How does franchising help a business grow? Franchising helps you grow your business in numerous locations and markets. You will include new and consistent revenue streams, with a wider market share and greater brand recognition by reaching a wider customer base. But first, what is a franchise?
A franchise system is the use of the franchisor’s intellectual property, processes and systems by the franchisee. The franchisee pays for the right to utilize and implement these through payment of an initial franchise fee and on-going royalty payments. The franchisee replicates the franchisor’s successful, established business model in new and geographically defined territories.
How to set up a franchise
The points are 10 of the most significant considerations. Each of these are targeted at starting a franchise based on an existing and successful business.
1. Is your business ready
Determine your readiness. How solid is your current business model? Are you profitable on a consistent basis? Given that, are you ready to take on the role of recruiting, training, mentoring and supporting your franchisee network for the purpose of building their success?
2. Legal due diligence
In the very early stages of franchising your business, you will need to create a new legal entity, as well as the associated requirements that go along with this. Most important are the Franchise Agreement and Franchise Disclosure Document. Franchisee candidates interested in your learning about your business and who are ready to get on board will want to review these legal documents.
3. Create your franchise business model
In similar fashion, a franchise business model will include an estimate of the total initial investment. This will define marketing and advertising strategies; the operational support and the ongoing training that you will provide to every franchisee and possibly their managers. This is a good time to strengthen relationships with existing vendors and suppliers; setting out the commercial rights, responsibilities and obligations of each party; projecting your future profit margins. Outline the correct and recommended usage of the brand, logos and the intellectual property.
4. Markets and territories
Franchisors have the freedom to operate in a wide number of territories, accordingly, you may want to start with regional development and even consider national and international expansion down the road. Be that as it may, all growth strategies should be backed by market research and in-depth due diligence. You may wish to engage a franchise marketing agency that will help you study the demographics of the chosen territories, determine what demand there is for your products and services and help you decide whether that location contains enough business opportunities to be pursued.
Another key point is the need for a highly qualified and experienced team to help you steer your business in the direction of franchising. This team will include a lawyer, accountant, franchise consultant and a marketing team. Equally important, these experts need to be well-versed in business expansion and development, franchisee training and support as well as marketing, franchisee recruitment and more. Remember, you cannot do everything yourself. Do not spread spread yourself too thin.
6. Acquire the necessary capital
Franchising your business is neither free, nor cheap. As noted above, costs range from the legal side of converting your business into a franchise model, as well as on-boarding the right team to help support your growth and marketing costs to find quality franchisee prospects, etc.
7. Policies and processes
Developing a successful franchise concept requires clear policies and processes that will guide your franchisee network. This will range from recruiting and training staff to marketing the brand. For example, this will mean hiring staff that has been background checked and have the relevant professional experience.
8. Screening franchisee candidates
Once all of the above has been put in place, you need to find the best franchisees. Quality always trumps quantity. The goal is to find interested people with the relevant background, experience, skills, passion and business mindset to develop their franchise location in accordance with the franchise model. Lead generation focuses on quality as top of mind. Given that, you need to develop processes that help you attract, warm up and retain strong leads.
9. Training and ongoing support
As can be seen, the franchisor-franchisee relationship is a two-sided affair. Franchisees expect the franchisor to show them how to implement the business model. This can only be achieved through thorough on-going training and support. In addition, as a franchisor, you want your franchisees to support and communicate with each other to share best practices and suggestions for improvement. Make this an integral part of your offer to attract potential prospects.
10. Marketing, marketing, marketing
Finally, marketing should be aimed at both your customers, potential customers and potential franchisees. Accordingly, the services of a franchise marketing agency can come in very handy by specializing in marketing audits and developing and implementing targeted marketing approaches and strategies. Above all, a well managed marketing strategy, will help you exceed your own goals and enjoy on-going success.
In conclusion, the question of opening a franchise doesn’t necessarily have a short and easy answer. As noted, the franchising process requires experience and a willingness to take your business to new levels. Effective attention to detail will help you reap the rewards on multiple levels.
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You can visit our website anytime at www.myfranchisepartners.com or give us a call at (647) 991-2282 to take one step closer to your dream of franchise ownership.