Important Matters to Consider
Important Matters You Need to Consider
What is Due Diligence? A legal term that has taken on extra-legal meaning over the last seventy years or so, due diligence was originally coined in reference to the U.S. Securities Act of 1933. Following the stock market crash in 1929, brokers were given some very specific steps to follow before being allowed to sell securities (stocks and bonds) to investors. One of the causes of the Great Depression was the lack of adequate controls on Wall Street. My, how things have changed! Today, the broad concept of due diligence can be summed up by a more pedestrian phrase: “Do your homework.”
Due Diligence in a Franchise Setting
For anyone considering the purchase of a franchise, the due diligence portion of the decision-making process is probably the most important. There are certain documents that a franchisor is required to provide, whether under federal or state statute, but that is not the only evidence worth examining. Beyond what the parent company must provide, there are a number of other elements that demand careful analysis. The steps outlined below are hardly all encompassing but nonetheless a great place to start.
Due Diligence Process – Due Diligence Checklist
Analyze your expenses – Compare what a franchise will cost against what you can afford to pay. If you will need additional funds, know ahead of time where they will come from and what your cost to acquire them will be.
Analyze the market – Examine closely the particular business you plan to operate and how well others in that field are doing; look not only at franchisees of the same company, but among the competition as well. If you see stagnant or declining demand across the entire sector, this could be a serious red flag.
Shop around for an opportunity – Tie your skills and interests to the type of franchise that offers the best match. Start by finding an industry in which you would be comfortable, narrow that down to an operational method you would enjoy (retail, wholesale, mobile, or work-from-home), and then compare brands within those parameters.
Investigate training and corporate support – Every franchisor owes its franchisees a certain amount of upfront and ongoing training, as well as field support. Some take these steps more seriously than others. For a simple business, a week’s training may be more than enough to teach you everything you need to know while, for a more complex model, a week at the home office will barely scratch the surface.
Visit other franchisees – Everyone who bought a franchise from XYZ Corp was once in your exact position, on the outside looking in. Now that you are contemplating a similar purchase, you have the perfect source for insider information.
Understand the paperwork – A franchisor is required to provide significant written material to a prospective franchise buyer that should be closely examined prior to signatures being applied to documents and money changing hands. Something called a FDD ( Franchise Disclosure Document) describes in detail the franchise system on offer, how many other franchise locations are open for business, and profit-and-loss statements that illustrate the overall financial health of the parent corporation. A separate franchise agreement will contain the rights and rules given to and enforced upon all franchisees within the system. If you don’t understand what you’re reading, hire an attorney who can explain it to you in words of one syllable.
Our Thoughts on Due Diligence
Consider the costs of a Lil’ Angels Franchise. Consider this: You receive all of your training and field training, all brand new professional photography equipment, a brand new laptop loaded with several pro software packages including Angels ROES, enrollment in our school that includes hotel and most of your daily meals, and unending attention and networking with management and all of our franchise owners.
Consider that you have no investment in a photo studio—You can be home-based saving you considerable dollars in overhead, studio space, and more.
Consider the primary market we work in. The childcare setting offers a large volume market with children all located in centers across your territory. We all know that as a child ages, parents tend to buy less photos of them. Being a Lil’ Angels franchise owner allows you to concentrate and access one of the most lucrative of all photos segments in the industry.
Consider the competition. Most of the competition in our main market areas is from employee-based companies who send different people each time to a center. This sets us apart as you the owner are the primary person calling on the center and you can provide special attention to them unlike an employee-based company.
Consider as others promote their training as being better and more concentrated. You will not find a better training program out there from any other franchise. We train you in what you need to know to be knowledgeable and successful in the business. At Lil’ Angels, your training and continuing education never ends.
Consider our great group of Franchise Owners. Talk to any of our existing franchise owners across the USA and see what they say about their Lil’ Angels Franchise experience. Look on our website at www.lilangelsfranchise.com and see all the testimonials of current franchise owners. When you are doing your due diligence on Lil’ Angels, you cannot pass up the opportunity to hear from current owners, and get a feel for the culture of our company.
Consider our culture. Lil’ Angels is a national franchise that acts like a family operation. We are here for the franchise owner, and we do what we can to provide a great value for the franchise owner. We work with our approved vendor, CPQ Professional Imaging out of Cleveland, TN. To bring our owners with the highest quality product, fastest nationwide shipping, and top-notched service in the industry. We are not “heavy-handed” in any way. We release lots of control and opportunity for growth to each franchise owner.
Consider our Franchise Disclosure Document (FDD) and Background Check Requirement. If you are truly serious about a Lil’ Angels Franchise, you will not find anyone more sincere and genuinely interested in you that all of us at Lil’ Angels. We will work with you to provide the FDD and once you have it, go over it extensively with you. Every person looking at this franchise should do much more than just read the FDD. They owe it to themselves to do the important step of calling the Lil’ Angels office and going over it for clarity and explanation. Often items in the FDD are misinterpreted, and prevent a prospect from going further. We as a company also need to do a background check on you to insure all of our prospects are fine examples to work with children in a childcare setting.
Do your homework. We know Lil’ Angels is a great company. We are financially healthy, and been in business actually since 1996. We have great franchise owners who live for what they do every day. They truly love what they do. If you do not believe us, ask them! Going through the process of deciding whether to buy a franchise is a very important task. But, one thing for sure, after you have done all the thinking and considering of what is really important and what is best for you, we think you will agree Lil’ Angels offers you the very best choice as you establish your new business.