Most business owners start their companies with the intention of growing it. Unfortunately, figuring out how to do that isn’t always the easiest task. For business owners who have achieved great success with one or more locations and are wondering where to go next, franchising can be a great way to spark rapid expansion in a sensible and methodical way. Read on to find out which steps business owners who choose the franchising route need to take to get to their desired destination.
Step 1: Ensure The Business Is Franchise-Friendly
It is important for business owners to realize that not every company is franchise-friendly. According to the U.S. Small Business Administration, the hallmarks of a business that will likely work well as a franchise is that they have a product or service that stands out, a universal business concept that is not location-dependent, and a business model that can be easily taught to others.
Step 2: Create Necessary Franchise Documents
Once a business owner knows whether the business will even work as a franchise, they need to develop some products that will assist franchisees through the process. Create detailed business and operations manuals as well as putting together a specific franchisee training program. Although it may seem a little early for this, these things will be helpful in the next step.
Step 3: Get Familiar With Legal Issues
It’s fairly easy to open a business, but franchising has its own set of legal rules and issues, and franchisers need to make sure that they learn every single one of them. Once they are familiar with state franchise law, business owners will need to complete a Franchise Disclosure Document and register it with the Federal Trade Commission. This document will also require financial statements and operating and training manuals to be submitted with it.
Step 4: Make The Important Decisions
Before a business owner begins to sell franchises, they need to take the time to set some ground rules for the franchisees as well as some overall goals for the business. As Matthew Deluca explains in Inc. Magazine’s step-by-step franchising guide, franchising success depends on carefully crafted details and goals. Business owners should determine things like franchisee fees and royalty percentages, agreement terms, required business experience, and territory rights. Also, decide how fast and far you want the business to expand. In the long run, these decisions will significantly affect profitability.
Step 5: Register as A Franchiser and Sell Franchises
When all legal and logistical issues have been settled, it’s time to register as a franchiser and begin to sell franchises to investors. It’s best for business owners to hire a dedicated staff to take care of franchising issues and support franchisees. Company owners should screen franchisees to make sure they have both the personality and the business sense to succeed. Once franchisees have been selected, it’s time to get rolling with training and location openings.
Very few business strategies can produce rapid growth in the same way that franchising can. If a business owner is willing to put in the work, franchising may be just the thing to help them take their company to the next level and beyond.