Interest from a whale (Franchising)

unhappycamper

Hi,



I have a brand that a business man wants. I wont sell it here in Ireland but for the right money I would be happy to license or franchise my brand throughout the world. From the outset I had planned to franchise my business and it just so happens I have a guy that's very interested, he is Irish but living in Chicago and he patents and licenses brands for global production. He also invests in innovation and rents out a private jet so I have no doubt that he is serious.

The questions I have (because I find this section of Boards extremely informative) is:

What is a brand worth if it has the potential to change the industry I am in?

Should I always have a lawyer with me when I meet this man or should I wait until he makes an offer?

What are the most important factors that I should consider?

How much money should I get for each country I franchise to?

Do you get paid based on the country or the continent or is that all negotiable?

What are the risks versus the pay offs?

Anyone with advice in this area would be a great help so thanks for taking the time to read this post and share your experience and advice, thank you.

AndyJB

Hi,
I hope you don't mind me saying but your questions are somewhat naive! You have an idea that "You" think is great, well why not roll it out in Ireland or your home country yourself then?

How many people in these times will take up a Franchise that's not even up and running?

The US guy is interested in getting involved in a business that, I gather, is not even up and running. That's great, take the opportunity to get some traction to the project.

How much is it worth? Well at the moment nothing!

What can the US guy bring to the table? Could he be a partner? At the moment you own 100% of zero? 50% of a real business would be much better!

Lawyers can't make your mind up for you, they're just hired hands.

What are the most important factors you should consider? There's only one factor at the moment. How can you get it up and running???

The other questions can only really be answered with any certainty when your business is up and running and has a positive turnover.

Have you a business plan done? How about a sales plan? In parallel to the US guy you need to speak with a professional business mentor. They should help you crystalise your thoughts.

Here's an out of the box comment for you. Contact an international Franchise holder and see if you can pick their brains. Tell them you're interested in becoming a holder or that you're doing a PhD in that area!!!!!

Talk to Enterprise Ireland (www.enterprise-ireland.com), business angels (www.enterprise-ireland.com/Grow/Finance/businessangels.htm) etc etc

Best of luck.

antoinolachtnai

I would not bring a solicitor. That would send the wrong signals.

I would be very careful about putting a high value on your brand at this point. It is a potential brand, not a brand.

I would worry less about payment terms and concentrate on how you and this potential investor might work together to create value for you both and finding out if this is realistically possible.

Mickk

AndyJB wrote: »

Hi,
I hope you don't mind me saying but your questions are somewhat naive! You have an idea that "You" think is great, well why not roll it out in Ireland or your home country yourself then?

How many people in these times will take up a Franchise that's not even up and running?

The US guy is interested in getting involved in a business that, I gather, is not even up and running. That's great, take the opportunity to get some traction to the project.

How much is it worth? Well at the moment nothing!

What can the US guy bring to the table? Could he be a partner? At the moment you own 100% of zero? 50% of a real business would be much better!

Lawyers can't make your mind up for you, they're just hired hands.

What are the most important factors you should consider? There's only one factor at the moment. How can you get it up and running???

The other questions can only really be answered with any certainty when your business is up and running and has a positive turnover.

Have you a business plan done? How about a sales plan? In parallel to the US guy you need to speak with a professional business mentor. They should help you crystalise your thoughts.

Here's an out of the box comment for you. Contact an international Franchise holder and see if you can pick their brains. Tell them you're interested in becoming a holder or that you're doing a PhD in that area!!!!!

Talk to Enterprise Ireland (www.enterprise-ireland.com), business angels (www.enterprise-ireland.com/Grow/Finance/businessangels.htm) etc etc

Best of luck.

He has a recording studio business up and running for the last two years, I know because it's around the corner from my shop on Camden St.

OP I don't have any experience dealing with franchises but I think you need to sit down with him and see what he has to say. I would have thought you wont get an upfront payment but rather a percentage of the profits. I wouldn't get too greedy either, if you create too many obstacles and he is really interested in the idea he will just take it. If the business model is something that is really unique then you should have patented it but as it stands you have disclosed it publicly so you or anyone else can't now patent it. Here is an article about Netflix who patented their business model and sued their biggest competitor, blockbuster settled with them a year later. http://arstechnica.com/old/content/2006/04/6528.ars

I imagine the benefit to him going in with you is that he will have someone on board who understands the business inside out and he has a working model to show potential franchisees.

Japer

Mickk wrote: »

but as it stands you have disclosed it publicly so you or anyone else can't now patent it.

If its that good a brand or idea I am surprised
(a) someone else has not thought of it first
(b) the American does not just copy / steal the idea and go ahead without having to pay the original poster ( o.p. ) anything ?

Call me sceptical, maybe I am, but if you are lucky enough to have a good idea, I wish the o.p. the best of luck with it.

Mickk

Japer wrote: »

If its that good a brand or idea I am surprised
(a) someone else has not thought of it first
(b) the American does not just copy / steal the idea and go ahead without having to pay the original poster ( o.p. ) anything ?

Call me sceptical, maybe I am, but if you are lucky enough to have a good idea, I wish the o.p. the best of luck with it.

(a) with an attitude like that you might have an amazing idea staring you right in the face and you would dismiss it because it's too good to be true.

(b) business relationships are mutually beneficial, I imagine the american wont just take money out of his bank and pay off the op, he will give him a percentage of the profits if it takes off. The americans benefit will be that he has a operational business to showcase to potential franchisees.

Japer

perhaps, mickk, but for now I tend to agree with another poster who wrote to the o.p. : "I hope you don't mind me saying but your questions are somewhat naive! You have an idea that "You" think is great, well why not roll it out in Ireland or your home country yourself then"

as I said to the o.p. , best of luck with it anyway. The market place will see who is right. Without knowing more of it I cannot really judge.

stepbar

unhappycamper wrote: »

Hi,



I have a brand that a business man wants. I wont sell it here in Ireland but for the right money I would be happy to license or franchise my brand throughout the world. From the outset I had planned to franchise my business and it just so happens I have a guy that's very interested, he is Irish but living in Chicago and he patents and licenses brands for global production. He also invests in innovation and rents out a private jet so I have no doubt that he is serious.

The questions I have (because I find this section of Boards extremely informative) is:

What is a brand worth if it has the potential to change the industry I am in?

Should I always have a lawyer with me when I meet this man or should I wait until he makes an offer?

What are the most important factors that I should consider?

How much money should I get for each country I franchise to?

Do you get paid based on the country or the continent or is that all negotiable?

What are the risks versus the pay offs?

Anyone with advice in this area would be a great help so thanks for taking the time to read this post and share your experience and advice, thank you.

I take the brand you are talking about is your recording studio?

I think this gentleman needs to put a proper business proposal to you or some sort of discussion document. And I would also be looking for examples of his own track record in this marketspace. You also need to map out your plans for the company.

Personally I think (if it's the company I'm thinking about) it's maybe a bit early to take the idea global. I get the impression that you haven't really thought through what franchising is all about. Franchising itself can end up being a different type business model. I can see where the attraction lies for this chap in Chicago - growth company, high risk with high rewards. I think you'd have a far better proposition if you opened another studio outside of Dublin (of course only if it's viable to do so). It would also give you experience of running a multi site operation.

I'm glad to see you're still in business. You have a cracking idea that has oodles of potential. But you have to be hard nosed about it. I'd hate to see you selling away potential for half nothing.

TheCostumeShop.ie: Ronan

You need to go to a franchising professional adviser / professional on this, Grab a few franchise magazines and look up the ads where these people should appear, ring a few and ask some people for referrals.

Get your NDA in order and then have the professional prepare the deal on your behalf.

Also I'd approach it in the way that this guy is wealthy because he's smart, try to make the deal structured that its low hassle for him (IE you'll help the new franchises and grow the systems) and try to limit the down side risk, if he can't sell the franchises he's not looking at big losses but if he can you'll share in the upside potential.

Remember these guys make many offers and only a few come into being so always to to work with him to mutual benefit rather than against him to get the best deal. The brand name itself may have little value in the US etc so be sure you don't give away all your secret sauce before he signs the deal. Its common when deals don't go through that they will try to replicate your idea anyway, so do be careful.

was.deevey

I think you need to find a good

a) NDA and Solicitor who specializes in franchise / licensing .. he/she will likely have a ballpark as to the fee's and contracts normally in existance, and unlikely to give you biased information as they'll want to sign you on as a customer if this goes big you'll probably end up using them in the future

b) Fish excatly what the American's rough terms are (so you can counter offer).

c) Most franchises work off an upfront fee + ongoing commission, however you would most likely be asked for ongoing updates to the business model, supply chain and complete A-Z documentation on your business runnings from franchisees... everything from the supplier source to accounting.

Licencing the brand alone might give you less control over the final product but probably less overhead and ongoing work (training / manuals etc).

Even your bank manager might be able to offer advice i'm sure he's probably dealt with loaning to franchisees in the past and will have an idea on the security of the franchises and what is being vetted when someone wants a loan to get involved.

If there is another business franchising like this already .. call them as a punter and ask for their franchise fee's.