How does franchising help a business grow? In multiple ways. Franchise ownership not only enables you to expand in numerous locations, including international ones, but also helps you enjoy new and consistent revenue streams, gain wider market share, take advantage of more brand recognition and overall, reach a wider customer base. Each of these factors is definitely worth keeping in mind if you are looking at franchising a business. But first, what is a franchise?
What is a franchise? – Business definition
Still unsure of what is franchising in business? While the answers may range from a solidified relationship between a franchisor and franchisee to a commercial agreement between these two parties that governs the way of doing business, a franchise definition, stated simply, is the following. It is the use of the franchisor’s intellectual property, processes and systems by the franchisee, who pays for the right to utilize and implement these through an initial franchise fee and royalty payments. All this while replicating the franchisor’s successful and already-established business model in new and geographically defined territories.
How to set up a franchise
If you are wondering how can I franchise my business, we provide an outline of 10 of the most significant considerations below. Each of these are targeted at the question of how to start a franchise based on an existing and successful business which you currently operate.
1. Determine your business’ readiness
Your very first consideration will be determining your business’ readiness. This may involve asking yourself questions such as what results have previous expansion efforts yielded? How solid is your current business model? Are you reaching profitability on a consistently high basis? Are you ready to take on the role of recruiting, training, mentoring and supporting your franchisee network to see their success as well?
2. Get the legalities in order
Up next is ensuring that all legal requirements are met. In the very first stages of transforming your business into a franchise, you will want to ensure that all the t’s are crossed and the i’s dotted. This includes not only creating a new legal entity, and the associated requirements that go along with this, but also creating your Franchise Agreement and your Franchise Disclosure Document for franchisees that are signing up or interested in your business, respectively.
3. Create your new franchise business model
Your current business model may be considered successful but you also need to ensure that this success is replicated in your franchise business model, too. A franchise business model will include consideration of the the total costs and investment for a franchisee prospect to start operations; marketing and advertising strategies; the operational support and ongoing training that you will provide to franchisees; strengthening existing relationships with vendors and suppliers; setting out the commercial rights, responsibilities and obligations of each party; projecting your future profit margins; and outlining the correct and recommended usage of the brand, logos and its intellectual property.
4. Select markets and territories
Franchisors have the freedom to operate in a wide number of territories and may even consider international expansion. However, this should be backed by market research and in-depth due diligence. To get this step right, you may wish to make use of the services of a franchise marketing agency which will help you study the demographics of your 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.
5. Put a team in place
You will also need a highly qualified and experienced team to help you steer your business in the direction of franchising. These experts will be well-versed in business expansion and development, franchisee training and support as well as marketing, franchisee recruitment and more. Remember that you cannot spread yourself too thin or you will end up risking your work-life balance. Relying on your team is a must as is delegating high-value and low-value tasks accordingly.
6. Acquire the necessary capital
Franchising your business does not come for free. There are numerous cost considerations that also need to be factored into the equation. These costs will range from the legal side of converting your business into a franchise, onboarding the right team to help support you, marketing costs to help you find quality franchisee prospects, etc.
7. Establish policies and processes
Furthermore, taking on a franchise business requires establishing and implementing policies and processes for the franchisee network to follow. This may range from how they recruit and train their own staff to how the overall brand is marketed. Regarding the former, this will mean, for example, hiring staff that has been background checked and has the relevant professional experience. And regarding the latter, it’s crucial to avoid brand voice dilution or any reputational irregularities.
8. Screen prospective franchisees
Once all of the above has been said and done, you need to start looking for franchisees. However, bear in mind that not just anyone will do. You need people with the relevant background, experience, skills and business mindset to develop their own franchise unit in a given location in accordance with your franchising business model. Lead generation is one part of the coin. However, acquiring quality leads is vital. You need to have processes put in place to ensure that you not only attract but also warm up and retain strong leads.
9. Be prepared to provide training and ongoing support
Remember that the franchisor-franchisee relationship is two-sided. For example, franchisees will expect the franchisor to show them how the business model should be implemented without fail every time and this can only be achieved through adequate ongoing training and support. In addition to this, as a franchisor, you will want to make sure that your franchisees support and communicate with each other, sharing best practices and suggestions for improvement, and making this an integral part of your offering will make you a more attractive option to potential prospects.
10. Get out there: Marketing, marketing, marketing
Finally, you need to engage in marketing. Marketing should be aimed at both your customers and potential customers as well as new and potential franchisees. Once again, the services of a franchise marketing agency can come in very handy as by specializing in marketing audits and developing and implementing targeted marketing approaches and strategies, you’ll be able to exceed your own goals and enjoy soaring success.
In closing
As you can see from the above, the question of how to open a franchise doesn’t have a quick and ready answer. The process should be looked at holistically and as a multifaceted approach that requires an experienced team and a willingness on your part to take your business beyond. Once all the considerations mentioned above have been implemented, you can reap the rewards – both on a personal, professional and financial level.
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You can visit our website anytime at www.franchiseba.com or give us a call at (866) 395-4697 to take one step closer to your dream of business ownership.
Source: franchisefame.com