Everyone wants a playbook to guide them in their business, careers and in life. “Franchise Strategies” is a business book intended to mentor students of franchising and entrepreneurs toward successful franchising. Indeed, its subtitle, “The Entrepreneur’s Guide to Success” accurately signals that this book provides mentorship. It is not written for lawyers, but should be required reading for lawyers to understand the path to success in franchising.

“Franchise Strategies,” by Edward Teixeira and Richard Chan, is written in a clear and practical business style with an academic pedigree from the Center of Entrepreneurial Finance at Stony Brook University. Teixeira has more than 40 years in the franchise industry with a master’s degree in economics and on the Board of the Center. Chan is an associate professor in the College of Business is the founder of the Center at Stony Brook. Their presentation is data-driven and contains concise case studies and research reports to present the proven success model of franchising. Teixeira is currently involved with FranchiseGrade.com, from which he reports industry metrics, and cites to Fran data and International Franchise Association reports as well. Chan provides academic rigor to the feasibility analysis for any franchise business.

Chapter 1 on “Introduction to Franchising” provides data to support the observations that it “is a proven business model,” which if properly employed, can lead to “successful and profitable growth.” The reader is provided with examples of start-up companies which are household names today and are now international brands. The reader also will learn valuable business intelligence about these companies, as well as the private equity companies which have emerged on the franchise scene, publicly held franchisors and franchisees, trade associations and franchise regulators. The authors provide charts of “Advantages and Disadvantages of Franchising to Franchisors” and “Advantages and Disadvantages of Franchising for Franchisees,” so the book has utility to anyone in the franchise industry. The chapter concludes with quantitative information about various industry sectors of franchised products and services.

Chapter 2 discusses “The components of the Franchise Business Model,” identifying intellectual property, trade dress and services which differentiates the franchise operating systems, training and the importance of the franchise operating manual. The manual, often overlooked, contains the central depository proprietary information regarding training and operations, marketing, development towards growth, franchisor support for franchisees, vendor purchasing programs, competitive intelligence and strategies, territory, and site selection. Advice is offered regarding setting initial franchise fees, royalty fees, payment terms and the term of agreements.

Chapter 3 takes an intriguing look at emerging franchise data to better understand the various benchmarks to monitor performance of franchise systems. For example, figure 32 is titled “10-Year Review of over 1,119 Emerging Franchisors from 2010 to 2020,” which contains performance data for the brands. The authors compare the cost of franchise investment against the growth statistics in franchise categories. The authors recommend that “a company considering franchising their business model should have a comprehensive 5-year business plan including franchise sector analytics and a competitive overview.”

The authors propose a thought experiment in Chapter 4 for purposes of evaluating the franchise venture, emphasizing the importance of self-examination and business planning. The experiment looks to other brands to determine whether expansion was successful through internal company operations, which indicates a need to maintains strong control over marketing and pricing. Other brands grow better in a franchise model where strong controls in these areas are unnecessarily limiting. They describe the five aspects of the evaluation process as “Internal Feasibility Analysis-Resource Availability,” Franchisability of the Core Company Attributes,” “Industry Practices and Trends,” and Franchisee Profitability, Cash Flow and Return on Investments.”

“The Franchise Launch” is covered in Chapter 5, and addresses the legal prerequisites such as trademarks, domain names, intellectual property protections, use of a business entity, selection of a development model of single units or multiple units, franchise disclosure documents and related contracts. The authors recommend that as the franchise documents are being constructed, that a franchise business plan be prepared summarizing how the new franchisor will meet its operational and financial goals. The chapter concludes with advice regarding involving franchise attorneys and consultants in the launch.

An important area rarely addressed in lawyer materials is “Developing Franchisor Organizational Capabilities. Chapter 6 provides organizational charts and descriptions of top management team members, roles and responsibilities. Very helpful for lawyers preparing employment contacts for these positions as well.

Chapter 7 provides strategies for franchise sales and development, such as targeting franchise territories, creating a franchisee profile, recruiting franchisees, preparing marketing materials, use of franchise brokers, web portals, and trade shows. The authors provide helpful information and forms for processing and qualifying franchisee leads, and covers franchise “Discovery Day” for the first person-to-person meeting at corporate headquarters with the prospect.

The International Franchise Association selected Teixeira as a moderator of a program on improving franchise relations, and his wisdom is displayed in last chapters. The book bravely discusses the symbiotic relationship between franchisors and franchisees. Chapter 8 discusses the “toolset” of franchise support and services which can mean the difference between success and failure. The topics include pre-opening assistance, site selection, training, operational services, support for the actual opening of the franchisees’ business, marketing on a national, regional and local basis, and pricing. The chapter includes instruction regarding field representative support, site visits and key performance indicators (KPIs).

Chapter 9 is devoted to resolving and adjusting the franchise relationship through effective communication and alternative dispute resolution options. The authors’ recommendation is to have objective measurements of performance and clear discussion of expectations and benefits.

The authors courageously look at franchise trends in the concluding chapter. They discuss franchise regulation, the effect of the Great Recession of 2007-2009, the role of technology, finance systems development, franchise performance evaluations, changes to the industry through private equity investment, the pandemic of 2020-2021 and the changes to enable the industry to survive and flourish.

Despite the changing regulatory, employment, legal and economic landscape, “Franchise Strategies” shows us the promise of continued growth in the franchise industry through proven business methods, discipline and proper execution.

Reprinted with permission from the July 18, 2022 issue of The Legal Intelligencer© 2022 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.