1. business and industrial

FDD Assessment
FRANCHISEGRADE COM
Vital Insight for your investment.
Good Data + Powerful Analytics = Better Results and More Sales!
To open more units, a franchise system needs to compete for the attention of
prospective franchisees. This requires the availability of timely, high-quality information.
The core strength of FranchiseGrade.com is its ability to collect, analyze and prepare
high-value, comparative franchise data. By analyzing as many as 2,400 franchise systems
each year, we have become the leader in franchise industry market research.
Franchise Disclosure Document Assessment
A challenge of franchising is achieving a balance between the contractual protections a
franchisor requires and the marketability of the franchise agreement.
Our FDD assessment consists of a review of your Franchise Disclosure Document and
comparison to your franchise competitors. Our role is not to offer legal advice or suggest
particular language but rather identify any provisions that could be considered a
deterrent to candidates and their franchise counsel. This assessment is designed to
improve the marketability of your FDD and prevent your prospects from abandoning
your offering and turning to a competitor during or after their due diligence.
Do you stand out?
How do your prospective franchisee leads compare your franchise to competitors?
Prospective franchisees typically compare franchise offerings. Aside from your franchise
network endorsement, we can offer you the opportunity to provide prospective
franchisees with data and statistics that position your brand above your competitors,
giving you the competitive advantage. Our FDD assessment tool can enable your
franchise development team to prepare for the questions and comments from your
prospects about your franchise and competitors. We provide you with data-driven
marketing material that will allow you to drive the conversation and take charge of the
comparison message.
Pricing at $1999 per project.
© 2015 · FRANCHISEGRADE.COM
INSIGHTS@FRANCHISEGRADE.COM
US AND CANADA 1 (800) 975-6101
What some of our clients say about FranchiseGrade.com:
"The Franchise Grade FFD Comparative Report gave us an objective review of our franchise
program and how we compare to our major competitors, which I was able to select. I believe
the information is this report will enhance our ability to further develop our franchise
program."
Charles Watson, CFE Vice President Franchise Development
Tropical Smoothie Café
"FranchiseGrade.com provided us with a review of our FDD, that supported our internal
review before updating our 2015 FDD. We received valuable insight into where we could
improve and further develop our system. The report provided us with a detailed and
competitive analysis of our franchise system and best practices within our industry. We
received information useful for our sales team and a platform to encourage new ideas.
"I would recommend FranchiseGrade.com to any franchisor who is looking to strengthen
the marketability of their FDD and better understand the competitive landscape within
their franchise sector. It is an effective tool for improving franchise operations, the FDD and
enhancing franchise development."
Debra Jonsson, Vice President Business Development
Brain Balance Achievement Centers
"As a new franchisor, with a unique concept, My Elder Advocate was looking for a way to
assure that our concept was competitive, in both it's market share and profitability
potential. FranchiseGrade.com was able to compare both our market potential, and our
unique payout structure within two different marketplaces. FranchiseGrade.com's FDD
comparison was thorough and detailed, giving us useful actionable information."
Claudine Halpern, COO My Elder Advocate © 2015 · FRANCHISEGRADE.COM
INSIGHTS@FRANCHISEGRADE.COM
US AND CANADA 1 (800) 975-6101
Sample Abridged Report
Your report includes your franchise system and three comparative choices. Examples of
these choices can be specific systems, groups of 2+ systems, your sector, the top 25% of
your sector, or the franchise industry.
Executive Summary
You receive an executive summary that presents key findings and highlighting the
opportunities to promote your franchise relative to sector benchmarks.
From examples from previous clients, your system may have:
•
Created a competitively-priced, high-quality franchise investment and operating
system;
•
Achieved enviable and stable system year-on-year outlet growth (5% versus the
sector's average of 2%);
•
Maintained a comparatively excellent Turnover Ratio (three times fewer lost stores
in relation to new stores);
•
Much fewer distressed exiting franchisees (more favorable percentage of transfers
of total turnover);
•
Potential to evaluate growth in royalty, national advertising, renewal and transfer
fees.
© 2015 · FRANCHISEGRADE.COM
INSIGHTS@FRANCHISEGRADE.COM
US AND CANADA 1 (800) 975-6101
Comparative Analysis
We provide a number of graphs detailing Initial investment benchmarks, Initial franchise
fee comparisons, Royalties per pay period, Renewal and transfer fees and Annualized
costs of the franchises
In each of these benchmarks, we highlight either opportunities for your system, risks
associated with the metrics, or is within benchmark averages. Here is a sample of data
received. We provide our expert opinion on potential changes for you to consider or
highlight opportunities or identify risks if found.
Initial Franchise Fee
$25,000
Initial Rent &Security
Deposit
$20,000-$25,000
$22,500
$2,400-$10,000
$0-$12,500
Design Fees
Leasehold Improvements
$10,000-$15,000
$94,000-$120,000
Opening Cash
Security Deposits, Utility
Deposits and Business
Licenses
$58,865-$148-379
$25,000-$180,000
$500-$1,000
$3,500-$6,500
Business License
$200-$2,500
Insurance
$2,100-$15,000 plus 25%
service charge
Initial Floor Plan
$500
Real Estate Costs
$3,500-$7,000
Opening Inventory
$4,000-$9,000
$1,500-$4,000
$4,500
$5,000-$8,000
$7,000-$10,000
Furniture and Fixtures
$8,500-$9,500
Grand Opening
Advertising
$7,500
Additional Funds (first 3
months of operations)
$10,000-$20,000
$25,650-$31,500
$75,000
Total Initial Investment
$227,000-$325,000
$187,450-$314,979
$188,500-$512,500
© 2015 · FRANCHISEGRADE.COM
$2,500-$5,000
INSIGHTS@FRANCHISEGRADE.COM
US AND CANADA 1 (800) 975-6101
Outlet Trending Information
We analyze a number of variables within Item 20 and present the data as we would for
prospective franchisees. Comparative graphs include; your system to your chosen
comparatives, franchised location analysis, year to year franchise location analysis of
your system and comparatives, Franchisee Turnover Rates (FTR) YoY and system to
system, percentage of Turnover attributed to Transfers and annualized franchise growth
rates. An example of these graphs follow;
Franchised Location Annual Growth Rate
(Year - Year Comparison)
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
Your Franchise
Comparative # 1
2011
2012
Comparative # 2
2013
Comparative # 3
2014
Annual Openings v. Turnover Ratio
(Franchise - Franchise Comparison)
14
12
10
8
6
4
2
0
2011
Your Franchise
© 2015 · FRANCHISEGRADE.COM
2012
Comparative # 1
2013
Comparative # 2
INSIGHTS@FRANCHISEGRADE.COM
2014
Comparative # 3
US AND CANADA 1 (800) 975-6101
We also review Effective Monthly Royalties to determine true percentages of royalties for
operation of the franchised business. Example:
Average franchisee= Annual GR of $478,195.75 * Assume even distribution throughout the year and maximum allowable fees.
Therefore, we will use $39850/month in Gross Revenue as the basis for our direct comparisons.
Your Franchise System
Royalty (6.0%)
National Marketing Fee (2.0%)
Local Advertising/ Cooperative (2.0%)
Technology Fee
Average Monthly Fees
Effective Rate
Average Annual Fees
Comparative # 1
Royalty (7%)
Advertising Fees (2.5%)
Local Advertising (2.5%)
Technology Fees
Average Monthly Fees
Effective Rate
Average Annual Fees
Comparative # 2
Royalty (6%)
Advertising Fund (2%)
Local Advertising (1.0%)
Loyalty Program
Average Monthly Fees
Effective Rate
Average Annual Fees
$
$
$
$
$
2,391.00
797.00
797.00
200.00
4,185.00
$
50,220.00
$
$
$
$
$
2,789.50
996.25
996.25
165.00
4,947.00
$
59,364.00
$
$
$
$
$
2,391.00
797.00
398.50
395.00
3,981.50
$
47,778.00
10.50%
12.41%
9.99%
Comparative Analysis and Actionable Steps
We summarize our findings and provide both a comparative analysis and specific
actionable steps that can be discussed with your executive team regarding
implementation in the FDD, or provided to your franchise development team to highlight
to prospects.
© 2015 · FRANCHISEGRADE.COM
INSIGHTS@FRANCHISEGRADE.COM
US AND CANADA 1 (800) 975-6101
We have Options For Additional Fees
Geo-Mapping
We provide mapping analysis of franchise system saturation levels within states, counties
or cities to help map out development options or assess market competition.
© 2015 · FRANCHISEGRADE.COM
INSIGHTS@FRANCHISEGRADE.COM
US AND CANADA 1 (800) 975-6101
This mapping allows you to plan for expansion or assess the competitive landscape to
determine competition in expanding markets.
Priced from $999 per project.
Lending Comparatives
We will analyze SBA comparative data for charge off rates or disbursements for your
brand, competitors and sector.
Priced at $499 per project.
© 2015 · FRANCHISEGRADE.COM
INSIGHTS@FRANCHISEGRADE.COM
US AND CANADA 1 (800) 975-6101