AORS Franchise + Restaurant Brand Case Study lr

FRANCHISE BRAND DEVELOPMENT



Alpha Omega Restaurant Solutions, the first and last word for all your brand needs.

We are a team of experienced entrepreneurs working together to take your company to higher
levels of performance. AORS specializes in the restaurant hospitality industry. While we service
non-restaurant clients, we predominantly specialize in the restaurant niche. Our proven expertise
can be yours in order to grow your brand. The pathway to excellence is rarely due to one or
two factors but, rather everything working together to create a cohesive experience for your
guest. We can assist you improve step by step, from concept analysis, recommendations and
implementations to a developing franchise program. We have the knowledge and proven track
record to assist any and all brands from small quick service to large full service concepts.

Please don’t hesitate to reach out and schedule your free consultation.
Contact: Ozzie Garcia at 866-339-AORS (2677), Cell: 909-730-3242 or

[email protected]

SERVICES OFFERED:
Brand Assessment, Operations Enhancement, Concept Branding,

Marketing and Social Management, Printing and Collateral,
Accounting and Implementation, Franchise Sales and Execution,

Real Estate Consulting

WHAT IS A FRANCHISE?

Federal and state franchise laws seek to define the term “franchise” by reflecting franchising’s underlying economic realities. However, the FTC and
the franchise-regulating states have agreed upon no single, uniform definition, and thus the scope of coverage of each statute must be carefully
analyzed.

The Federal Trade Commission, in a promulgation known as the “FTC Rule”, which was recently amended, defines a franchise as a “continuing
commercial relationship” which contains all of the following three elements, and if any of these three elements is missing, the business relationship is
not considered a “franchise” under the FTC Rule.

1. Trademark: The franchisee is allowed to operate a business, or offer, sell or distribute goods, commodities or services, which are
identified by a trademark, service mark, trade name, advertising or other commercial symbol.

2. Significant control or assistance: The franchisor exerts, or has authority to exert, significant control over, or provides

significant assistance to, the franchisee’s method of operation.

3. Fee or Payment: The franchisee is required to make a “required payment” to the franchisor or its affiliates of $500 or more (other

than for bona fide wholesale prices for inventory) at any time before or within six months after commencing operation of the business.

Your future
in franchising

has just
begun...

•••• WHY DO BRANDS FRANCHISE?
• ••
•••
•••

MONEY PEOPLE TIME

The primary barrier to The second barrier to Finally, opening another
expansion that today’s expansion is nding location takes time. Hunt for
entrepreneur faces is and retaining good
unit managers. All too sites. Negotiate leases.
lack of capital. One Arrange for design and
huge advantage with often, a business build-out. Secure nancing.
franchising is that you owner spends months Hire and train sta . Purchase
can use OPM (Other equipment and inventory.
People’s Money), to looking for and The end result is that the
fund brand expansion. training a new number of units you can
manager only to see open in any given period of
that manager leave or, time is limited by the amount
worse yet, get hired of time it takes to do it
away by a competitor. properly. For companies with
too little time (or too little
sta ), franchising is often the

fastest way to grow.

IS YOUR BRAND FRANCHISABLE?

Franchise ready brands must have the following characteristics:

It needs Does your company have experienced management? Is the concept proven?
to be Have you achieved good local press or public acclaim in the market place?

CREDIBLE

It needs Is your business adequately differentiated from its competitors?
to be Is it marketable as a business opportunity?
Does it have a sustainable competitive advantage?
DESIRABLE

It needs Are the systems in place? Are operating procedures documented?
to be Could someone learn to operate your business in three months or less?

TEACHABLE

It needs It needs to provide an adequate return. If a business can’t generate a 10 percent
to be or more return on investment after deducting a royalty (typically between
5 and 7 percent), it’s going to have difficulty keeping franchisees happy.
PROFITABLE

If your business meets these criteria, then it may be a good candidate for franchising

FRANCHISE SYSTEM ADVANTAGES

• The franchisor provides detailed training. • The franchisee can call on the specialized and highly-skilled
knowledge and experience of the franchisor’s head office
• The franchisee has the incentive of owning their own business with organization.
the additional benefit of continued assistance from the franchisor.
• The support and benefits provided by a franchise system greatly
• The franchisee benefits from operating under the name and reputation reduce a franchisee’s business risks.
(brand image) of the franchisor, which is already well established in
the mind and eye of the public. • The franchisee has the services of the field operational staff of the
franchisor who are there to assist with any problems which may arise
• The franchisee will usually need less capital than they would if they from time to time in the course of business.
were setting up a business independently because the franchisor,
through their prototype operations and buying power, will have • The franchisee has access to use of the franchisor’s patents,
eliminated unnecessary expense. trademarks, copyrights, trade secrets, and any secret processes or
formula.
• The franchisor provides advice and/or help in identifying suitable
locations or territories for the franchisee. • The franchisee has the benefit of the franchisor’s continuous research
and development programs, which are designed to improve the
• The franchisor helps the franchisee obtain occupation rights to business and keep it up-to-date and competitive.
the location, comply with planning (zoning) laws, prepare plans
for layouts, equipment and refurbishment, and provides general • The franchisor provides a knowledge base developed from their own
assistance in calculating the correct inventory and staffing for the experience, as well as that of all the Franchisees in the system, which
opening launch of the business. would otherwise be impossible for a non-franchised business to
access.
• The franchisor trains the franchisee (and very often, the franchisee’s
staff, as well) in all areas of the business including; food preparation, • Defined territories of operation within the franchise can help protect
accounting, business controls, marketing, promotion and guest the franchisee from competition.
service.
• A franchisee can always speak to their franchisor or a fellow
• The franchisee receives the benefit on a regional or national scale franchisee to discuss their business challenges or problems,
(if appropriate) of the franchisor’s advertising and promotional something a non-franchised business can almost never do.
activities at a lower cost than if they were to attempt such marketing
themselves.

• The franchisee taps into the bulk purchasing power and negotiating
capacity made available by the franchisor by reason of the size of the
franchised network.

HOW DO I START A LEGAL FRANCHISE PROGRAM?

TOOL KIT 3) Franchise Agreement

FOR START-UP The franchise agreement is the most important document as you begin franchising. The
FRANCHISORS franchise agreement defines the relationship and outlines the obligations and duties of the
parties. If not given careful consideration in the drafting of the franchise agreement, issues such
In launching a new franchise concept, the franchisor faces several critical issues that can make as the amount of discretion and anti-trust concerns can expose a franchisor to unnecessary
the venture either a success or a failure. AORS has found that companies who begin franchising liability. In addition, the agreement must maintain flexibility to address issues such as territory
well informed and prepared increase the likelihood of success and limit costly errors. This toolkit rights, e-commerce and national customer accounts over the term of the agreement (often
outlines 6 common issues that start-up Franchisors face when launching their franchise system. 5 to 10 years). We typically use “plain English” agreements to allow Franchisees a better
We briefly describe AORS’s approach and experience in addressing them. We encourage each understanding of an otherwise intimidating document.
client to use this tool kit and our experience to successfully expand its Franchise system.
4) Registration Requirements
1) Trademark Protection
13 states require that franchisors file the FDD with the state before offering a franchise in that
The first step in establishing a sound franchise program is protecting your brand identity. state or to a resident of that state, and the majority of those states will review the document
We recommend that you conduct comprehensive searches for all important marks to ensure closely and provide comments to the franchisor. In addition, while a trademark application
that the mark is available and that common law rights of third parties are limited. You should is pending, you may have to file in several states under certain business opportunities laws
immediately file a federal trademark application for each principal trademark or service mark if that require registration if the franchisor does not have a federally registered trademark. We
you have not done so. You may want to register not just your primary trademark, but also key discuss development objectives for your company and help determine a sales strategy. With
secondary trademarks, service marks, logos and symbols. The trademark registration process regular contact with franchise examiners, we can anticipate issues that may otherwise slow the
will take approximately 15-18 months to complete. The description of services is also important registration process.
in maximizing protection of your brand identity. We advise clients in adequately describing the
goods and services for each mark to maximize the protection for that mark. 5) Sales Compliance

2) Franchise Disclosure Document Franchise sales procedures can be complex, especially for a company new to the regulatory
landscape. To ensure compliance with state and federal franchise law, a franchisor should
The Federal Trade Commission and fifteen states require a franchisor to prepare and disclose to establish a sales compliance program for its personnel involved in the sales process. As a
prospective franchisees in the franchise sales process a Franchise Disclosure Document (FDD). As franchise system grows, the franchisor should hire a compliance officer to oversee the program
you are aware, the FDD must contain specific information about the franchisor and the franchise and provide comprehensive training to sales people.
system, including each party’s obligations, the fees payable to the franchisor, the costs to operate
a franchise, and the financial statements of the franchisor. In addition, the FDD contains a sample 6) Confidential Operations/Training Manuals
franchise agreement and any other agreements that the franchisee must sign. The FDD may or may
not contain an earnings claim. If you have elected not to use an earnings claim, you cannot make The operations manual is integral to the success of your franchise system. It outlines the policies
any representations to a prospective franchisee about potential earnings. We assist franchisors and procedures that maintain system standards. The operations manual is the bible for the
in developing or revising a FDD that is appropriate for their business. We discuss various options franchisee to run its business and should include information regarding financial management,
available to you, including earnings claims, fees charged to franchisees and optional programs, so that marketing and reporting requirements. Although the operations manual must contain sufficient
the FDD does not unnecessarily inhibit the franchise sales process. detail for the franchisee to comply with system standards, it is not an employee manual. Many
franchisors are not careful enough while drafting their operations manual and risk exposing
themselves to liability through their franchisees by exercising too much control over parts of the
franchisee’s business that are not related to system standards, such as employment.

WHAT DO I NEED FOR A CONTROLLED, LEGAL FRANCHISE PROGRAM?

BUILDING 4) Excellent franchisees
BLOCKS OF A
SUCCESSFUL Franchises should not be sold. They should be awarded. You must
FRANCHISE have an efficient system for recruiting and awarding franchises to
SYSTEM people who will add value to your brand

1) Customer Focus 5) Effective manuals

Successful franchise system makes the customer the number Manuals should clearly and concisely document your proven
one priority. You must learn to talk to the customer and build your operating system. They enhance the value of your brand among
business around their expectations, wants, needs and desires. You franchisees. Teach the value of franchising, marketing, customer
must measure how well you are doing in serving and satisfying the service and compliance. Act as valuable marketing tools in the
customer. Following these priorities will result in high margins and recruitment of new franchisee candidates. Manuals are legal
profits. documents and you should think of them as operational bibles.

6) Excellent franchisor/franchisee relations

You must constantly promote a franchise-wide strategic partners
relationship. Everyone should work together toward the common
goals of disproportionate market share, enhanced brand image
and mutual profit. The key here is communication and franchisee
participation.

2) Superior leadership 7) A focused field staff

You and your management team must provide the kind of leadership You must have a professional field staff who will work in harmony with
that earns the respect and trust of franchisees. Your leadership should franchisees to help them deliver excellent customer service, build
inspire an appreciation for the operating system, help internalize the market share and work with fellow franchisees to dominate local and
desire to follow the system and result in opening additional units. regional markets.

3) A strong business and financial plan 8) Effective training programs

To succeed in franchising, both you and your franchisees must Awarding franchises to top candidates is only the beginning. You
carefully plan your growth and control your business. In addition, you must have a carefully planned training program to assimilate them
must have a plan for systematically monitoring franchise operating as smoothly into your organization. You must also provide ongoing
information and analyzing return on investment from the development, programs that will further develop existing franchisees and reinforce
marketing, operations and training departments. the purpose and practice of your systems and strategies.

THREE BIGGEST BARRIERS TO A LEGAL FRANCHISE PROGRAM

1. KNOWLEDGE FRANCHISE FINANCIAL INVESTMENT
$100,000 BREAKDOWN EXAMPLE
There are many laws at a state and federal levels that
your business will need to conform to. These laws Legal $24,000
change and evolve from year to year. Many states have
different registration laws. Most people in the restaurant Franchise LLC, Register Trademark, Filings, FDD,
industry have no idea what these laws and regulations
are that govern franchising in the United States, thus Preliminary Franchise Agreement, Franchise Agreement,
they are afraid to venture into the franchise waters.
Many set up a simple “licensing agreement” with a with ADA, State Addendums
a business partner. This, according to the FTC, is an
illegal franchise and can result in severe financial Accounting $50,000
penalties, up to and including jail time. Franchise funding $2,000-$3,000
Franchise accounting audit
2. TIME Once a year LLC fee $800

Administering, managing and growing a legal Manuals $15,000-$20,000
franchise program is time consuming. Operations/Training manuals

3. MONEY Training Program $7,000-$10,000

In order to set up a legal franchise program you need 2-3 month training of new franchise owners & staff
to have roughly $100,000.
Branding/Marketing $5,000-$9,000

Franchise brochures, website, marketing collateral

Brand Package Franchise Program

Polish and perfect File all legal documents
brand,create brand and set up franchise
standardsand printed agreements
marketing materials
Franchise Sales
Ops Assesment
Seek out and qualify
Complete review and potential franchiees.
action plan of operations Sign franchise agreements
with improvements and
document procedures

Brand Assesment AORS Real Estate

Complete review of Find best locations,
all current marketing negotiate leases and
materials help build out space

On-Site Review Hire and Train

Full day in-house Create all operations,
review with franchise help hire the right staff
and operations and train for the future
consultant

Anaylsis Expand

Preliminary Once open, build
consultation franchiseby brand
of business awareness and
marketing efforts

FRANCHISE



RESTAURANT BRAND DEVELOPMENT

CASE STUDIES

Goal: Develop a Franchise Model

The owners of Krave Kobe are franchisees of several other restaurants and wanted to create their own concept.
Brand strategy of the concept and name assistance were done as well as design of all logos, menus, signage, wall art, website, etc.

Color selection and materials were also provided alongside Cafe Concepts who did the interior to create a cohesive palette.
Upon finalization of branded elements operations manuals, training materials and franchise sales materials were designed.
Ongoing marketing materials, social media and most recently trade show graphics for the Franchise Expo were produced.

Krave Kobe Burger Brand Package Development
Newport Beach & Glendora, CA

Signage



Wearables

Wall Art

Table Tent & Promo Posters

Franchise Brochure (partial)



Goal: Sell the “Fresh Experience”

Legoland creates a majority of their food fresh daily using all natural ingredients unlike other theme parks.
The problem is nobody knew their story so a full parkwide “Start Fresh” campaign was produced.

Working with the Food & Beverage department all signage from free standing restaurants to kiosks were re-branded.
A dining guide was also created to showcase the restaurants and highlight the features of what they offer.

Legoland Food & Beverage Dining Campaign
Carlsbad, CA

Pizza Mania Window Signage

Uniforms

Uniforms

Uniforms

Uniforms



Uniforms

Goal: Serve as The In-House Marketing Team

JT Schmid’s brand was created almost 20 years ago and is still going strong.
An ongoing monthly retainer is in place and all internal marketing and graphic needs are created as needed.

Items include: Menus, email blasts, social media graphics, website and all marketing materials.

JT Schmid’s Brand Package Development
Anaheim & Tustin, CA

Signage

Van Wrap

Email Blast

In-House Holiday Promotions

Holiday Promotions

Goal: Brand Strategy & Design Development

Completing the branding and style guide gave us the opportunity to jump quickly on a free standing location
when it was presented. All signage, packaging, menus and the complete opening was done within a month.

They are now franchising and have multiple locations.

Bruxie Brand Package Development
Orange, CA

Brand Strategy Plan

Direct Mail Campaign

Menu Boards

Signage

Promo Posters

Goal: Re-brand to not look like a Weight Loss Center

They had done all branding but hadn’t considered their message and needed to re-brand to show they were a restaurant.
A new logo was created as well as signage, website, wearables, menus and marketing collateral.
Franchise brochures and trade show graphics will be developed upon final FDD approvals.

Portion Control Re-Brand
Las Vegas, NV

Promotional Collateral

MDioreocdt BMoaailrd

WBuesarCaabrldes & Menu

WSiegbnsaigte

Take Out Menu

Goal: Create Franchise Marketing Materials

‘Bout Time owns 12 locations in 2 states and is franchising into new territories.
In conjunction with their sales team we used with their existing brand to develop sales brochures,

trade show booth, marketing materials and assisted with brand materials for website updates.

‘Bout Time Pub & Grub Franchise Sales Package
Utah

20 Page Franchise Brochure

Nations Restaurant News DPS ad