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Hello,
I currently manage vehicle donation programs for charities all across the US. I’m proud to say that I have helped to raise over $1M for charities each of the last six years. I was in Kansas City last week visiting one of my auction clients and I came across an organization that was franchising my business model. I’ve taken a few days to think about it and I wanted to get some third party advice on whether to go ahead with franchising one of my organizations.
I’m thinking that I could franchise a few cities as a trial bases just to see if it is possible to do on a larger scale. Here is a bit of info on how it would work.
A franchisee would be responsible for investing money advertising a vehicle donation program for a licensed non-profit. Advertising can be as simple as grass roots local advertising or as complex as PPC online advertising. The franchise agreement would give the franchisee the right to advertise the program how ever they want. There would need to be some minimum investment required.
The first question of course would have to be: How do I get paid? You would be given a 1-800 number to use in your advertising which rings to a call center in Washington, DC or an e-mail address that comes into the same office. Once a donation is taken it would be sent to one of the 93 vendors I have across the US that sell cars for me now. This year I will sell about 6000 vehicles across the US. Depending on the terms of the franchise agreement you would get a percentage of the sale price. Most deals average between 25% and 50%.
What is the potential? I’ve personally spent $52K advertising one of my clients in Washington, DC this year with a NET return of $72K w/ sellable inventory being carried through the rest of this month. This includes sending $66K back to the charity. This is a mid-line type of program. There are companies that spend $1M+ advertising their campaigns while others spend only a few $’s per month.
I have a licensed 501c3 interested in giving this a try. They are a great program that is very transparent in the way they spend their money. They just don’t have the money to spend on growing their program and I’m fully budgeted for 2008.
I’m trying to give as much information as I can with out giving away my entire business. Here are some recommended terms. Let me know what you all think!
City Population Annual License Fee Min Monthly Inv
Under 500,000 $2500 $1000
500,000 to 1M $5000 $2500
1M+ $10000 $5000
Potential Income
Under 500,000 Total Inv (12m) = $14,500 Proj Sales = $24,000
500,000 to 1M Total Inv (12m) = $35,000 Proj Sales = $60,000
1M+ Total Inv (12m) = $70,000 Proj Sales = $120,000
Risks:
1- It takes 90-180 days to realize income do to the fact that you have to build brand awareness in each new market. This means that this is not a short term get rich quick type of deal. There are real potential returns for investors with a 12+ month investment time frame.
2- Advertising expenditures are a big deal. This type of program would be best suited for someone with either an advertising or marketing background. The above projected sales amounts are based on the use of a third party marketing company that specializes in vehicle donations. If you don’t spend your money wisely as in any business you would not make your money back.
3- These types of programs have seasonality. Again you have to have a 12+ month time frame in order to be successful with this type of program.
Well, that’s all I can think of for right now. If you are interested in talking further PM me or e-mail me rbryan@charitydispatch.com
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