About to do a franchise, need some advice

A

Apollo_Auto

New member
Hi everyone! I've been approached by about 4 or 5 different people about franchising my company but I've always turned them down until recently. A long-time customer of mine, who also happens to be filthy rich, approached me with the idea of making another Apollo Auto entity in the region where he lives. I trust this guy and he trusts me and I've got the skills he's got the bread, so I can't think of a better partner. Basically this "other me" would be trained by me, etc. and wouldn't be my "own competition" as we'll be in different regions. Also, the BIG polishing jobs will still all be carried out by me, because until this person can hone his skills, he'll be doing 1-step polishing only with a DA.



My questions >>



1. The "investor" will be investing money only. All the training, managing, etc. will all be my responsibility. Into what percentages should the profit be divided?? Keep in mind, my company has been in operation for more than 2 years and all the work thus far (corporate identity, methods, marketing, etc.) have been done by me alone. A SH1TLOAD of work IOW.



2. I'm a detailing supply distributor in HU and at the moment it's nothing big, as I haven't had time to work so much with it next to detailing. He also inquired about that and was asking if it's worth getting into and I said yes. Should I get him in on that too and do it on a much larger scale?



I guess that's the only questions I have for now, TIA for any advice! BTW my web site is www . apolloauto . hu if you'd like some more info on the company.



- Jesse
 
I would think that your investor would want a return on his investment plus interest before any split on the "profit". I'd be surprised that he doesn't already have something in mind, talk to him.
 
Sounds interesting, but you need to find someone that has been on the other side. I know you trust this guy, but he is a business man and will milk you for all you have. Its nothing personal, its just business. Do your homework and then start working out a deal.
 
Why would he franchise your business to do one step da polishes? That's easy enough without paying a franchise fee.





John
 
JohnKleven said:
Why would he franchise your business to do one step da polishes? That's easy enough without paying a franchise fee.





John
Click to expand...



Thanks for the advice all! John >> I'm pretty much the pioneer of this type of detailing service in this country and the name that I've already earned for myself, the knowledge I have and the image that my company has is what my friend wants to franchise... anyone can buy some soap and buckets and say that they're a "mobile detailer", but what I offer is much different.



People don't franchise hamburger stands because they're the best hamburgers in the world; they do it because there's a feeling about it that makes it stand apart from the rest. This is what my company has here in this country.
 
I would look at what other companies charge for franchise fees. I would expect 5 to 10k up front to use the name. He should then pay you a percentage of the profits - typically of 6% of net sales plus 2% for branding.



Plus I would charge the training fee - if he is taking time for your shop, you should be compensated at your hourly rate.
 
I don't have any franchise experience, but I think you might be SOL if you ever try to start one up here in Canada with the Apollo name :chuckle:
 
Apollo_Auto said:
Thanks for the advice all! John >> I'm pretty much the pioneer of this type of detailing service in this country and the name that I've already earned for myself, the knowledge I have and the image that my company has is what my friend wants to franchise... anyone can buy some soap and buckets and say that they're a "mobile detailer", but what I offer is much different.



People don't franchise hamburger stands because they're the best hamburgers in the world; they do it because there's a feeling about it that makes it stand apart from the rest. This is what my company has here in this country.
Click to expand...



I see. I think it's a great idea then, just make sure to keep any other stores properly trained so they don't damage your good reputation. Good luck with your venture.





John
 
People also franchise infrastructure, logistics, and procesess...



3 complex things that sink most new businesses.





Jesse will be selling the following to a franchisee:

Process

Policy

Logistics

Infrastructure
 
Not sure how the laws are over there but I know you'd have to come up with some sort of FOC. I would contact a lawyer on the matter to make sure you both are covered. You just never know what happens.
 
Krafcik said:
I would look at what other companies charge for franchise fees. I would expect 5 to 10k up front to use the name. He should then pay you a percentage of the profits - typically of 6% of net sales plus 2% for branding.



Plus I would charge the training fee - if he is taking time for your shop, you should be compensated at your hourly rate.
Click to expand...



Good input, thanks!



efnfast said:
I don't have any franchise experience, but I think you might be SOL if you ever try to start one up here in Canada with the Apollo name :chuckle:
Click to expand...



:D :hifive: I wonder what happened to mister "I hand wax cars while wearing a ring"...



JohnKleven said:
I see. I think it's a great idea then, just make sure to keep any other stores properly trained so they don't damage your good reputation. Good luck with your venture.





John
Click to expand...



Thanks John! I'll be sure he/she is properly trained!



jdoria said:
People also franchise infrastructure, logistics, and procesess...



3 complex things that sink most new businesses.





Jesse will be selling the following to a franchisee:

Process

Policy

Logistics

Infrastructure
Click to expand...



Roger that, Justin!



Jakerooni said:
Not sure how the laws are over there but I know you'd have to come up with some sort of FOC. I would contact a lawyer on the matter to make sure you both are covered. You just never know what happens.
Click to expand...



Yarp, I'll definitely have this one done by my lawyer...
 
Apollo_Auto said:
Thanks for the advice all! John >> I'm pretty much the pioneer of this type of detailing service in this country and the name that I've already earned for myself, the knowledge I have and the image that my company has is what my friend wants to franchise... anyone can buy some soap and buckets and say that they're a "mobile detailer", but what I offer is much different.



People don't franchise hamburger stands because they're the best hamburgers in the world; they do it because there's a feeling about it that makes it stand apart from the rest. This is what my company has here in this country.
Click to expand...



Mmmmmmmmmm, hamburgers!!!!!!!!



Jesse's gonna be one of those rich SOB's who hires us to detail HIS car!!!!
 
Got More Wax said:
Mmmmmmmmmm, hamburgers!!!!!!!!



Jesse's gonna be one of those rich SOB's who hires us to detail HIS car!!!!
Click to expand...



:) Wouldn't that be sweet? Still haven't fingered out the details yet, but I think I'm getting close.
 
Apollo_Auto said:
:) Wouldn't that be sweet? Still haven't fingered out the details yet, but I think I'm getting close.
Click to expand...



What you actually mena is, you're undecided on buying a 599 or waiting for the 458??????:)
 
My detailing business activities are very simple and to be honest it is more of a very passionate hobby that I have seeing how I don't charge nearly enough. Although, business activities ,in general, are completely separate. As mentioned earlier, although you trust this man... Business is business. I am sure he wants you to profit from this partnership, but obviously you should know that he will be looking to get the largest return on investment that he can which would shrink your return. Do not sell yourself short. It would not be a bad idea to find out how much your company is worth on a balance sheet. In the most elementary terms this would entail adding up your property, facilities, equipment, cash, accounts receivable, etc etc... After that I would calculate the return on investment that you have made from first starting your business. Once your ROI is determined you would then have a good starting place to negotiate what the Apollo_Auto name is worth. If you have been working for two years, that is a relatively short time in business terms. Take in to account how successful you have been in comparison to other regional detailing companies. The younger the company and the newer the market, the more possibilities you have for growth.



Who knows, maybe you decide to take the plunge and expand the company yourself with a small business loan. A hard worker (most detailers are) combined with a dream and the right amount of risk = financial success. Doesn't sound very attractive, but remember this. The greater the risk, the greater the reward.



Just my 2 cents.



Good luck and God bless with this possibly life changing decision. :2thumbs:
 
Could be semantics, but is this truly a franchise arrangement, or would this be better described as a second facility? If you're handling management oversight, training, and escalation of the heavy work, I'd consider this to be more of a branch/second location of your business...with the only variable being that you have an investor providing the capital. Legally and contractually I'd think such an arrangement would be less complicated as well, and from a marketing perspective you could use your reputation to a fuller extent.



Just thinking out loud....good luck with everything.
 
^^I agree with Jerry. I think by simply opening one, or more, detailing locations and simply expansing your business with the help of a partner leaves you much more control over the business and the quality of results than franchising. However, if you aren't worried much about the business expanding and quality of the work from franchising, I think the potential for more profit is definitely there with franchising.



I would say the main thing here is to get ALL the details as well as ideas down on paper and go into this as a business deal 100%, regardless of your relationship with the investor. Best of luck man. :2thumbs:



ps. I'll detail your car just fly me out there on a 2 month vacation!
 
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