The process of turning a business into a franchise begins long before the first advertisements are placed for potential franchisees. You must first gain a full understanding of franchising, including its advantages and disadvantages, and its likely effect on their existing operation.
The British Franchise Association recommend that you take these steps if you want to become a franchisor:
You should research the market fully to ensure that your products and services are competitive and distinctive enough to be franchised. Also, ensure that your potential customer demand is sufficiently widespread.
Produce a Business Plan outlining proposals in full and include a detailed SWOT analysis
Protect all your intellectual property rights by registering your trademarks, trade names and patents with the relevant offices.
Test the franchise in the form of a pilot operation lasting at least 12 months – longer if the business is seasonal. The pilot scheme should be operated at more than one location to test the concept in different geographical areas. A comprehensive pilot operation will prove the viability of your strategy and approach, highlight problem areas, and enable you to fine-tune the package before fully committing.
With the pilot operation running successfully, you can prepare to launch your network. At this stage, you should instruct a solicitor experienced in franchising operations to draw up a comprehensive franchise contract setting out the obligations of each party. This will include, how the fees, mark-ups on supplies and any other payments from the franchisee are to be calculated. To prevent possible conflicts in future, these obligations should be made clear to the franchisee at the outset of any agreement.
Produce a Prospectus to attract suitable franchisees and to determine the criteria for franchisee selection
Produce a comprehensive operations manual and training programme for franchisees that will enable you to set and maintain standards for all aspects of the business – most notably customer service – across the network
Establish a central management function and, possibly, field support staff to support the franchise network, and set up a system to monitor the performance of all franchisees
Develop a marketing, sales and advertising strategy to promote the franchise network. More specifically, when competing against other companies whose products and/or services may be better or as well known in the marketplace
Whether you are a restaurateur, printer, carpet cleaner, car tuner, fashion retailer, or deliverer of parcels, your business will change when you become a franchisor. It will then be all about recruiting, training, monitoring and motivating people who want to run a business under your name, using your system and operated to your standards.
They will expect leadership and direction; help when they want to expand, or when they meet the inevitable problems; on-going training and marketing support; and the product or service development to keep their business at the forefront of its marketplace. They will also expect you to create and maintain standards, both in your own business and throughout the network.
As this is what you will have promised them when they were considering joining you as a franchisee, you had better deliver it.
Franchisees are not employees, although they work to instructions and will hopefully have been recruited with as much, if not more, care. They are not customers, although they will have been, and continue to be, sold products or services. They are not, whatever the PR message may say, partners. Not legally, anyway.
If you get it right and follow the necessary steps outlined above, franchising may provide a great opportunity for you to expand your business and quickly scale things up. It is imperative that you get the right help and advice along the way.
Get in touch today if you would like some further guidance.