There are several ways to grow your business, and franchising is among them.
You can learn how your company can franchise and scale effectively, but keep in mind that it’s not a trump card to success. The tough economic times have seen established franchises such as Daphne’s Greek Café file bankruptcy protection.
But that’s not to discourage you.
Growing your business can bear fruits, popularize your brand and scale it beyond your imagination with the right franchising concept, especially if your company is involved in construction cost estimating. Take time to understand the franchising.
Creating a franchise involves a legal agreement with trademark licensing, fee payment, and business operations control. As the franchisor, it’ll be your role to create the legal documents you give to franchisees.
By franchising your business, you give the franchisees your business systems, trademark, training, suppliers, and support. They can then invest and open new locations for a win-win situation with you as the franchisor.
Evaluate the Business You Intend to Franchise
A franchise-ready business takes more than consistent sales and profitability. Your current success does not always mean that all your franchisees will replicate the same success.
There are a couple of other factors to weigh in before you decide.
- Consider the concept you intend to use and make sure that it has something unique that appeals to franchisees and end consumers. The concept should be easy to systemize, replicate and create economies of scale.
- The business should already have a few profitable units in operation. It should not be a trial and error strategy, as franchising can prove an expensive exercise.
- Conduct market research in other areas to determine if the concept will appeal. Is there some room for a new competitor, and what can you use for a competitive advantage?
- You should also be ready to relinquish control of the concept and let others run the business for you. Your role will change to that of a trainer and salesperson, and you should be ready and willing to make the transition.
A Franchise Disclosure Document is a critical legal document that you must register when franchising. FDD requires a wide range of information that includes a franchise operating manual, audited financials, and business experience of the management team.
Some states will typically have their own rules beyond the FDD requirements, and some, like Illinois, have a daunting process. A franchise attorney or franchise consultant may help with the process.
You’ll need to make a host of decisions about the franchise model you will use.
How much territory will you award to every franchisee, and what is the franchise fee you’re going to charge? It is up to you to determine the length and content of the training you will give and whether you’re selling the equipment required by the franchisees.
After making the paramount decisions regarding the business, the next step is to fill out the necessary legal documents to register the franchise.
The authorities may critique the documentation and ask for more disclosures before they approve the application. It can take a few months to get state approval.
Hire the Right People
You cannot do all the franchise support by yourself. You’re going to need some help.
A full-time hire is necessary for a trainer, marketer, and franchise advocate. A franchise process manager that aligns computer systems across the franchise is a vital position for hire.
Sell the Franchises and Offer Support
Searching and convincing potential franchisees is a work by itself.
There are several tactics at your disposal, such as using a referral fee, a sales agent, or a whole marketing department to handle the task of finding new franchisees. You can also partner with franchise consultants to recommend you to their partners.
The sales department should know your business, in and out, and be able to tell a compelling story.
The last step, support, may seem like the easiest in the chain, but nothing could be further from the truth. Support efforts that include training will establish quality control and determine the franchise’s success.
Conduct regular training to weed out wrong behaviors and create a sustainable culture. The goal is to find a profitable business for a long time.
Franchising can be an excellent way of scaling your business. But it would be best if you have a good model, hire the right people, and sell your franchise to the qualifying franchisees. The marketing and support efforts are most important, and they determine your overall success as a franchise. Invest sufficiently.