for your franchise to be a successful one you must ensure that you have the right qualities and skills. To do this you will need to look at your previous achievements and experiences and assess you areas of strength from these. There are certain maths and English skills that you need to have to become a franchisee of the Subway® restaurant chain. These will be tested before you can become a franchisee. In is advised that you choose a franchise to buy into that can leverage your strong points. Look at the background of the franchisor as you do not want to take up their offer if they have a history of being unreliable and unsuccessful. You will also want to work for a franchisor who treats their franchisees well and gives them support and training throughout the whole business process. You should definitely talk to other franchisees in order to get an idea of how that particular franchisor works before applying to the franchise opportunity.

There may be restrictions within the business that you need to be aware of in terms of outlet size and restrictions on territory. It is advised that you familiarise yourself with these when making your decision. Agreements that you are required to sign will list out rights and obligations of both you and your franchisor and these should be read very carefully, if possible with legal opinion.

Franchise Offering Circular is the franchisor’s disclosure document and you should make sure that you ask to have a look at this before you sign up as a franchisee. Reading this will help you to evaluate the financial stability of the franchisor and therefore see if they are financially capable of supporting you as a franchisee. It is law that you are given this document to read at least ten days before you sign up to the franchise.

So, before deciding to start up your own franchise, ask yourself these questions:

• Is training required before starting?

• Where is the best place to start up a franchise business?

• What equipment will be needed in order to start up th franchise?

• How many people will be required to start the operations of the franchise?

You will also need to consider all the risks that you may be open to throughout the business process as this will help you to minimize these risks and make your franchise business a success. You may like to get some professional guidance when choosing a franchise.

When we think of business franchise opportunities, we think of a licensed method of doing business paying a certain fee to the “franchisor”, in lieu of getting rights to conducting the business. This is a proven method of increasing a business chain, and giving opportunities to many entrepreneurs who become the “franchisee” and in turn help in expanding the business chain, or the likes. Many international business chain owners often franchise their retail chain to franchisees in various other countries, this not only helps their business grow vertically, but also allows for lateral growth wherein their businesses are regionalized and diversified. Franchise opportunities provide small scale entrepreneurs achieve great heights, with the franchising rights to a certain business.

There are immense opportunities in the world of business franchise, and as more and more small to medium scale businesses plan their growth, they allow for their businesses to be legally franchised. There are several kinds of business franchise opportunities, including product franchising and trade name franchising along with other variants that may sell over certain rights to the franchisee and not all rights originally reserved for the company. In certain franchise opportunities, the franchisee is given the rights to conducting the original business practice of the company, but no rights to conducting their own business, that is they are not given rights to additional profits, this is called product franchising. This method is adopted by many international companies who want to make their presence felt in overseas countries, but not necessarily want to diversify.

A franchisor earns royalties from the franchisee, and this is a beneficial mode of income for the mother company. The various franchise opportunities that attract small and independent entrepreneurs may include anything from retail chains, cosmetic companies, food outlets, vending machines, training companies, etc. The business franchise opportunities for an entrepreneur and for the parent company are endless. The tried and tested method of doing a certain business, allows for the quick setting up of a new business franchise, and this saves a lot of time and training required for the franchisee to set up the same. The hugely successful food chain McDonalds, Subway, and Starbucks in USA, have excelled in the world of franchise opportunities, and many companies in developing countries are trying to expand their businesses in the same manner. The fast growing economies of India and China see a lot of indigenous companies expand their wares through business franchise opportunities, for example Venky’s chain of food stores in India.

In many countries such as India and Russia among others, business franchise opportunities are provided by the franchise associations, which help the entrepreneur in locating the best franchise opportunities. Today, the world of business franchise has also adopted social franchise opportunities, which help the poorer sections of society, take up a franchise and start a small scale business. Many countries such as Germany and the UK have helped provide franchise opportunities to the less privileged of their societies, like the CAP markets in Germany. These are great ways of helping a lot of deserving people, in the spirit of business.

Franchisor Pro Forma Statements: Marketing, Mendacity, or Malfeasance

The Franchise Relationship

In theory, the franchise relationship is a symbiotic relationship, such as a marriage, or a partnership. However, as often happens, there is a significant gap between theory and practice. What should be well understood is that the goal of the franchisor is the same as any other business entity: maximize profits. Moreover, we live in an era of immediate gratification; therefore, in many business entities long-term planning is limited to managing earnings per share (EPS) for the current reporting period. Thus, many franchisors will maximize profits in the short-term whether of not this has a deleterious effect on the franchisee. I owned and operated a family restaurant’ franchise; therefore, this discussion will tend to focus on this type of franchise.

Clearly, the franchise relationship mimics a marriage in that there is a strong tendency for disputes to become more frequent and bitter as the business relationship evolves from the honeymoon stage to an actual business relationship, a partnership where one partner controls the other. Often, the franchisor is soon viewed as a greedy control freak by the franchisee as the realization dawns that the franchisor is not be the savior that he made himself out to be during the courting period. In fact, it soon becomes evident that the franchisor may have been somewhat less than candid during the sale of the franchise.

Pro Forma Statements

Pro forma financial statements is the term applied to financial statements that would result if certain projections for costs and revenues had occurred during the financial year of the pro forma statements. Clearly, they are what if’ statements based upon assumptions made by those generating the statements. The validity of the pro forma statements is directly related to the validity of the underlying assumptions. To be sure, pro forma statements are a valid accounting tool; they are used frequently for planning purposes. For example, they are part of the annual budgeting process for most organizations. What the pro forma financial statements depict for management is what the financial statements will look like if the planned activities for the budgeted year actually come to pass as forecasted during the budgeting process.

In summary, the key for anyone working with pro forma statements is to determine precisely what the underlying assumptions are, and the

In 1996, 32 Pizza Express franchisees sold their businesses back to the franchisor Pizza Express.HMRCs argument was that there was no saleable goodwill as the franchisees merely had a licence to trade and therefore no business asset to be rolled over. They claimed the amount allocated to goodwill should be reallocated to early termination of franchise agreement! The consideration apportionment should not be changed as it was reached honestly and at arms length. As a matter of law, the goodwill belonged to the franchisor, not the franchisee. The Commissioner considered that what was goodwill, had to be determined in accordance with legal rather than accountancy principles. It was a question of fact and would include whatever was added to the value of a business by virtue of situation, name and reputation, connection, introduction to old customers and absence of competition. The Commissioner found that the appellants invested capital and time into their businesses and Pizza Express had no direct interest in their profitability, simply, taking a percentage of turnover as their franchise fee. The accountants had complied with standard accountancy practice in allocating part of the consideration to goodwill, being the excess over the true and fair value of the tangible assets. The appeals were therefore allowed in principle

Question: I am tired of running my restaurant franchise. How do I sell it?

Answer: Many franchisors face this same predicament. Not only are restaurant franchises resold every day, but it is very common to see all types of franchises for sale on the resale market.

The absolute first thing that you must do is to contact your franchisor. Do not be embarrassed! Franchisors expect that a certain percentage of their franchisees will someday want to sell their franchise. It is normal. There are many reasons for a franchisee to want to sell a franchise. Your reason for wanting to sell is probably a legitimate reason, something that the franchisor has probably heard many times before.

But probably the biggest reason that you need to contact your franchisor is that many franchisors will impose restrictions on franchise re-sales. For the most part these restrictions will follow closely with their existing guidelines used for recruiting a new franchisee. They just want the ability to approve any new franchisee.

Are you prepared to sell your franchise? Do you know what your franchise is worth? Will you need to carry financing? Is your financial information up to date? Have you talked with your attorney about the correct from of structure for a sale (asset based vs. stock based)? Are there property lease considerations? Will your landlord allow an assumption of your lease?

You have got to know the answers to these questions. Make sure that you are properly prepared to sell your franchise. You will need to research the marketplace in order to establish a price point. You may wish to talk to a Business Broker or other informed expert for guidance. Check with your accountant. He or she has probably seen a business or two that has been sold over the years. Lean on those around you for good quality advice.

Looking at many franchisor web sites over the last few months, many sites include a section on their web site for franchise re-sales. Consequently, your franchisor may be able to help you market your franchise for sale to others. There are other ways to sell an existing franchise. A good old fashioned newspaper ad can work. A more progressive way is to advertise your franchise for sale online with a web site that is designed to market your franchise. An example would be The Business Market which has a number of existing franchises for sale.

So don’t be embarrassed… be proactive! You can do it!