Frequently Asked Questions of The Franchisor Coach

So, what is Outsourcing?
Outsourcing is the practice of using outside firms, commonly called service providers, to handle work normally performed within a company is a familiar concept to many entrepreneurs. Examples include payroll processing, billing, HR, IT, franchise sales and development as well as many other important functions.

What are the benefits of Outsourcing?
Control capital costs. Cost-cutting may not be the only reason to outsource, but it's certainly a major factor. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business.

Increase efficiency. Companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. An outside provider's cost structure and economy of scale can give your firm an important competitive advantage.

Reduce labor costs. Hiring and training staff for short-term or peripheral projects can be very expensive, and temporary employees don't always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.

Start new projects quickly. A good outsourcing firm has the resources to start a project right away. Handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support they need.

Focus on your core. Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly.

Reduce risk. Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions, and technologies all change very quickly. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise.

How does outsourcing apply to Franchising?
Many franchisors rely heavily on outsourcing. When start ups begin, they will commonly outsource the set up and development of their legal documents, filings and their legal compliance. They will outsource their financial documents to an accounting firm and maybe use a payroll processing company. They will also outsource both their consumer and franchise marketing efforts to a qualified ad agency or a franchise brokerage house.

Can Franchise Sales be Outsourced?
The most recent outsourcing trend emerging in franchising is the emergence of "franchise sales outsourcing". Franchise sales outsourcing can free resources and speed growth, while allowing the franchisor to refine systems and focus on making their franchisees more successful. And franchisee success, along with the good "buzz" it creates, is what ultimately builds strong franchise brands.

Every aspect of the franchise sales process is managed on behalf of the franchisor by The Franchisor Coach professional franchise sales staff. This outsourcing example can free a franchisor's time to focus on the success of their franchisees, while at the same time optimizing their ability to grow.

What is Franchise Sales Outsourcing (FSO)
An FSO will typically take responsibility for franchise marketing input, initial lead handling, database input and maintenance, materials distribution, trade show attendance, preliminary lead qualification, disclosure, Discovery Day, document management and preparation and both pre- and post-franchise sales closing support. When dealing with an FSO, the franchisor is responsible for marketing expenditures and, of course, has the final decision on accepting any candidate.

Can Franchisee Development be Outsourced?
Yes, this makes good sense for franchisors that are starting up, emerging or growing rapidly and need resources to follow up and touch and coach their franchisees during the critical start up phase of their business. As franchisees grow their needs change and so does the way in which they are supported. The Franchisor Coach has experience in supporting new to mature franchisees.

Are Outsourcing costs Tax Deductible?
To be clear check with your Accountant, Tax Advisor or Attorney but The IRS tax code says you can deduct an expense as long as it is "ordinary and necessary." According to the IRS, an ordinary expense is one that is "common and accepted in your trade or business." A necessary expense is one that is "helpful and appropriate for your trade or business."

What is the Fee Structure?
That depends. The first step is to access the needs and goals of the franchise and then to craft a plan that provides the solution. While compensation for services is important it is the solutions and results that take priority from which the compensation is derived. Contact us for a confidential discussion.


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