Retail Store Ownership

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Retail Store Ownership

• Independent stores (entrepreneurs)
• Corporate Retail Chains
• Franchising (__ of all U.S. retail sales are by
  franchises)

Franchisee Pays up front fee paid to franchisor
(_________ fee) Pays monthly royalties to
franchisor based on _____ volume
(__-_____ ______ fee)
Franchisor Provides use of the _________ Helps
locate and build the store Trains
franchisee Monitors quality control On-going
support Does all the advertising, develops
systems and products Territory exclusivity
granted
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Why buy a franchise

• Proven ______ of operation and training in how to
  use it.
• Avoid a lot of the mistakes start-up
  entrepreneurs typically make
• Reputable franchisors conduct _____ ________
  before selling a new outlet
• Franchisees enjoy the benefit of _______ in
  numbers
• Economies of scale in buying materials, supplies,
  and services such as advertising
• Negotiating for locations and lease terms

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Steps to Ownership

• Research various franchises
• Formally request information from franchise
• Online or in writing
• Preliminary negotiation (interview)
• Chance to get questions answered
• Chance for franchise to get to know prospective
  franchisee
• Interview other franchise owners
• Evaluate overall franchise fit
• Make a choice

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Franchise Law

• ___s Franchise Rule (effective October 21, 1979)
• Requires franchisors to supply a full disclosure
  of the information a prospective franchisee needs
  in order to make a rational decision about
  whether or not to invest.
• A _______-___ period
• Uniform Franchise Circular Offering (UFOC)
• A disclosure document containing extensive
  information about the franchise.
• To be provided at least 10 days prior to signing
  any contract or the exchange of money
• All contracts must be provided to prospective
  franchisee a minimum of __ days before the actual
  date of execution of the documents.
• North Carolina has no laws governing franchise
  registration.

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Top 10 Franchises for 2005
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Risks of Franchise Ownership

• Loss of control
• Binding contract
• Branding/Image risk
• Trends
• Franchisor dictates introduction of new products
• Labor
• Working capital needed not well defined