How to franchise your business
Posted: Sunday July 23 2017
By: Guest Blogger
So, you’ve set up a brilliant business but you’re stuck for what to do next. How about franchising? With a solid brand and a good plan, it could be very successful but how do you actually do it?
How to franchise your business
By Richard Turner – Business Lawyer
Firstly, you need to find out if your business is capable of becoming a franchise. Do your research. Is your brand/reputation solid? Is customer demand widespread? Is your formula for success easy to roll out to others? If you answered yes to all of the above, franchising could be for you.
Before beginning you will need to make sure your brand is protected. All trade marks, patents, logos, names etc will need to be registered with the right offices. If in doubt, seek advice.
In order to make it work, people need to want to buy into your brand and replicate it. They are essentially paying for the proven formula and reputation you have already developed. How are you going to show them what to do? What training programme will need to be put in place to ensure that they are doing everything the way they should be? Set up a pilot scheme where you can check your strategy and monitor what works and what doesn’t.
The key to any good franchise is to make sure your business format is specific. Your brand, business systems and support systems will all need to be clearly defined and set out in a comprehensive operations manual. This will then need to be included in a franchise agreement which will also set out the financial arrangement.
You should be aware that this is not a one-off agreement, it is in fact an ongoing arrangement between you and the franchisee. To create a successful franchise, there will need to be continuous support and advice. You will be taking on responsibility for training, product and service development, national promotion and PR, purchasing financial and administrative services, quality control and national accounts, network communications and discipline and all other support.
Are you ready for this commitment and can you afford it? Pricing is vital for a successful franchise. Generally, initial fees are kept low to encourage franchisees to sign up and ongoing returns would be based on a percentage of the turnover. However, you need to make sure that any price set would offer a return you would be happy with and that you won’t be out of pocket actually setting it up. Franchising a business will involve a large upfront cost with minimal returns initially. Talk to your bank and see if they have a franchise team that could assist and support you in going through this process.
Once you’ve decided that you’re going to do it, you will need a prospectus in order to generate some interest and recruit franchisees. You’ll also need to make sure you have a good franchise agreement which sets out the full details of your relationship and should minimise any disputes in the future. Whilst you can do this on your own, I wouldn’t recommend it and it’s an area where I would always seek expert advice. Ultimately, it will be a lot of hard work but if you can make a success of it, you could be the next big thing!