Can you summarize the franchise process?
The most appealing benefit of opening a business within a franchise system is the ability to utilize proven systems that have historically made money. Trademarks, systems and market advantages are the most common reasons for opening a franchised business. The process of opening a franchise can take years or maybe just a few weeks to complete. The first step is selecting a desirable industry and business model. Once you have identified a marketplace, then it’s important to consider the geographical boundaries that work best for you.
Assuming the territory has not been developed, you can then proceed to a discovery phase with the franchisor to learn more about the systems, best practices and the expected investment. For Two Maids & A Mop, the average discovery process takes approximately 60-90 days before we’re able to award development rights to a franchise candidate.
How can you trust that a franchised brand is legit?
Franchising is regulated by the FTC and many states also regulate the industry. Franchise companies are required to comply with both federal and state franchise laws and regulations related to the offering and sale of franchises. You will find that all compliant franchise companies follow similar paths in introducing prospective franchisees to their franchise. For example, you must receive the franchisor’s Franchise Disclosure Document (FDD) at least 14 days prior to signing the Agreement or paying any money to the franchise company.
The FDD includes the Disclosure, Franchise Agreement and additional Exhibits. The FDD also provides information about the franchise company and various contractual provisions contained in the franchise agreement. You will learn a great deal about the company and the franchise business through your careful review of the documents.
How do I read the FDD?
Every section within the FDD is important but some sections contain more meat than others. The sections are divided into “Items” and each item has its own unique purpose. A typical FDD can comprise 100+ pages so it’s difficult to dive into each item here. However, here are some helpful tips when reviewing the FDD
- Read the (FDD) and absorb everything contained within it so that you can fully understand the investment, the business and the risk. The FDD contains several items that should provide you with specific information on the expected investment and possible return based on real data from current franchisees within the system.
- Items 5, 6 and 7 detail the required investment along with any regular fees that will be incurred after you open the business. Dig deep into these items and don’t be afraid to ask questions.
- Item 8 is extremely important because this section provides details on the list of approved and/or required vendors. In some cases, a franchisor may benefit from the relationship via rebates so make sure to dive deep into this section because you’ll be stuck once the franchise agreement is executed.
- Item 19 is a very important piece of information contained within the FDD. In our case, Item 19 contains real data from any location that has been open for at least two years. The purpose is to educate the potential franchisee on the cash flow abilities of their future franchise. A franchisor is not obligated to provide this information, but we choose to highlight our franchisees’ success so that franchise candidates can receive as much information as possible.
What qualifications are required to become a franchisee?
We are actively looking for individuals who want to use our business model to radically change their life. Whether you’re sick of corporate America or want to diversify your investment portfolio, our main concerns related to your qualifications include your personal financial situation and your reason for wanting to own a small business. There’s no need to understand the science behind cleaning a home. This is a business opportunity, and we can teach you the technical skills required to properly clean a home.
We can’t teach passion, and that’ll be exactly what we’re investigating once we have an opportunity to talk with you. If you have access to the required capital and have a desire to outwork your local competition, then we want to partner with you.
How large is a franchise territory and will I have an exclusive territory in which to operate?
You will own exclusive rights to a territory upon execution of a franchise agreement. Typically, our minimum territory will be comprised of at least 50,000 US census households with the maximum size of 300,000 US census households. Of course, there may be exceptions based on the demographic breakdown of a territory that allows for a smaller or larger territory than our minimum or maximum designations. The average territory is comprised of approximately 160,000 US census households.
How long does it take to begin operating a franchise?
We estimate that the typical length of time between signing the Franchise Agreement and opening a Franchise is 2-4 months. This includes the time necessary for you to complete our initial franchise training program, setup your office, market your business and hire and train Team Members.
Do you recommend that I visit the home office?
Yes, we actually require a visit to our corporate headquarters. This will enable you to meet our corporate staff members and view our operations in person. We periodically schedule Discovery Days inside our home office in Birmingham, AL. The purpose of the day is to educate you on our story and inform you on the investment potential. Please contact us to learn more about available Discovery Day openings.
Can I talk with other franchise owners?
Yes. In fact, we will not award a franchise unless a candidate has spoken to multiple franchisees within our system. There are a million questions to ask a current franchisee. Do you enjoy the experience? Is your business growing? What’s your best and worst opinion of the franchise? Would you do it again? Do you want to buy more franchise territories? A current franchisee knows what your future life is going to look like, and we want you to have those conversations prior to making any decision.
Can I be an absentee owner?
Yes, sort of. We do not offer fully absentee ownership but we do offer a semi-absentee investment option. Approximately 50% of our current franchises are owned by semi-absentee owners. In each case, a semi-absentee owner must have flexibility in their daily schedule so they can focus on the business. Some of the requirements are physical in nature while other requirements may be more strategic.
For example, a semi-absentee may need to assist with a business if a manager is not present. Other examples include general oversight of the business, meeting with employees and/or providing customer support.
Typically, a semi-absent franchisee best use of time is financial support, business vision, workplace culture, management direction and contractual obligations associated with the franchise agreement. Building a successful franchise as a semi-absent owner is very realistic, but it’s important to remember that a business owner cannot own a business passively. In our system, our most successful semi-absentee franchisees dedicate anywhere from 15-30 hours per week towards the business.