{"id":29897,"date":"2019-03-18T19:00:55","date_gmt":"2019-03-18T19:00:55","guid":{"rendered":"https:\/\/www.thefranchiseking.com\/?p=29897"},"modified":"2022-04-28T15:00:00","modified_gmt":"2022-04-28T19:00:00","slug":"getting-in-the-weeds","status":"publish","type":"post","link":"https:\/\/www.thefranchiseking.com\/getting-in-the-weeds","title":{"rendered":"Are You Getting in The Weeds As You Look For a Franchise To Buy?"},"content":{"rendered":"

\"weeds\"<\/a><\/p>\n

As you look for a franchise to buy<\/a>, it’s easy to get “in the weeds”<\/em>.* I’ll show you what I mean.<\/p>\n

*There are two definitions of the term “in the weeds<\/em>, and they’re very different.<\/p>\n

1. This is a term used by food-service personnel.<\/p>\n

For example, when Sue<\/a> and I were a popular serving duo at one of Cleveland’s finest (and hippest<\/em>) restaurants years ago, and our area of the dining room was sat all at once-and we felt overwhelmed, we’d be “in the weeds<\/em>.”<\/p>\n

2. This definition refers to people…especially those who tend to be a skosh analytical, get stuck in the details.
\n <\/p>\n

Really Stuck!<\/h2>\n

I’m talking so stuck they frequently can’t escape…so they can’t make a decision. Or they delay and delay and delay, because they “still need more data<\/em>.” And sometimes the data confuses them-which is never good.<\/p>\n

For example, let’s say you’re interested in learning more about pizza franchises.<\/p>\n

So, you go to a popular<\/a> franchise opportunity portal and start looking for pizza franchises for sale<\/a>.<\/p>\n

You find a few that look interesting, and you request information from them.<\/p>\n

3 weeks later, after receiving more information (by talking with the franchise reps<\/em>), you eliminate all but one. It turns out that Pizza Hut<\/strong><\/a> shows the most promise. (In your opinion<\/em>) This is when things get interesting.<\/p>\n

 <\/p>\n

The Pizza Hut Franchise Disclosure Document (FDD)<\/h2>\n

Now that you’re getting fairly serious about Pizza Hut, your franchise development representative does too, and sends you the FDD.<\/p>\n

FYI:<\/strong> Once you receive the FDD (and start looking it over<\/em>) things change. The “fun<\/em>” part of finding that “perfect<\/em>” franchise to own all of a sudden becomes a little less fun. But not in a bad way. Things just become more businesslike.<\/p>\n

Suggested Reading:<\/strong> Don’t Freak Out When You Get The FDD<\/a><\/p>\n

One more thing: the Pizza Hut FDD contains an earnings claim.* That means the company discloses financial information about their franchisees. In other words, you’ll be able to see some figures.<\/p>\n

*The FTC\u2019s Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and\/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.<\/em><\/p>\n

 <\/p>\n

\"reading<\/a>
\n(Looking at the figures from the FDD<\/em>)
\n <\/p>\n

The Figures<\/h2>\n

Here’s part of what you’ll see from the Pizza Hut FDD* concerning their earnings claims.<\/p>\n

*The Pizza Hut FDD is available to the public-for free, on the Wisconsin Department of Financial Institutions website<\/a><\/em>.<\/p>\n

Set forth below are historical data for certain domestic traditional Pizza Hut outlets owned and operated by PHLLC or its affiliates (\u201cCompany-Owned System Restaurants\u201d) and certain<\/em> domestic traditional Pizza Hut outlets owned and operated by franchisees (\u201cFranchised System<\/a> Restaurants\u201d).<\/em><\/p>\n

MATURE FRANCHISED SYSTEM RESTAURANTS<\/strong><\/p>\n

The financial performance representations below provide certain information regarding the Franchised System Restaurants – of the Dine-In\/Red Roof, RBD and Delco Delivery\/Carryout Restaurant Concept type – – that were open and operating for at least one year as of December 31, 2017 (\u201cMature Franchised System Restaurants\u201d). Specifically excluded from the<\/em> definition of Mature Franchised System Restaurants are those DBR\/FCD System Restaurants; Carryout-only System Restaurants; seasonal System Restaurants; Express restaurants (for<\/em> PHLLC FDD 201864 which franchises are offered under a separate disclosure document); any type of System Restaurant that reported sales for 24 or fewer days in each financial period; or, any type of System Restaurant other than traditional Dine-In\/Red Roof, RBD and Delco Delivery\/Carry-out System Restaurants. As of December 31, 2017, although there were a total of 6,021 <\/em>Franchised System Restaurants, there were 4,285 Mature Franchised System Restaurants -See Note 11.<\/em><\/p>\n

Mature Franchised System Restaurants of the Dine-In\/Red Roof and RBD Restaurant Concept type<\/em><\/strong><\/p>\n

Number of System Restaurants in Sample Set = 2,056<\/em><\/p>\n

Number of System Restaurants Attaining or Exceeding Average Gross Sales Percentage of System Restaurants- 912<\/em><\/p>\n

Percentage of System Restaurants Attaining or Exceeding Average Gross Sales Percentage of System Restaurants – 44.4%<\/em><\/p>\n

AVERAGE GROSS SALES<\/em>
\n(note 1) $898,037<\/em><\/p>\n

Lowest\/Highest Numbers in Range $225,766\/$2,537,179<\/em><\/p>\n

Median $861,470<\/em><\/p>\n

Maybe you should read that entire section again.<\/p>\n

And again.<\/em><\/p>\n

Are you getting in the weeds yet?<\/h3>\n

Give it time.<\/p>\n

\"getting<\/a><\/p>\n

 <\/p>\n

More Important Stuff As You Look For a Franchise To Buy<\/h2>\n

More From the Pizza Hut FDD:<\/p>\n

This Item 19 financial performance representation has been prepared based upon calculations<\/a> which do not take into account any adjustment required pursuant to the Financial Accounting Standards Board\u2019s accounting standards regarding revenue recognition related to loyalty program transactions. Under these standards, you may need to defer the recognition of a small percentage of your Gross Sales.<\/em><\/p>\n

This financial performance representation represents the averages for certain subsets of all System Restaurants in the continental United States and Alaska during the calendar year 2017.<\/em><\/p>\n

A new franchisee\u2019s results are likely to be different from the results stated in this financial performance representation. As noted in the charts above, the Mature Company-Owned System Restaurants do not have certain expenses that your franchised System Restaurant will have, such as payment of Monthly Service Fees. In addition, Company-Owned System Restaurants, as well as certain of the Mature Franchised System Restaurants (owned by franchisees that operate a large number of System Restaurants) included in the tables above, benefit from economies of scale that are not available to System Restaurants that are owned singly or in small groups by a franchisee.<\/em>
\n <\/p>\n

**** Intermission ****<\/h2>\n

If you want to take a breather here, you can. Give your eyes (and brain<\/em>) a rest.<\/p>\n

Watch a video. Hit the restroom. Take the dog out for 5-10 minutes.<\/p>\n

 <\/p>\n