The following is a comprehensive guide to the extent of our possible involvement in developing a franchise or licensed model that aligns with your specific objectives. It is intended to provide an overview of the process and the major considerations, but it is not meant to be exhaustive.

It is important to note that our services do not incorporate legal advice, preparation of your disclosure document or franchise agreement. We liaise with your lawyers and review and comment on all documentation and reports. Moreover, specific structural and taxation advice should be obtained from suitably experienced accountants familiar with your particular financial arrangements and structures.

In addition, we highly recommend that you obtain independent demographic and geographic profiling to support the franchise process and site selection.

We can refer you to some suitably experienced professionals with whom we have worked successfully and help you negotiate your terms of engagement.

Our advice and assistance typically involve the following three phases, but we may extend them to include franchisee identification, selection, and induction:

1. Establishment of Franchise Model
2. Completion of Initial Information Document
3. Completion of Operations Manual

The first phase involves obtaining a detailed understanding of all the commercial aspects of the current business. We develop Excel spreadsheets that incorporate every business element, including activity assumptions, pricing grids, variable costs, and fixed costs. From these spreadsheets, we then model both the Franchisee and Franchisor businesses and determine the returns to both parties.

Establishing the initial franchise’s asking price and agreeing on the most appropriate transfer prices, royalties, and other charges or revenue streams are critical elements of this phase. All key risks and policies regarding buying patterns, return policies, purchasing guidelines, promotional policies, etc. must be considered and incorporated into the model. We also undertake numerous site visits and gain an initial understanding of the business’s operations during this phase. On completion of this phase, we will have agreed on all details of the franchise model and a model showing the financial assumptions and returns to the Franchisee and Franchisor.

Completion of Initial Information Document

The Initial Information Document, or Package, is designed to be distributed to all potential franchisees but only after they have signed a Confidentiality Agreement. This document provides detailed information about the critical elements of the franchisee’s business, enabling potential franchisees to evaluate the opportunity and make an informed decision about proceeding with a purchase. Therefore, it serves as a crucial marketing document.

The format of the document is flexible but typically covers the following areas:

• Conditions and Disclaimer
• Introduction
• Aims and Aspirations of the business
• Franchising Information
  1. About The Company
  2. Why invest?
  3. Turn key operations
  4. Client sourcing
  5. Service delivery
  6. Opportunity to own your own business
  7. Guarantees?
  8. No selling required
  9. Franchising explained

• How does your Franchise Work
  1. Franchising
  2. Basic assumptions
  3. Income profiles
  4. Guarantee and conditions
  5. Operating expenses
  6. Accounting and administration
• I nvestment Requirements
• Annexure (detailed income profiles, expenses and assumptions)
  This document will be provided to your lawyers, who will
  use it as the framework for the preparation of the Franchise
  Agreement.

Completion of Operations Manual

This stage entails documenting all procedures and operational processes, in addition to the specific requirements of the Franchisee, such as the rules of operation of the franchise.

You would usually prepare most of this document and emulate current practices and compliance regimes. Raffrey Consulting will work with you to review draft documents and ensure they cover all critical risks to the Franchisor.

Franchisee Selection Process

We can also assist with identifying, selecting, and signing prospective franchisees. This process is crucial to ensuring the Franchisor selects the most capable franchisees, and franchisees commence with the highest level of certainty regarding their success as possible.

• The process typically involves the following stages:
• Prospective franchisee identification method or process
• Taking initial enquiries
• Personal meeting and Expression of Interest obtained
• Determining suitability
• Obtaining a Confidentiality Agreement
• Providing and explaining information document
• Offer to proceed as a purchaser
• Reviewing the financial requirements
• Site selection process.

Standard Terms of Engagement

We propose a fixed fee for each phase of our involvement, which has proven to be cost-effective in negotiating fixed fee schedules for legal services. We typically invoice each phase in two equal instalments, one at the beginning and one upon completion.

Payment is due within seven days of each invoice. If you wish to terminate our Non-Executive Management services, you must provide written notice before the beginning of each phase. If you provide information during a phase, you will be liable to pay the initial fee for that phase.

Our fee quotation is based on the estimated time required to complete each phase, liaise with your lawyers and accountants, and provide ongoing advice and assistance as you establish the first Franchisee. The fee will remain fixed; however, if we complete our services within the estimated time, the second invoice of each phase will be reduced accordingly.