Before you start franchising, it’s important to know how to do it correctly. There are many different ways you can go about franchising your small business, and each one requires certain considerations. Read our guide to learn more about franchising, including how to choose a franchise model, how to find the perfect partner, and how to make sure your brand is ready for franchising.
What is franchising?
Franchises are businesses owned by another person or entity. They are often referred to as “franchise chains.” Franchises come in many forms, including restaurants, retail stores, and even real estate. Some people buy franchises because they want to start a business without having to build one from scratch. Others buy franchises because they already know how to run a successful business and just want to use it as a way to make money. Still others buy franchises because they like the idea of owning a piece of something bigger than themselves.
The most popular types of franchises include restaurant franchises, such as McDonald’s, Subway, Starbucks, and Panera Bread; retail store franchises, such as Best Buy, Petco, and Radio Shack; and real estate franchises, such as Century 21 Real Estate and Coldwell Banker.
7 steps you must take to franchise your business
Franchising is one of the most effective ways to expand your business without having to invest much money. You don’t even have to start up a whole new business; you can simply buy a franchise. But there are some important factors to keep in mind when considering franchising. Here are seven tips to help you make the best decision possible.
1. Understand Your Needs
Before you jump headfirst into franchising, ask yourself why you want to do it. Do you already run a successful business? Are you looking for something different? If you’re just starting out, you’ll probably need to work hard and save up a lot of money before you can afford to open a franchise.
2. Determine What Type of Franchise Is Right For You
There are several types of franchises, such as food franchises, retail franchises, medical franchises, and more. Some are better suited for certain industries, while others are ideal for people who like to travel. Before choosing a franchise, think about what type of business you’d like to pursue.
3. Research Potential Franchises
Once you’ve determined what type of franchise you want to go into, research potential ones. Check out sites like Entrepreneur Magazine, Franchise Business Review, and Franchise Direct to find companies that fit your needs. These sites offer information about the benefits and drawbacks of each franchise, and give you insight into how well the company treats employees and customers.
1. Check to see whether your company could be turned into a franchise.
Franchises are becoming increasingly popular. In fact, there are now over 5 million franchises worldwide. But it takes a lot of work to make a successful franchise. And while many people think that franchising is just about opening up shop and selling products, it goes much deeper than that. There are legal requirements that must be met before a business becomes a franchise, and you need to meet those requirements before you open shop.
The first requirement is that your business idea needs to be “franchiseable.” This means that the concept behind the business is something that can easily be replicated. If your product or service isn’t something that can be duplicated, you’re probably not ready to become a franchisee.
Next, you’ll want to look into what type of franchise system you’d like to operate under. For example, some businesses offer multiple locations, whereas others focus on one location per franchisee. You’ll also want to consider how large you want your business to grow. Some businesses are limited to just one store, whereas others allow thousands of stores across the globe.
Finally, you’ll want to take a close look at the financial aspects of being a franchise owner. While it might seem like a great way to start a business, owning a franchise requires a significant investment. So, make sure that you know exactly what you’re getting yourself into before jumping headfirst into the world of franchising.
2. Develop a business strategy
A business strategy includes goals and objectives. You need to think about what type of business model you want to operate and how you’re going manage it. Setting realistic expectations and goals for yourself and your business are key aspects of developing a sound business strategy.
3. Refer to the BFA
The Bureau of Franchised Affairs (BFA) is a great resource for anyone looking to learn more about franchising. They offer free resources like guides, tips, articles, videos, webinars, and much more. Their membership program offers members exclusive discounts and other benefits. And becoming accredited makes you look professional, trustworthy, and qualified to work within the franchise industry.
4. Seek specialist advice
Franchise contracts should be drafted by a legal professional. They are complex businesses, so it is important to seek specialist advice.
The best way to start is to find a franchisor who specialises in franchise law. There are many different types of franchises, each with different requirements and risks. A good franchisor will be able to advise you about what type of franchise suits your needs, and how to protect yourself against potential problems.
A franchise contract must include certain key elements, such as the name of the franchisee, the territory covered, the duration of the agreement, the number of units required, the financial obligations of both parties, and the terms of termination.
There are four main types of franchise agreements:
• An exclusive supply agreement – where the franchisor supplies a product or service exclusively to the franchisee;
• A nonexclusive supply agreement – where the franchisee provides the franchisor with goods or services, but there is no exclusivity clause;
• A master franchise agreement – where the franchiser grants the franchisee the right to use a trademark or trade dress owned by the franchisor; and
5. Make a decision regarding your pricing system.
The most common way to charge clients is based on a percentage of revenue generated. This method allows you to set your fees accordingly and avoid surprises. However, it does come with some drawbacks. For example, there are times when you might want to raise your rates without warning. Or, perhaps you want to offer discounts during slower months. If you choose to go with a percentage fee structure, you’ll have to make sure you’re willing to adjust your rates frequently.
Another option is to use a fixed fee structure. With this approach, you know exactly how much money you’ll receive each month. You won’t have to worry about raising your rates unexpectedly or offering discounts. However, you’ll lose out on potential income because you won’t be able to increase your prices. So, what do you think? Which one works best for you?
6. Recruit and train franchisees
Recruiting potential franchisees is one of the most critical steps in starting a franchising business. Once a candidate expresses interest in becoming a franchisee, recruitment begins. This includes conducting research about the industry, identifying candidates, developing a screening questionnaire, and scheduling interviews.
Once a candidate is selected, it’s time to begin the recruiting process. There are many different ways to recruit franchisees. Some companies prefer to use cold calling while others prefer to use social media. Either way, there are certain things that every recruiter needs to consider.
The first thing to do is to make sure that you have a clear understanding of what type of person you want to attract. Is it someone who wants to start a business, or someone who already has experience in the field? Do you want someone with a specific set of skills, such as being able to speak Spanish, having a college degree, or working in the restaurant industry? Or maybe you just want to hire someone who fits into your culture. Whatever the case may be, you need to know exactly what you’re looking for.
Next, you need to develop a detailed job description. You don’t want to miss out on hiring the perfect candidate because he/she didn’t fit the role perfectly. Make sure that you describe everything that the position entails, including the hours worked, how much money the employee makes, and whether or not the employee gets paid vacation days. This information will help you determine whether or not the candidate is qualified for the position.
Finally, you need to conduct a thorough background check. Many states require prospective employees to disclose previous convictions, bankruptcies, liens, judgments, and arrests. If you discover anything negative during the interview process, you won’t be able to offer the candidate a job.
Having a structured selection process helps avoid wasting time and energy on unqualified applicants. When you select the best candidates for each position, you increase the chances of success.
7. Market the franchise
If you are thinking about starting a franchise, it might seem like a daunting task. You must consider how much money you want to invest into the franchise, what type of location you want to open up, whether you want to sell franchises directly or work with a franchisor, and many other factors. But there is one thing that you cannot overlook—marketing. Marketing your brand is essential to ensure that people know about your franchise. Here are some tips to help you market your franchise effectively.
1. Create a logo
Your logo represents your brand. If you don’t have a logo, now is the perfect time to start creating one. Your logo should represent your brand and make customers feel comfortable whenever they see it.
2. Promote your brand online
Social media platforms such as Facebook, Twitter, Instagram, Pinterest, YouTube, LinkedIn, and others offer great opportunities to promote your brand. Make sure to update your social media profiles regularly.
3. Develop a website
A website is also a good way to promote your brand. Customers will be able to find information about your brand and learn more about your products and services. They can even sign up for newsletters and receive special offers.
Make your company into a successful franchise.
Franchise ownership provides numerous advantages over starting a small business from scratch. Here are some reasons why it makes sense to invest in a franchise.
1. You’ll Have More Time To Focus On Your Business
A franchise gives you access to proven systems and processes that make running a successful business easier. This frees up your time to spend on what you do best – growing your business.
2. You Can Grow With Someone Else’s Success
The franchisors have been there before you and know how to build a successful business. They’ve done the research, planning and training necessary to ensure success. All you have to do is follow their lead.
3. You Get Access To An Expert Team
Your franchisee team includes experts in finance, marketing, operations, legal, human resources, accounting, IT and much more. These professionals provide support throughout your entire tenure with the franchise.
Frequently Asked Questions
What’s the Difference Between Franchising and Licensing a Business?
Licensing and franchising are both forms of intellectual property ownership. But there’s a difference between the two. A license gives you permission to use someone else’s trademarked name, logo, slogan, or product design. In return, you pay a royalty to the owner of the intellectual property. On the other hand, a franchise agreement allows you to open up your own location of a business that uses another person’s trademarked names, logos, slogans, or products. You agree to operate the business according to the rules set out by the franchisor.
How Much Time Does It Take to Develop a Franchise for My Company?
The answer to this question is going to depend on how much capital you have saved up, what type of business you want to start, and whether you’re looking at starting a franchise or not. If you’ve got enough money saved up and you’re confident about your skills then you could go ahead and open a franchise yourself. However, if you don’t feel comfortable doing this then you should consider franchising instead.