As you consider the possibility of franchising your business, you have to consider many variables. If the financial performance is there and you have a scalable, adaptable business model that can be replicated, franchising makes sense. It all starts with those first few steps.
Before you move on to financing, the first step is to analyze the costs and expenses of operations for a franchise. Ideally, you want to work with advisors and franchising experts to analyze the different franchising options, the expenses to successfully launch and then to operate long-term, and identify any other operational requirements.
Here is a guide on how to expand your business into a future franchise:
Invest in your business
In franchising, there will be legal fees to pay, IP protections to register, small business legal documents to file, market research to conduct, and marketing and advertising campaign arrangements to be made.
As the franchisor, it’s all on you to ensure all the legal requirements are completed. A franchise lawyer can assist with the vast majority of these things or guide you on what’s legally required to ensure you don’t hit any major snags along the way.
Expand your business to other cities
Location is everything. For a franchise to succeed, you have to give it its best shot. Identify geographic locations where your market exists. Understand customer habits and desires. Define how your concept is to work in other markets.
See what the competition is doing. Define if an adaptation of anything has to happen to align your brand with what the target audience might expect.
Franchise fees & royalty structure
You have to decide what the franchise fee will be that franchisees will pay upfront and the royalties you are to receive on an ongoing basis, as well as what you’re offering in return.
Franchising isn’t as easy as getting other entrepreneurs to pay you upfront and long-term fees. There’s a give-and-take in every franchising model, and that’s something every franchisor has to plan for.
Establish franchise documents
You want consistency across every franchise. A franchisor needs standardized documents that outline all operating procedures, employee policies, manuals, and more to achieve this.
Regardless of the type of business, standardization is key to attracting customers and reinforcing that no matter the location, they always will receive the same product and the same service. Attached with these documents should include the same training standards, of course.
Find the best entrepreneurs
As a franchisee, you partner with other entrepreneurs to help replicate your business. Finding the right entrepreneurs can be a massive challenge for some business owners. Lending your brand to someone you don’t trust is not an option. Invest the time to find the candidates who meet your standards.
Sign the franchise agreement
Once you have settled on the right franchisees for the job, you have to sit down with each entrepreneur and get everything in writing. A franchise agreement should look identical for each franchisee. This is to streamline things.
There may be room to negotiate specific items, however. Be open to that, certainly. Things like territory or items that would normally fall under the addendum are adjustable. However, the bulk of the franchise agreement should differ from franchisee to franchisee.
Help your franchisees
Franchising isn’t hands-off for a franchisor. You need to be available to manage and coach franchisees, evaluate franchise performance and day-to-day operations and develop a franchisor’s skillset.
Do you enjoy what you’re currently doing with your business or enjoy the customer interactions? If so, being a franchisor may not be in the cards for you. It’s a whole new management level that puts you in a different role than what you’re probably used to.