What I Learned When Finalizing My First FDD: Famous Toastery

Becoming an emerging franchisor is exciting for company founders, but it can also be a stressful time full of uncertainty. When it comes to finalizing a franchise disclosure document, there are lessons that a new franchisor will inevitably learn after the fact. There’s no blame on anyone in the process, it’s just an unknown experience and he or she simply doesn’t know what they should and shouldn’t be doing. To this point, 1851 Franchise connected with Robert Maynard, founder and CEO of Famous Toastery, to talk about what he learned after publishing his first FDD in 2013.

Don’t take the cheapest route

As a new franchisor, counting every penny is more of a necessity than it is for an experienced brand, but don’t look to take the cheapest option, because it can bite you later on. Maynard said his No. 1 recommendation for emerging franchisors would be to hire a reputable franchise attorney. In the decision process, he suggests talking to people the attorney you’re considering represents. He learned firsthand that the brand’s needs weren’t being met by his first choice and it was up to him to make a better one in order to set Famous Toastery up for success.

“If you get your FDD done cheaper, make sure it’s a good guy,” Maynard said. “You want to make sure that he knows what he’s doing. Don’t just save a couple of bucks, because you’ll pay for it in the end.”

Build marketing into the plan

“I learned people don’t like marketing their stores,” Maynard said. “Most people will give you an excuse, so you have to include in the FDD that you as a franchisor control the marketing. Either they need to staff their franchise with an in-house marketing person or hire somebody to take care of their marketing.”

Maynard warned that many franchisees—and people in general—simply don’t understand public relations, social media and marketing are separate entities. The best way to make sure they understand is to take over the efforts. To ensure they’ll promote their store, it’s imperative to build a national marketing fund into the FDD.

Be cautious about employee poaching

Maynard mentioned that coaching employees is important, and as your brand scales, employees sometimes jump from one store to another.

“You can’t tell your employees what to do, but sometimes, franchisees try to steal a successful trainer or GM from a corporate store,” Maynard said. “I’ve realized that if they want to steal them, we needed to incorporate a fee. After we encountered this issue after our first FDD was drafted, we now note that if a franchisee wants somebody, we either have to know in advance or they have to pay for it.”

Include a training fee

Maynard emphasized the importance of including a training fee when a franchisee signs the franchise agreement. Depending on the concept, the cost can vary dramatically, but it’s important to make sure new franchisees pay for because of the costs incurred by the franchisor in the opening process.

Provide approved vendors

This notion was one Maynard said he reflected on and later had to adjust after creating his first FDD.

“If someone says they’re going to have their buddy build the location, we have to say ‘yes’ or ‘no’ depending on their credentials,” Maynard said. “We need to know if they’ve never built a restaurant before; we need to approve who is building so everything will be done properly.”

Bulk up your Item 19

As a new franchisor, it may be tempting to leave the Item 19 bare. However, based on Maynard’s experience, he advises disclosing as much as you can. “The more, the better – it’s best to include unit volume, sales, gross margin, everything you can,” he said. ?