Why Did Unity Incorporators Choose Franchise Acquisition in 1996?

The first thing shareholders need to understand is what a franchise is. Unity's incorporators choose franchises in 1996 because franchise acquisition was and still is the simplest method of doing business by which Unity's shareholders are collectively granted the right, as Unity Inc., to engage in the business of offering, selling, or distributing goods or services under a marketing plan or system, described in part by the franchisor, which is substantially associated with the franchisor's trade name, logo and advertising. In addition, profits can be realized quickly, it simply saves us money and lowers our risk.

The only franchises in which Unity has interest are those that can produce maximum profits in the shortest period of time. The reason for this focus is due to the large number of owners that must share the profits. Even though owning a franchise will create pride in ownership, and this is great, but profit sharing by Unity's owners, the shareholders, is much better and far more rewarding. Therefore, the only franchises that meet Unity's profit needs are those that provide the entire business system. In a turnkey operation, Unity is granted the name, the products, the marketing techniques, internal controls, operations and procedures.

First and foremost, a franchise gives Unity's shareholders the advantage of business ownership with all the advantages of ownership, but with the buying power and identity of a chain. This saves us time and money. In addition, no previous experience is necessary. Every shareholder must remember, the overwhelming majority of African Americans have no business ownership experience and many do not have management experience. The franchisor assumes we know nothing about his business model. Therefore, the franchisor provides the training our employees and managers need; as well as, insights as to what sells best in a given area.

Second, a franchise gives Unity's shareholders a business model, in which somebody else has worked out all the problems. The franchisor has identified the market, the products and the advertising campaign that works best in that market. In addition, Unity, as a corporation, is acquiring an established and total concept. Unity will have access to the franchisor's trade name, logo, if any, the franchisor's registered trademark, patents that have already been filed and location design concepts. This also includes a proven operational system and market recognition. Even space requirements for maximum profits and inventory are included.

Third, since the failure rate of business ownership is extremely high, acquiring franchises significantly lowers Unity's business risks. Trial and error is virtually eliminated, therefore, franchise ownership will give all of us a much better start. Products and systems are already standardized; as well as, financial and accounting systems. Unity will have inventory control forms, hourly cash register readings, profit and loss statements, forms and formats and the advantage of someone from the franchisor reviewing both financial and accounting records on a monthly basis.

Fourth, owning and operating franchises will give Unity's shareholders collective buying power. This is a major advantage because business conglomerates are getting larger. This makes it virtually impossible for a small business to compete for market shares. As a franchise owner, Unity will have the collective buying power of an entire chain. This allows Unity to reduce the cost of goods and/or services.

Fifth, Unity's managers will get ongoing assistance, supervision and consulting. This means when the franchise opens, someone will be there to help our managers open the unit, hire the staff, train employees and help solve business development problems on an ongoing basis. Unity will also have access to local and national advertising campaigns; as well as, point of sale advertsing. This includes ceiling mobiles and posters. Packaging is uniform and in many cases, research and development is ongoing for new products, better ways to package and menu ideas that can help increase sales and Unity's profits.

Sixth, Unity will recieve operating manuals, assistance in sales and marketing, as well as assistance in planning and forecasting. With a franchise, Unity will be able to start business operations with less capital. There is no guesswork on our equipment needs, supplies and/or operating procedures. Finally, if Unity ever needed financing for a franchise acquisition, franchisors have very competitive interest rates.

Compared to the advantages, the disadvantages are rather small and are essentially the same disadvantages that will be experienced in any business. Therefore, the disadvantages of franchises ownership are not entirely unique to franchises. However, since every shareholder has the power of the vote, it is best that shareholders consider the disadvantages as well. Like any other business, owning a franchise is a long term commitment. Capital will be tied up until the franchise generates enough profits for shareholder distribution. Capital does not come out of a business easily, If the franchise is not doing well, selling it will be difficult; as well as, getting a good price for it.

First, when it comes to franchises, Unity will have to take orders from the franchisor. This is a natural by product of franchise ownership. Franchisors may have spent years researching and developing their products, systems and business model, therefore, franchisors will always believe they know what is best and they are going to resent any changes without approval. This is also to be expected.

Second, in terms of capital investment, Unity's franchise fee will be determined by the profitability of the franchise. Franchise fees can range from $20,000.00 to $50,000.00 or more. In addition to the front-end franchise fee that is a one time charge, there are also royalties. Unity may also be required to buy land or a building to house the franchise, or rent a building. If Unity rents, Unity will have to pay for leasehold improvements. This refers to all the work that must be done on rental space to meet the requirements of opening and operating the franchise. Leasehold improvements on rented space can vary from as little as $5,000.00, to as much as $30,000.00.

Unity is going to have to purchase equipment, this is not unique, yet it must be considered. Unity is going to have to buy signs, this is not unique. Unity is going need inventory. This is not unique. Without inventory, there is no business. Any business Unity owns will need lights, phone service and in today's business market, high speed internet access, whether its a franchise or not. Like any other business, a Unity owned franchise will need working capital to operate until cash flow is realized.

Third, what is unique to franchises are royalty fees based on gross business receipts. Royalty fees are for using the franchisor's name, concept and the continued services Unity's managers will receive. The royalty supports these costs; as well as, provide the franchisor with profits for the use of their system. There is usually a fee for advertising. This is a normal business expense that is not unique to franchises. Restrictive franchise agreements are to be expected and a long term relationship is also to be expected. {Click here for more information about franchise ownership.} Therefore, based on verifiable facts and Black America's historical reality, it is in the best financial interest of Black people living in South Carolina and anywhere else in America, to stop wasting what little financial resources we do have and to start saving our money now; so we can collectively fund, build and own as many corporations as possible, as fast as possible and acquire as many income producing assets as soon as possible. If not for ourselves, then for our children and their future.