The Complication of Buildouts in FDDs2017 Facts & Figures Report Published on August 29, 2017
Share Tweet Share
As franchise system development becomes more competitive and attracting qualified franchise candidates becomes more challenging, franchise systems are employing a new strategy to grow their brand and increase franchise sales.
This strategy is based on presenting a choice of buildout options within their investment offering. Buildout options are defined as two or more investment ranges for a specific franchise brand. This could mean two types of locations, with a variety of investment ranges, that differ based by square footage, territory size or other market differentiation.
We identified 299 franchise systems in our database which offer multiple buildouts. With a total of 819 buildout options available within the 299 franchise systems, we dug deeper into the Item 7 buildout options.
What you will learn in this report:
- Buildout Options
- The number of franchises that offer multiple buildout options
- Buildout Averages
- The average of franchise systems that offer multiple buildout options
- Item 7 vs. Item 20 Differences
- Item 7 buildouts disclosed separately from Item 20
At Franchise Grade, we discovered that even if you offer multiple franchise buildout options and open yourself up to more available prospective franchisees, you are increasing the number of franchises you are competing against for the same investment dollars.
A Study of Ongoing Fees Between 2013 and 2016
We have completed a study on the changes in Ongoing Fees in the franchise industry using our data from 2013 – 2016 to publish the report.
The Franchise Disclosure Document Shouldn’t be a Secret
A Franchise Disclosure Document (“FDD”) presents key components of the franchise program including the obligations of the franchisor and franchisees.
Historical Trends of Key Franchise System Metrics
The composition of the franchise investment differs in key areas such as: franchise fees, royalty rates, territory protections and Item 19 disclosures.
Maximize the Power of Data to Sell More Franchises
Data has become essential to having a successful franchise development team. Those that maximize the power of data will sell more franchises.
Item 20 Errors Reflects on Franchisor Performance
When reviewing an FDD, we always keep our eyes out for any errors. The error that is the most troublesome for us is when we see Item 20 errors.