Ever thought of taking the next step to franchise your business? This article will show you how to franchise your business.
So, you have a thriving small business and you want it to grow bigger at a faster pace.
One way to do it is to franchise your business.
For franchising to work, you need to know yourself and your business well.
There’s no question that rewards are great for a successful franchise.
After all, knowing how to franchise a company is one of the best ways to spread your brand.
Also, it will help your business grow fast.
However, the process of building a franchise is not a piece of cake.
There are lots of details that you need to address.
From producing Financial Disclosure documents to coming up with the design of your store, everything should be ironed out well.
In the US in 2007, Franchises produced more than $1.3 trillion in revenues and paid over $150 billion in salaries and wages to over 8 million workers.
If you are looking to franchise your business, you can seek the help of a franchise consultant.
Many of these consultants have personal experience in turning their small businesses into successful franchises.
Of course, some of them experienced failure at first.
In fact, most of their early attempts at franchising a business crashed and burned.
However, they did not give up.
They went back to the drawing board and found out what went wrong.
Once they did, they never looked back.
This article will help you learn everything you need to know about how to turn your small business into a successful franchise.
Having said that, below are useful tips to keep in mind.
How to Franchise Your Business
Make Sure You Understand The Ins And Outs of Your Business
People looking for buying-a-franchise tips need to have precise instructions on how to run the business.
Now, how can you provide them with proper directions if you don’t have a good grasp of your own business?
Truth is, a lot of small business owners often tend to run their operations based only on hunches.
So, they may find it a bit difficult to itemize everything.
This includes the minute but important duties they perform each day.
To help them, provide them with detailed steps to owning a franchise.
Your franchisees may not have the freedom to do things on their own.
So, you need to tell them how they should do everything.
This includes anything from ordering supplies to bookkeeping.
You must outline and detail every step.
Furthermore, put yourself in their shoes, in particular, when you were starting.
Think about how you would run the business for the first time.
Take entrepreneur Tariq Farid for example.
We shall be using his personal experience in setting up a franchise to highlight important points throughout this article.
At the young age of 19, Tariq already had 4 flower shops.
During the early years, his mother helped him work around the shop.
That was the time when he was earning only $60 each day.
He used to tell his mom about his dream of making hundreds of dollars someday.
Once he achieved that goal, he adopted a new goal.
He told his mother that now he wanted to earn thousands of dollars a day.
Tariq says that the setting of goals is a never-ending process.
He is now the founder and CEO of Edible Arrangements.
But, the goals he sets still keep on getting higher.
No business school can teach what Tariq learned from his early entrepreneurial years.
But, it wasn’t enough to get him ready to build his next concept.
A store that offered bouquets made from carved fresh fruits.
He wanted it to become a global franchise.
During his early years in business, building a franchise wasn’t in his business plans.
Like many other entrepreneurs, his focus was on building his business.
So, he took on every job that the business needed.
He made himself available when his company website lacked product photos.
He became an amateur [learner] photographer in an instant.
When the store needed a stronger backend to cope with the growing online orders, Tariq built it on his own.
By this time, his head was buried deep in increasing his revenues, which was then growing at a rapid pace.
So, the concept of franchising didn’t cross his mind.
Everything changed when one day, a man walked into his store. The man said he wanted to open his own Edible Arrangements store in another city.
This was the first time Tariq thought about setting up a franchise.
He then decided to find out what he needed by doing a test run on his own.
So he opened a second store.
He found a location and prepared all the necessary documentation.
Then he went through everything, detail by detail, himself; from setting up the store décor to training his staff.
He went through each step of the way just as how a new franchisee would.
Without realizing it, Tariq was already laying the groundwork of a successful franchising business!
Here’s a good test to determine how well you know your business.
Do you know everything that your company does, and can you explain it to a prospective franchisee in 30 seconds?
Be Familiar With The Legalities
As mentioned, there are documents that one looking for information on how to franchise his business needs to prepare before he can turn his business into a franchise.
In particular, there is a section where you need to outline your financial performance data.
You can seek professional help if you think you cannot present the required information in a clear and proper way.
After all, most prospective franchisees would refuse to work with companies that don’t present a clear picture of their finances.
Franchising experts don’t advise going through the process of franchising a business without professional help.
In the case of Tariq, he did everything on his own, and he succeeded.
But, this is not the case for everyone.
In fact, many who tried to follow his lead of turning a business into a franchise failed.
Tariq did it on his own because he had no money to pay for expert advice.
He cut through all the legalities and built his test franchise.
He said he couldn’t go to a consultant without a lot of money.
The consultant said that it would cost him a good hundred grand.
The good thing is, he got some expert advice that got the ball rolling, so to speak – by accident!
The consultant said that if he didn’t have the money to pay for his services, then Tariq should try turning a business into franchise himself.
While it may have been a joke, Tariq took the advice seriously.
Looking back now, he thinks that the consultant was not kidding.
Tariq admits that he made many mistakes in the process.
In the end, he found himself hiring franchising consultants.
But, by then, he had already learned a lot by doing things on his own.
If you are looking for resources to use if you want to learn all the legal issues about how to build a franchise, you can refer to the International Franchise Association (IFA).
The IFA has a library of information on franchises.
They also lobby for legislation that will benefit franchisees.
They are willing to help and provide resources to businesses that are looking to franchise.
The IFA also has released reports on franchising legalities.
One publication that is quite helpful is entitled Introduction to the Law of Franchising.
The book has 450 pages.
If you want to prove that you are determined to succeed, try going through each page of the book.
Know How You Intend to Grow Your Business
Every business owner is thrilled by the idea of growing his business.
But, as a small business owner, you must be realistic and reasonable.
For some people who want to turn their business into a franchise, creating a franchise model means making their business go international.
Furthermore, it might mean making it available from coast to coast.
For others, it may mean as simple as adding a few new outlets.
Experts recommend a growth rate that is natural to the type of business you own.
When a business consults with a franchising expert to explore their business’ franchising potential, the first thing that the consultant does is to evaluate the proof of business concept.
If you are looking to franchise your business, you must consider where your business model will work.
You must also determine how far you can expand your brand into new and unfamiliar territories.
For example, if your brand has a reliable recognition in California and other nearby states, you can try expanding to other areas in California.
Also, you can try expanding to surrounding states such as the northern part of Nevada.
You can expect your company to grow, within the range of your brand recognition.
You will need to work to see that it grows in areas where your brand is not known.
International franchising is on the other extreme end of the franchising venture.
With the help of a franchising consultant, you can develop a plan to bring your brand over to other countries.
This will include securing an international license and a deal with an international investment group that will help develop your brand in the region.
This way, you can spread your brand beyond the boundaries of your country with minimal risk.
Screen Your Prospective Franchisees
Sure, it is flattering to know that there are people who want to open a franchise of your business.
However, you shouldn’t give in to just anyone who approaches you with the idea.
Bear in mind that they will represent your brand.
So, you need to make sure that you have a solid system in place.
This way, you will know that the franchisee will bring your company forward to a new market, and in the right direction.
Tariq developed a system to know whether someone is an ideal franchisee or not.
He calls it the ‘googledy-eyes’ test.
He would immediately pass up on the opportunity if he is convinced that the prospective franchisee doesn’t have any clue on the amount of hard work it would take.
The steps to owning a franchise are not easy.
So, if someone approaches you and says they want to own a franchise of your company, don’t just say yes!
Even if they show great enthusiasm and optimism [positive belief] that they will succeed, if they think that everything would be as easy as pie, take it as a red flag.
In business, it is easy to be over-enthusiastic.
This is true for franchising as well.
There are many things that you should consider when evaluating a potential franchisee.
Aside from the financial information and documents that applicants provide, you should also assess the potential franchisees’ personalities.
All passion without substance will not cut it.
It is better if the applicant is measured and thoughtful, with the right amount of enthusiasm about the business.
One common mistake of business owners looking to turn their company into a franchise is using the ‘shotgun approach’ when choosing franchisees.
It would be a big mistake to send an invitation to all without having a particular target market in mind.
Often, when you talk about franchising, people would think about a job working on a truck.
Of course, this is true if you are franchising a burger stand.
But, not all franchises work this way.
There are white-collar franchises that do not involve wearing a pair of gloves and driving on a truck.
When screening your potential franchisees, you need to look for specific qualities.
For one, their previous income expectations would be an evaluation pointer.
Put The Right Restrictions In Place
Knowing how to build a franchise involves providing your franchisees with specific instructions on how to hire and train staff, as well as other processes.
But, you need to make sure to give them some freedom to be creative.
Provide them with useful information.
Like when you were starting out, these people also are small business owners.
As you start to lessen your involvement in the daily operations, you will need to trust in the franchisee’s judgment.
Remember that this business is something new to them.
So, you need to give them some freedom to decide on their own.
But, this freedom should have clear restrictions.
Depending on the type of franchise, these restrictions may vary.
There should be a good balance between retaining the brand identity and injecting a touch and influence of the individual franchisee.
Some franchisors in the past failed because they set too many narrow restrictions on the possible franchisees.
They placed very strict requirements on prospective franchisees, making the pool of potential applicants too narrow.
Your goal is to grow your brand. Requiring your franchisees to set aside a minimum amount for advertising is a good idea.
This applies to all media – online, TV, radio, print, and others.
For example, the franchisees need to reinvest in their market around 10% of their gross revenue.
Your company will provide around 90% of all the necessary promo materials.
Franchisees may use their own ideas, but only with the approval of the corporate office.
Provide Good Support For Your Franchisees
As the franchisor, you will start to step away from the daily operations of the franchises.
But, you should set aside some time to get to know more about your individual franchisees.
Unlike other kinds of small business owners, a franchisee opens a new shop or service provider with the name of an established business.
He or she is responsible for the performance of the franchise within a specific area.
He earns from the business, and he oversees the day to day operations.
But, looming over his head is a bigger corporate structure.
It is ever-present, although the structure may vary from one franchise to another.
There are specific challenges to face when creating a franchise model.
If a business is succeeding, you can expect new shops to open.
This means that the franchisor is working with new recruits all the time.
To make the steps to owning a franchise easier for everyone, Tariq’s Edible Arrangements set up a department that dealt only with sourcing the materials for franchisees.
Another department takes care of staff training.
There is even a department in charge of handling potential problems and any type of unexpected outcome.
To make everything work in a smooth manner, constant communication is important.
As the franchisor, you need to spend a lot of time communicating with your franchisees.
This way, you will be up to date on the latest news about the franchises, the challenges they face, and where to find new prospects.
This is one of the important buying-a-franchise tips that you should keep in mind.
You may think that you are getting too paranoid and attached this way.
This is normal, particularly, if you devoted a lot of time and effort to your business.
It is understandable that you will find it difficult to step away from the business you took care of for a long time.
But, once your business grows to heights you never imagined before, your perspective may change.
After you have opened hundreds of stores, you may have no choice but to step back.
By then, it would be too difficult for you to keep track of all of them on your own.
You may still want to visit some of your franchises from time to time.
This is because, like Tariq, you enjoy doing it.
But, you will realize that your franchisees now have the task of bringing your business to new levels.
And, as Tariq says, it doesn’t ever end!
Has this article helped you understand how you can franchise your business?
Please leave us your comments!
Click on Buy Now For a PDF Version of This Blog Post
 |
