Debate for Business Plan Data and Early Franchise Disclosure A potential buyer wants to put together a business plan to get funding to buy a business for which he/she does not have the cash to buy. In order to get a loan, they will need a business plan. But any business plan they put together will be in contradiction to the absolute franchise business model that the franchisor will reveal after the actual purchase, we cannot reveal it sooner otherwise it will be copied and used against our team. I have heard FTC people say that they believe the potential buyer has a right to the information necessary to put together some close representation of a business plan of the franchise they wish to buy to determine if they should buy the business. Whereas this seems like a good idea on the surface the FTC has put into place rules making it impossible. They believe that this type of added disclosure sooner in the buying process will help. Yes it could, but a franchisor cannot provide the information unless first he can substantiate it and second unless the potential franchise buyer can prove he is a real buyer and can afford the franchise. We believe the answer to this concern lies on the back of the potential buyer to fill out a questionnaire truthfully and correctly and for the franchisor to verify data on that application before disseminating any additional information. At that point our company provides for the potential franchisee to go work with an actual franchise for one day and bring a calculator. We can provide a blank spreadsheet with typical expense categories on it but no numbers. The potential buyer in our franchise can visit a current franchisee and bring his/her calculator. And of course the disclosure documents will be provided once the proof of financial capability has been satisfied somewhere in the application process time frame. It also appears from observation that no one really seems to understand the franchising model outside the actual industry practitioners, attorneys in franchising and those who own franchises. The FTC certainly does not see the whole picture. I would invite Steve Toporoff and/or the entire FTC Franchise Group to go on a paid sabbatical and work in a franchisor’s sales department sometime and listen to real franchise buyers ask questions, competitors trying to get information and the obnoxious looky lou’s. The FTC should also send four or five of its highest-ranking franchise sector employees to do the same. I think if that were done you would begin to understand the ridiculous nature of enacting such a revised disclosure rule and you might ask yourself why we have a franchise rule in the first place. But the FTC is not the only organization that does not understand franchising. I spoke at the SBDC’s Annual Conference in San Diego, CA a few years back. In the workshop on franchising I had about 50 directors from around the country from the SBDC bombard me with questions after giving my talk. I was dumbfounded by the lack of understanding and knowledge on franchising. Almost to the point of frustration and wanting to walk out, I was shocked these were the directors of some of the largest SBDC offices in the country. I carefully worded my answers to make sure they had understood the issues presented to them. Finally we made some headway and many stayed afterwards to continue the conversation because they knew franchising was a major issue with their clients who come in for counseling usually prior to getting an SBA loan or putting together a business plan for a franchised business. I got to thinking about the 550 or so Directors and Executive Management of the SBDC Annual Conference that were in attendance and wondered why weren’t all the participants in our workshop? Instead many had gone to time slot competing workshops as that is generally how such conferences are set up. But what could be more important than franchising which accounts for 1/3 of every consumer dollar in the country and a huge chuck of the small businesses in the US. What other business model can claim 350,000 outlets would the SBDC; “Small Business” Development Centers Deal with? After all franchising is the largest sector in small business, not to mention accounts for the most efficient small business models. Executives of the SBDC should have training in franchising as compulsory.

Why Do A Business Plan? To be successful and profitable, a business must know and understand as many details as possible about its industry and its place in the marketplace. Don’t get me wrong, we could all use a little extra funding, but that’s not what we’re talking about here. A few thousand dollars to start up your business doesn’t usually come from investors. Keeping this in mind, if we put together a traditional business plan (to impress investors), generally, what we put into the plan, will be the wrong things for the wrong reasons. If impressing the investors is not your intent, you can’t succeed in this kind of plan. It’s that simple. So, do you actually need a business plan? Oh, yes! You simply don’t need the traditional business plan. Rather, what you need is a plan that will help you (and only you) take control of our own business. Think of it as a guide that will give you direction and keep you on track. Ask yourself these questions: 1) Why am I doing this business? What are my motives? 2) What do I personally want to do with this business? What do I want to gain? 3) What are my personal strengths to offer to the business? What are my weaknesses? 4) What new knowledge will I need? 5) What parts of my business can I outsource? 6) Where do I want to be in six months from now? One year? Five years? See the difference? These questions are you-based. Write down your answers as a preface to your plan. Refer to these questions often and adjust your answers as your perspectives change over time and as your knowledge grows.