A Simple Guide to an FFG Partnership

Franchise Funding Group has received applications for all sorts of businesses from all across the United States, so how do we choose which businesses to help build into successful franchise systems? Franchise Funding Group President Dan Murphy recently presented the answer to this question to a group of senior finance majors as part of a capstone course at Xavier University in Cincinnati, Ohio. He used the acronym FRANCHISOR as a guideline:

F: Financially sound with a proven business model in place. If a business isn’t running on all cylinders with one or a few locations, it won’t be successful on a larger scale. It needs to be profitable today to scale tomorrow.

R: Replicable, repeatable and scalable. Small businesses that are dependent on the owner as the technically and all-around problem solver won’t work as a franchise. Or, if your business is based on an in-house expert or artist, celebrity or special location that can’t be easily duplicated, other entrepreneurs won’t be able to replicate your success.

A: An attractive concept to franchise buyers. People buying a franchise are looking for a better life and the franchise is a vehicle for that better life. But they also want a profitable business that’s fun, fulfilling, in alignment with their passions and lifestyle goals and something they would be proud to own and tell their family and friends about. But beauty is in the eye of the beholder. For example, while some may find a concept related to sports, travel, pubs or pets enjoyable, some may be turned off by pest control, restroom maintenance, or even junk removal, though these too are successful concepts.

N: Not a saturated market. At Franchise Funding Group, we like to work with businesses that are new – but not BRAND new. It’s tough and expensive to be the very first when you’re introducing a brand new concept because you have to focus on educating your potential clients – not just earning them as customers. Working in a non-saturated market also means your competition is likely to be less-sophisticated and more fragmented, so you have an opportunity to expand and improve on what others are doing.

C: Caring Industry. At Franchise Funding Group, we are looking to build businesses that provide a necessary and sustainable service, like caring for cars, kids, aging parents, homes, pets, health, etc. These kinds of businesses are far more recession proof than a business that provides a luxury item or service. People want a product or service that is in demand in good times and bad times.

H: Hot industry. As demographics, incomes, geography and life-needs change, so do businesses. Today’s hot industries include things like pet care, senior care, health services/products, tutoring, home services, and business services to name several. Is your business in line with an upcoming trend or need?

I: Investment – and this is not just financial. If you’re looking to turn your existing business into a franchise system, you have to be prepared to spend the time, money, energy and focus to make it happen. If you’re also personally involved in running your existing business, you have to account for that too. It’s all about mindset – you can do it if you’re prepared and committed.

S: Secret sauce. What makes your business special or unique? Franchise Funding Group isn’t looking to expand the ordinary, but rather something different and better. We wouldn’t be interested in expanding a normal veterinarian business, but very interested in a mobile vet business that goes to the customers’ homes and provides VIP care with an on-time guarantee. We want something different that brings unique competitive advantages, which will be attractive to potential franchisees.

O: Organized. If you want to turn your business into a franchise, you have to have all of your ducks in a row. You need to have documented systems, processes and procedures in place and working, a complete operations manual, etc. If the entire business runs from the owner’s head and heart, it won’t work as a franchise. They best way to prove a concept is “franchisable” is to have it running profitably and consistently in multiple locations now, beyond the owner’s reach and capacity to be in all places at once.

R: Return on Investment. At Franchise Funding Group, when we build a partnership with a new company, we need to make sure that our small stake in the new franchise system will merit our time, energy, training, strategic guidance, resources and money. We also want to make sure that potential franchisees will feel the same way. Everyone, the founding entrepreneur, the franchise owners and their customers, and FFG must all benefit – we want it to be a 4-way win!

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