Navigating the 2023 FDD: A Guide for Express Employment Professionals Franchise Owner Candidates
From initial investment to financial performance representations, here are some of the key takeaways that can be found within the staffing agency franchise’s 2023 FDD.
As a prospective franchise owner of Express Employment Professionals, one of the most crucial documents you'll encounter is the Franchise Disclosure Document (FDD). The FDD for 2023 is a comprehensive guide that provides essential insights into the brand, its operations and what you can expect as a franchise owner.
The FDD consists of 23 items, each covering a specific aspect of the franchise. Understanding each item can help you discern how well a particular franchise might fit your business goals and aspirations. Let's take a closer look at these items and highlight some key takeaways and insights you can glean from them.
Item 1: The Franchisor, Its Predecessors, and Affiliates - This section provides an overview of the franchisor's business and the industry within which it operates. It's essential for candidates to gauge the franchisor's track record and experience in the industry before signing on with the brand.
- Express Employment Professionals is a professional staffing solutions franchise that helps people thrive and businesses grow. The brand’s international network of franchises offers localized staffing solutions to the communities they serve across the U.S., Canada, South Africa, Australia and New Zealand, employing 579,000 people globally in 2022 and more than 10 million since its inception.
Item 2: Business Experience - This item details the business experience of the franchisor's key executives and management team. The expertise and stability of the franchise leadership will be crucial for the long-term success of franchise owners.
- William H. Stoller, Chief Executive Officer - Mr. Stoller became Our CEO on April 1, 2018. From May 2014 to April 1, 2018, Mr. Stoller served as Our President. From Our inception until April 1, 2018, Mr. Stoller served as Our Vice Chairman and Director. Mr. Stoller has also served as the President of The Stoller Group in Portland, Oregon since 1983.
- Robert A. Funk, President - Mr. Funk became Our President on April 1, 2018. From Our inception until April 1, 2018, Mr. Funk served as Our CEO and Director. Mr. Funk has also served as the President and Director of Oklahoma Temporary Service, Inc. in Oklahoma City, Oklahoma since 1983.
- Robert A. Funk, Jr., Senior Vice President of Corporate Development and Strategic Planning - Mr. Funk, Jr. was named Our Senior Vice President of Corporate Development and Strategic Planning in January 2021. He was appointed as a Director on Our Board in May 2014. From February 2019 to January 2021 he was Our Vice President of Corporate Development. From February of 2017 to February 2019, he was Our Vice President of Sales. Mr. Funk, Jr. is owner and CEO of Prodigal LLC, an Oklahoma City based sports and entertainment marketing company he founded in 2007.
- The section includes many more bios.
Item 3: Litigation - This section discloses any relevant litigation history of the franchisor or its management. Frequent litigation might be a red flag for potential issues.
Item 4: Bankruptcy - This item discloses any bankruptcy history of the franchisor or its management. A history of bankruptcy could indicate financial instability.
- No bankruptcy is required to be disclosed for Express Employment Professionals.
Item 5: Initial Fees - This section outlines the initial fees that a franchise owner must pay to the franchisor. It will help prospective franchise owners understand the upfront financial commitment and determine whether or not it fits within their budget.
- The initial franchise fee for Express is $40,000, paid in lump sum when franchise owners sign the agreement.
Item 6: Other Fees - This item details any other ongoing or recurring fees that the franchise owner must pay. Prospective franchise owners will need to ensure these fees align with their budget and the business model.
- Specific percentages depend heavily on the type of Express model, but some of the fees required include royalties, marketing funds, technology, training programs, etc.
Item 7: Initial Investment - This item outlines the various costs associated with starting an Express franchise, including fees, compliance with standards and policies, insurance, advertising and more. This section is perhaps the most crucial for prospective franchise owners to gather an in-depth understanding of the financial requirements.
- The total investment necessary to begin operation of an Express Employment Professionals Business Traditional Model ranges from $100,000 to $220,000 and Express Specialized Recruitment Group (“SRG”) Model ranges from $200,000 to $400,000.
Item 8: Restrictions on Sources of Products and Services - This section outlines any restrictions on where a franchise owner can source products or services for their business. Some franchises may require owners to purchase from specific suppliers, for example, which could affect their costs and therefore should be taken into consideration.
Item 9: Franchise Owner's Obligations - This item details the obligations of the franchise owner under the franchise agreement. Understanding this will ensure prospective franchise owners are prepared to meet all expectations before signing on the dotted line.
- Franchise owners at Express can be successful if they are ready to lead a team, willing to make sales calls, and have a strong passion for helping others find success. Whether that’s a small business owner who doesn’t know how to move forward with finding employees, or it's someone who just got laid off and doesn’t know where to turn, Express franchise owners are there to serve. Owners should also have strong leadership skills, clear communication, motivation, extroverted personalities and be comfortable making cold calls and building relationships.
Item 10: Financing - This section discloses any financing arrangements offered by the franchisor. For those in need of assistance with start-up costs, this can be a crucial factor in the decision-making process.
- Express Employment Professionals started offering the Bridge to Ownership (“BTO”) program in 2003. The BTO program is designed to offer qualified staffing industry employees an opportunity to become franchise owners either through the award of a new Territory or by purchasing an existing territory (resale).
- If franchise owners are permitted to participate in the BTO program, Express will finance up to $250,000 to cover the initial investment (excluding franchise fees) and operating capital of a new territory, as well as up to $450,000 for a resale territory.
Item 11: Franchisor's Assistance, Advertising, Computer Systems and Training - This item outlines the support and training provided by the franchisor. Candidates should be looking for robust training and support infrastructure, including assistance with marketing, staffing, operations and more.
- Express aims to give franchise owners everything they need to be successful. This includes the franchise support center at the Oklahoma City based International Headquarters, available for staff to contact for help on the job; monthly regional meetings with other owners to help discover best practices; annual sales and leadership conferences available for staff to attend to further their development; annual conferences for franchise owners; monthly in-person meetings; strategic development and problem-solving–and more.
Item 12: Territory - This section details the territory rights granted to the franchise owner. Candidates will need to ensure the regulations align with their target market location.
- Territories will be specified in the franchise agreement and will have a minimum of 30,000 jobs based on results from GbBIS, a division of Intelligent Direct Inc. Franchise owners must have an office in their territory.
Item 13: Trademarks - This item provides information on the franchisor's trademarks. This item is crucial to understand the brand and the assets that come along with it.
Item 14: Patents, Copyrights, and Proprietary Information - This section discloses any patents, copyrights or proprietary information owned by the franchisor. This can be another indicator of the unique value and competitive advantage of the franchise.
Item 15: Obligation to Participate in the Actual Operation of the Franchise Business - This item outlines the franchise owner's obligations regarding their participation in the day-to-day operation of the business. Candidates should make sure these requirements align with their desired goals and ideal work-life balance.
- Franchise owners (or the principal member, shareholder, or stockholder if a corporation, LLC, or partnership) must actively be involved in the day-to-day operation of the business.
Item 16: Restrictions on What the Franchise Owner May Sell - This section details any restrictions on the goods or services the franchise owner can offer. Franchise owners should ensure these restrictions align with their business goals.
Item 17: Renewal, Termination, Transfer, and Dispute Resolution - This item outlines the terms for renewal or termination of the franchise agreement, transfer of the franchise and dispute resolution procedures. It's vital to understand these terms upfront as a franchise agreement is a long-term commitment and one that should be taken very seriously.
- Term is five years. Franchise owners may apply for a renewal term by applying at least 6 months, but no more than 12 months, prior to the expiration of their initial term or then-current renewal term. Express does not charge a renewal fee.
Item 18: Public Figures - This section discloses any public figures used in promoting the franchise. Knowing this can help franchise owners understand the marketing strategies of the franchisor.
Item 19: Financial Performance Representations - This item provides a glimpse into the financial performance of existing Express franchises. This section is particularly important as it gives candidates a realistic expectation of the potential earnings and financial performance of the franchise.
- Franchise units that were opened in 2020, 2021, or 2022, generated average annual sales of $1,080,407.45 during their first 12 months of operation and $2,689,887.19 in their second 12 months of operation.
- Annual sales for franchise units opened in 2020, 2021, or 2021 averaged $3,694,128.89 in their first 24 months of operation.
- For the 545 units open and operating more than 24 months as of December 2022, average annual sales were $6,497,275.
- For the 127 units open and operating between 24 to 60 months as of December 2022, average annual sales were $4,201,538.
- For the 418 units open and operating more than 60 months as of December 2022, average annual sales were $7,194,784.
Item 20: Outlets and Franchise Owner Information - This item provides information on the number of franchised and company-owned outlets, as well as contact information for current franchise owners. This can give candidates valuable insight into the stability and growth potential of the franchise — if the brand has closed more locations than it has opened, that could be a cause for concern, for example.
- Express has gone from a total of 769 outlets in 2020 to 791 in 2022. The brand opened 17 franchise outlets in 2022 alone.
Item 21: Financial Statements - This section provides the franchisor's financial statements. Review these with a financial advisor to assess the financial health of the franchisor.
Item 22: Contracts - This item includes copies of all contracts the franchise owner will be required to sign. This section should be reviewed carefully with a franchise attorney.
Item 23: Receipt - This section includes a receipt acknowledging that the franchise owner received the FDD. Candidates typically have a minimum of 14 days to review the FDD before signing any agreements.
Overall, the FDD is a treasure trove of information, and we've only scratched the surface. As a prospective franchise owner, it's important to read the document in its entirety, understand the obligations and expectations and seek legal advice if needed. Remember, becoming a franchise owner is a significant decision, and the more informed you are, the better equipped you'll be to make the right choice.
For more information on franchising with Express Employment Professionals, please visit: https://1851franchise.com/expressemployment/info