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The fundamentals for success

The Fundamentals For Success

Successful reseller requires thorough planning and preparation. Here are some qualities shared by many successful sellers:

Concept: A good business concept is required, preferably one that is unique and interesting and with long-term potential. This is what your business is all about. This needs to be appealing to consumers and to potential Resellers.

System: A systemized standard for operations is needed. These include things like policies, procedures and other types of standards that will be used like every business location. The system includes the special know-how about how to set up and run the businesses. Usually, the system is represented by the operations manual.

Stability: Most Resellers have long-term contracts and have made major investments. They are in the business for the long haul, which adds stability to the seller and Reseller relationship.

Transferability: The system needs to be transferable. Most reseller systems do not require new Resellers to have any experience in any particular industry. You must be able to teach your Resellers how to successfully set up and run the business using your system. The transfer of this detailed information takes place through the initial training program, the operations manual, and the ongoing support the seller provides. If there are parts of the system that require special skills that are not easily transferable (such as business experience, musical ability or artistic talent), it may still be possible to seller your concept, but the pool of potential Resellers will be limited to those people who already have these special skills.

Identity: Your concept needs distinguishing features to give it a clear identity in the marketplace. This identity includes things like trade dress and image (the way the locations look); trademarks (identify the business and/or the products offered), and service marks (identify the business and/or the services offered).

Protection of Identity: You should take the necessary steps to protect the seller identity by registering with the U.S. Patent and Trademark Office all important trademarks and service marks. This federal registration will give you important legal rights. Part of this process will be to investigate who else might already be using the same or similar names and logos. A trademark lawyer should be involved in this process for maximum protection of the marks.

Protection of System: You should also protect the system to the extent possible. This involves steps like:

  • keeping your proprietary information confidential.

  • using confidentiality agreements and non-competition agreements with anyone who has access to your confidential information.

  • claiming copyright protection for key documents, training videos, recordings, etc.

  • filing for a patent in appropriate circumstances (using an experienced patent lawyer).

Experience: You should have experience in setting up and running the same business that your Resellers will. Actual operating experience is important for several reasons:

  • It demonstrates the viability of your concept.

  • It helps you refine your concept and system.

  • It gives you more credibility with Resellers.

  • It helps you refine your manuals and training program if units are managed by someone else.

  • It helps you set up the management and support staff and infrastructure you will need for reselling if units are managed by someone else.

All of these factors will help you sell sellers. While experience is strongly recommended, it is not required. It is possible to start a new seller without experience but inexperienced Sellers usually have a tough time selling sellers.

Profitability: Operating a seller is a business and the primary purpose of businesses is to make money for the owners. Each Reseller will expect to make a reasonable return on initial investment by the end of the initial term. You must make sure that the concept is capable of generating profits sufficient to make money for your Resellers (even after paying you royalties and other fees).

Operations Manual: The Resellers’ operations manual needs to be comprehensive. Your seller agreement will require your Resellers to follow the mandatory system standards in the manual, so it is important that the manual includes everything that the Resellers must do. It can also include non-mandatory suggestions for other things. Manuals evolve as system standards are added, dropped or changed. Your seller agreement should allow you to modify the manual any time you want to. Mandatory standards must be carefully designed- you are legally liable for damages resulting from faulty or harmful system standards. An experienced seller lawyer can help point out potentially problematic provisions. For more information, please see this site’s FAQ section.

Management: Your Resellers will need some initial support and additional ongoing support. You must have capable management to provide this support in appropriate categories such as site selection, lease negotiating, staff recruiting, staff training, marketing, customer service, etc. You will also need to inspect your sellerd units periodically to make sure that the Resellers are following your system standards.

Capital: Some experts suggest that you will need from $1,000 to $15,000 to get started. However, the amount one will need depends on the system, how much of the start-up work has already been done, and how much of the additional start-up work you will do yourself. If your efforts are successful, you could recover your start-up capital quickly.

Entity: You will probably want to form a new legal entity to be the seller, however, this is not a requirement. By setting up a new entity, you will help protect other assets (such as company-owned units) from liability that may arise under the reseller system, and you will reduce the cost of getting audited financial statements. The most popular entity choice for Sellers is limited liability companies and corporations.

Legal Compliance: To be able to sell legally, you must have a Uniform seller Offering Circular (UFOC) to deliver to your prospects, and you will need to register your business in certain states. The UFOC must comply with certain rules for the content and format of the required information, and it must include copies of the form seller agreement and other contracts you will use with your Resellers. You will also need to learn about the federal and state laws that regulate reselling before you begin talking to Reseller prospects.

Audited Financial Statements: The UFOC must also include audited financial statements prepared by an independent certified public accountant. The fastest and least expensive type of audit is one done for a company as of the day of formation (or initial capitalization). Audits for companies with existing business operations will take more time and money.

Business Plan: To help you formulate your plans for your new reseller system, you should develop a business plan. This is not a requirement, and many start-up Sellers do not do this.

Marketing Plan: Similarly, you should develop a specific plan for how to sell sellers. There are many different marketing techniques and tools available for selling sellers. You should formulate your plan based on your budget, and the target audience of prospective Resellers. seller advertising is regulated in some states, so be sure to consult an experienced seller lawyer early in this process.

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