How to Franchise a Business
Franchising is one way of expanding a business with lesser risks and higher return of investments. Here are a few things you have to know when planning to franchise your business.
2 Kinds of Franchising
Trade Name Franchising. In this model, you, as the franchisor, allows your franchisees to use your trade name.
Business Format franchising. This is the most common franchising model used today. You give the franchisee all the necessary equipment and support to operate within your company’s policies.
Measuring the Franchisability of your Business
Before deciding to franchise, you have to make sure that franchising would work for your business. Consider looking into the following factors:
Uniqueness. To attract franchisees, there should be something in your business that differentiates it from the rest of your competitors, like products, services, investment costs or target market.
Adaptability. Your business should be able to work on different locations. Keep in mind that what may be in demand for one area, may not be in demand for another. Your business should be able to adapt to different marketing environments.
Credibility. Before a franchisee buys from you, he would want to know your business’ background. You need to establish a good name in the industry you’re in so that investors can trust you with their money.
Return of Investment. You should be able to ascertain that after the royalty fee and other initial cash outs have been paid, a franchisee would have a good return of investment. You may want to give your franchisee a time frame as to when he’ll be able to earn back the money he invested.
Making a Franchise Plan
If you’ve decided to franchise your business already, the next thing to do is make a franchise plan. This document should include all the steps you and the franchisee need to do. It should also include the amount you’ll charge for the franchise.
Structuring a Business Plan
This is your business’ guide for the next few years. It’ll be a good idea to include all business strategies and goals.
Operations and Training
As a franchisor, you’re required to make a franchise agreement and Franchise Disclosure Document (FDD). Consult a franchise attorney to help you with all the legal aspects you need to understand.
You should also provide your franchisees an operation’s manual and training seminars. These will help them operate their franchise within your company policies. Providing them with manuals and trainings will also ensure uniformity of services.
Have a Marketing Plan
Put your business out in the world. Make use of various marketing strategies to attract both franchisees and customers. Some techniques you may use are placement ads online, listings with a franchise broker, participating in trade shows, and mailing out brochures. Having a company website would also be a great help.
Franchising is a good business strategy. Before you decide to franchise your business, be sure that you’re equipped with all the necessary documents. You may also decide to consult a franchise firm. A franchise firm will be able assist you in franchising your business. Start expanding your business today.