How to Franchise

Thinking of expanding your business, could franchising be the model to use? The essential element to franchising your business effectively is to have a proven, successful concept that is working well as a business already and comprehensive manuals detailing... more

How to Franchise your Business – Low cost, step-by-step

Thinking of expanding your business, could franchising be the model to use?

The essential element to franchising your business effectively is to have a proven, successful concept that is working well as a business already and comprehensive manuals detailing step-by-step operations of how the business works.

By following these steps, you will have built a solid foundation for your franchise system, which will give it the best chance of succeeding.

The Franchise Business Plan

This will confirm what you want your business to achieve, and as part of it you will need a comprehensive system plan for your franchise. You need to consider how you will finance the following:

research,
pilot operation(s),
support structure,
recruitment process,
design and development of the operations manual,
design and development of the training manual,
design and development of the franchise sales document,
design and development of the franchise agreement,
legal documents ufco, disclosures, non competition agreements.

All of these costs will probably be incurred before you have selected your first franchisee. You will also need to have a long-term view of your growth plans, the operational structure of the business.

1. Franchise Operations Manual

You need to collate the knowledge and experience you and your team have. This is the business, and if you are going to train other people to operate it, you need to know what to tell them. You’ll be surprised at how much that seems obvious to you might need to be written down for others to understand. This comprehensive information will form the basis of your franchise operation manuals.

This is the blueprint for a franchisee to run their business. It needs to be comprehensive, setting out everything a franchisee and their staff needs to know to run the business. It may also need to be regularly updated to give franchisees the best chance of success, and maintain the value of your brand.

Technology is helping to streamline this process, there are many low cost solutions available online, simple to uses, low cost franchise templates that have most of the structure outlined, guiding business owners through the path of designing suitable comprehensive operation manuals.

2. Pilot Operation

Although you are already running a business, you need to make sure it will still operate at arm’s length.

This will act as a test of the franchise system. It’s up to you how many pilot sites/outlets you run, but at least one is essential. This needs to be operating for at least six months, longer if there is a seasonal element to the business. Lessons you learn from the pilot operation will need to be included in the operations manual. They may also make you reconsider whether franchising is the right way forward for your business.

The best way to monitor this is by having an in-house operation that does exactly the same as a franchised operation. This can also be used to test new ideas that could, in the future, be made available to all franchisees for their businesses; for example, new equipment or revised advertising material.

3. Franchise Agreement

The Franchise Agreement governs the relationship between you and your franchisees and is an important source of protection for your business. It will contain potentially hundreds of clauses including the length of the agreement, rights of renewal, obligations of the franchisee and franchisor, termination provisions and what happens in the event of the death, illness or incapacity of the franchisee.

There are a number of companies offering Franchise Documents online. Franchise templates including comprehensive Franchise Agreements, are available for a quick low cost solution.

The Franchise agreement is a legal binding agreement and it is recommended that once you have configured the structure of the Franchise Agreement, you seek legal advise from a Franchise Lawyer who, for a fee will advise you further.

4. Franchisee Sales Document

You need to think about the type of franchisee (persons) you want to be working with. These may be existing businesses that are looking at new opportunities or private individuals who are setting up in business for the first time, but looking for a proven formula to help them get started. Selection of franchisees is critical, particularly in the early stages of the franchise system, as the initial franchisees will form the backbone of your system. Decide what skills you need them to have and develop a profile based on this.

Once again there are many low cost online solutions to implementing the correct franchise sales documents.

5. Franchisee Training

You need to decide what training your franchisees will need, how to train them and who will actually carry out the training.

Having the correct franchise training manuals are a necessity, and there are many resources available online.

6. Franchise Investment Costs

The amount of initial fee payable by the franchisee needs to be clear, and also the level of ongoing payments from the franchisee to you. In addition the franchisee will usually pay the costs of establishing the business or operating unit.

7. Recruiting Franchisees

There are a number of ways of doing this. Specialist magazine advertising, national newspapers which run regular franchising features, franchise exhibitions and the Internet are all potential sources of good-quality candidates. You will need to produce a franchise sales document outlining your system and what is expected from your franchisees, and also establish a recruitment process. Remember you are competing with other franchise systems who are also seeking good quality franchisees.

There are a few online companies who offer low cost franchise templates, including franchise sales documents.

8. Franchise Management and Support Staff

A key role in your network will be that of your franchise management team. They will usually be responsible for selecting franchisees, and providing the ongoing support and guidance that is essential for the franchisees to build their business. The support staff role will vary, but typically will include monitoring franchisee performance and reporting, carrying out credit control and providing technical advice for franchisees. Although it is difficult to generalise, usually one member of support staff is required for every 5-10 franchisees, depending on how complex your franchise system is.

9. Professional Advice

In this age of the Internet, there are many resources available, low cost franchise documents, online templates, and online franchising advice. The more information you have the better you will understand the pros and cons of franchising. Even if you have substantial resources within the business to look at projects like franchising and no matter how well you know your business the more information you have and the more you understand the franchise documents structure, the better your chances of success. The advisers who are likely to be of the greatest value to you are those who have experience in franchising.

Franchise Consultant

Once you have a comprehensive outline of the business and the franchise documents, using a good franchise consultant can bring an extra perspective to your business in addition to specialist knowledge of franchising, and help you decide what is the next step ahead for you.

Accountant

Your own accountant should be able to help with the financial aspects. These will not only include your business plans, but also guidance for franchisees on what they could expect to achieve from a franchised outlet.

Solicitor

Legal advice is essential to protect your business, a comprehensive franchise agreement will be necessary, and you may also need advice on registering your trademarks and service marks. By doing this you should increase the value of your trading name, and afford greater protection for you and your franchisees.

Useful Franchise Resources - Contacts

Franchise Councils -

Franchise Council United States - http://www.franchise.org/

Franchise Council Australia - http://www.franchise.org.au/

British Franchise Association - United Kingdom - http://www.thebfa.org/

Malaysian Franchise Council - http://www.mfa.org.my/

Canadian Franchise Association http://www.cfa.ca/

World Franchise Association http://www.worldfranchisecouncil.org

Franchise Documents, Templates and Resources –

Franchise Documents Online http://www.franchisedocumentsonline.com

Franchise Market Place http://www.frandocs.com/

Franchise Consulting http://www.entrepreneur.com/