Are FDDs Public or not?

The answer is kinda.

If you are like many people, you heard Franchise Disclosure Documents are ‘out there’, and ‘available’, but when you search all you find is sites offering to sell you the documents. There are a couple of reasons for that. First, FDD’s are not public records; they are not like court records, birth, death, and statistical records, or other type of documents you actually have a right to access. For some franchisors, in certain circumstances, you can find their FDD’s online, but if you can’t, no one ‘has’ to share it with you (assuming you are not actively engaged in their discovery process). Irrespective of if you are a potential franchisor wanting to see what this whole “FDD” thing is about, a young franchisor trying to find competitive FDDs to see if you can adopt some best practices, or even a prospective franchisees wanting to find old FDDs of a franchisor that you are considering as an investment, knowing these parameters will quickly let you know if the documents are something you can find, and I’ll even give you the direct links to find them at the end.

1. The franchisor must be registered in Wisconsin, California or Minnesota. As previously mentioned, FDDs are not public records and some states require franchisors to register their document with state authorities before they can offer or sell franchises in that state. Three such state authorities then make those documents available online: Wisconsin, California and Minnesota.
2. You must know the legal name of the franchisor; not just their DBA name (Doing Business As). This can be tricky as the legal name may be different from the name used for their brand or business. However, in Wisconsin, the state allows searches for FDDs by both legal and DBA names, so if the franchisor you are looking for is offering franchises in Americas Dairyland, you may still be good to go.
3. The franchisor cannot fall under the seasoned franchisor exemption. Different states provide different definitions of this, however California is the only state that provides both online FDDs and has this exemption. If the franchisor has a net worth in excess of $5mil, you won’t find their FDD on California’s website.DD on California’s website.

There are other places to find an FDD, but your first stop should be these three state sites:

A. California Department of Financial Protection and Innovation

B. Wisconsin Department of Financial Institutions

C. Minnesota Commerce Actions and Regulatory Documents Search

If you see something in an FDD that doesn’t make sense, want to learn best practices, or are looking to franchise your business or improve or even outsource your franchise sales process, don’t hesitate to reach out!

Yes, The ECE Market is the Place to Be in 2021

Businesses centered around childcare, preschool, tutoring, etc. are often spoken of in “soft” terms. Many individuals that enter into the children’s services space, and specifically the Early Childhood Education (ECE) space, have a desire to “give back”, “leave a legacy”, or “impact children’s lives. This is more than admirable; a desire to contribute to the greater good is a necessity to succeed in this industry. I want to begin, however, by bringing some hard facts to the discussion.

For the last 6 years, I have represented a franchisor in the ECE industry. When I first met the founders of Building Kidz Preschool in 2015, I was intrigued by their model, purported numbers, and passion, but had never considered the industry in-depth. As a metrics-driven individual, I started looking for concrete data on the industry. If you have ever researched the preschool industry, you know what I found, troves of information from extremely reliable sources.

I started, as they say, at the top; with a report from the Executive Office of the President of the United States (December 2014). The report is a detailed analysis of the true ROI, as a society, of early childhood development through education. If you are wondering if the impact of quality pre-kindergarten education can be quantified, the answer is a resounding “yes”. The report determined that for every dollar invested in educating young children, a lifetime societal return of $8.60 could be anticipated. Half of this return is from increased earnings of the child throughout their lifetime, and the other half is divided between increased parental earnings, lower engagement with the criminal justice system, and reduced expenditures on remedial education by the public school system. Outside of the straight dollar return, the report stated that pre-kindergarten age education leads to a “change in cognitive functioning and brain development” and could account for some characteristics, such as IQ, that are often considered to be hereditary.

Moving away from the President’s report and into actual industry numbers, I found the same availability of data. In 2015, the ECE in the U.S. was a $70B per year industry and had grown 13.5% CAGR 2011-2014. As I helped to launch Building Kidz into the franchise world and grow them to their current 30+ locations, the markers for ECE kept improving. In April of 2018, a report was released by Zion Market Research that pegged the 2017 U.S. market at $13.5B, and in February of 2020, a report by Facts and Figures had 2019 global Early Childhood Education Market at $245B and projected to grow over 10% CAGR until at least 2026.

Of course, that was THEN. Before the change that we are still watching remake our social and business structure.

In the last issue of Franchise Connect Magazine, I wrote about the appeal of home services businesses; lack of client contact, generally minimal investment, people investing more in their homes rather than vacations or going out to eat, among others. While completely true, home-based businesses and home services are not for everyone. Many people have a passion for helping their community, a passion for education, and a strong desire to build a physical presence that contributes. Recently I was speaking with Seth Lederman, one of the country’s leading franchise acquisition and development specialists, and he explained it like this:

Out of the 200 or so people that I have helped find a franchise, about half of them are really just looking for the right business for their needs, budget, and, especially now, the current economy. Many individuals, however, are driven to entrepreneurship by a passion. While still looking at unit-level economics and long-term trends, they won’t consider a business that doesn’t engage them in whatever brings them personal satisfaction. As someone who left the medical field in order to pursue a passion for coaching business owners, I can relate”.

The good news is that, while nothing is yet certain, the preschool and daycare industries seem to be surging back rapidly. The need for preschools as part of the economic recovery is both obvious and data-driven. We learned early on in the 2020 pandemic that, more than just an essential business, childcare is essential to business. For businesses that need their workforce on-site, the need for childcare is unquestionable. After the 30th or 50th zoom call interruption, however, the need for work-at-home parents to have childcare available is quickly becoming apparent as well. For the children’s sake, we’ve already explored the impact early childhood education has on their entire lives, but we must remember too that children that were not in preschool pre-pandemic often had playdates and other socialization activities. These activities are now often looked at as unnecessary group exposure, leaving only preschools and daycare centers as an option for early socialization skills to be developed.

The Chief Marketing Officer and Partner of Building Kidz Preschool Franchise parlayed his high-tech career into creating a high-touch franchise brand.

I recently had the privilege of attending the first annual Building Kidz Preschool franchise convention in Foster City, CA. I sat down with Building Kidz Partner and CMO (and Foster City Councilman) Sanjay Gehani. Building Kidz is a long-running client of Franchise Beacon’s in the preschool franchise space. We helped take their preschool business and turn it into franchise, and I count Sanjay as a personal friend as well. I was meeting with him to do an interview for Franchising.com’s Chief Marketing Officer Q&A section.
The piece can be seen here, and it obviously struck a chord with Franchise Update Media’s audience, as it has about a 10% share rate (compared to less than 1% average), so I thought I would share it on our blog as well.
Read below for my recounting of the interview and key answers from Sanjay, or check out the interview on franchising.com.

Sanjay is obviously popular with his franchisees; everyone who walked by received a personal greeting, and most were eager to take a minute to catch up. In between handshakes, we discussed his background in high-tech, how it prepared him for franchising, and his learnings from his first four years in franchising.

To begin, I asked Sanjay to share a bit of his pre-franchising background.

I am an Electrical Engineer by education, and my time in corporate America was at Xilinx, a semiconductor company that leads the industry in technology development for reprogrammable devices. I started in customer support, but management saw something in me, and I was quickly fast-tracked into cross-functional roles. Early on, I relocated from the Bay Area to Tokyo. There, I helped build relationships and drive technical training and implementation for top customers like Fujitsu, NEC, and Sony. After a year in Tokyo, I came back to the Bay to take on roles in regional sales, business development, and global pricing. My 15-year career with Xilinx was rewarding with my last position overseeing a portfolio of international partners influencing over $700M in lifetime revenue.

So how does one go from overseeing global strategic initiatives to leading an emerging preschool Franchise?

Like many people in franchising, I fell into it. I was looking for a preschool for my son and Building Kidz was a local preschool chain owned by Vineeta Bhandari, a long-time family friend who has known me since I was 6. I sat down with her to learn more about her business goals. What she told me touched me, and I knew right then that I had to get involved.

What Vineeta shared was her backstory; how in 2002 her daughter’s preschool was no longer willing to provide services because they didn’t know how to deal with an insulin-dependent child. Vineeta left her career as a financial consultant to Bay-Area companies like Sun Microsystems to start a preschool and be close to her daughter. Over the next 10 years she developed a passion for both the business and education side of preschools. When Sanjay went into Building Kidz in 2013, she had developed a proprietary curriculum and was deploying it at 5 schools in the area. Over the previous 10 years she had developed a dream of impacting the lives of 1 million children in her lifetime through her Early Childhood Education work.

Vineeta gave me, and my second business partner, Sangeet Karamchandani, an opportunity to invest in preschools and collaborate on the growth strategy. Over the next 14 months, we doubled our footprint, but it became clear that we would not, on our own, touch the lives of 1 million children. That realization was the genesis of both the Building Kidz preschool franchise and Building Futures, our non-profit organization.

Building Kidz dedicates 25% of its profits to help underprivileged children in impoverished areas, both at home and abroad, by providing access to sanitation, education, and nutrition. They also help fund research into diabetes and other childhood diseases.
I asked Sanjay how he felt that his time at Xilinx had prepared him to become a franchisor.

When you think about it, silicon is at the base of every process that drives our world; it allows your bank to track your balances in real time, allows you to sit there and type notes as we talk, silicon is even what allowed you to call an Uber from the airport. The world’s largest manufacturer of Silicon reprogrammable chips is naturally steeped in processes and procedures. Franchising is such a process-driven world, and my background allows me to think in processes, workflows, and procedures for implementation. Beyond that, developing global alliances on behalf of Xilinx allowed me to hone my ability to understand people from various walks of life, cultural backgrounds, and ideals. Quickly identifying if disparate groups of people were ideal “fits” for us, from a strategic standpoint, prepared me to do the same thing in the franchise space.

Like most of us in franchising, certain parts of the space caught him by surprise. What caught him by surprise itself is also surprising, however.

I was on the bleeding edge of tech, so of course I realized the world changes fast. Knowing that the world changes fast and even seeing the changes in technology coming way before others is not at all the same as living in the middle of those changes every day. When I left, our partners at Xilinx were developing photo-stitching technology; a backbone component of self-parking applications and, eventually, autonomous driving. Now I am in the trenches and experiencing how, as an example, mass adoption of cloud computing allows young franchisors to have access to data that, even 5 years ago, only the big boys had. Knowing about change, even helping to implement change, is not the same as experiencing it day-to-day.

Now four years in Building Kidz has 26 schools open in 8 states and two countries, with more opening all the time. They have received extensive recognition, including being named a “Top Emerging Franchisor” by Franchise Gator and considered one of the “Top 100 new franchises”. Sanjay laughed when I asked for his advice for would-be or emerging franchisors.

I still feel like an emerging franchisor! I learn more about this industry and the responsibilities, frustrations, and joys of what we do, as well as the challenges of small business ownership, every single day. For advice? I guess the default answer to your question is ‘document everything’. I would say ‘assemble the right team, fast’. Make sure they are people who have experience in franchising and in business, and people who you want to break bread with. If you have the right team, they will tell you to document everything, along with a thousand other small pieces of advice, every day, that will keep you on the road to success. This hasn’t been easy, it still isn’t easy, but we couldn’t have made it to where we are without our internal team and external group of advisors.

Interested parties can learn more about Building Kidz at Buildingkidzschools.com