If you have a thriving business that is due for expansion, it may be time to think about turning your enterprise into a franchise. Becoming a franchisor can be a cost effective way to grow your business with reduced risk of debt since franchisors only invest in the initial unit. There’s also the potential for steady returns given that franchisees pay into the franchise, and there’s less liability and involvement for the franchisor in the day-to-day operations than would be required for running several operations on your own. Here are a few quick tips to get you going:
Determine franchise-ability: To start, determine if you have a franchise-able business model, says Mark Seibert, CEO of iFranchise Group, an Illinois-based franchise consulting firm. Can you sell the business? Do you have a product or business that works well in multiple markets and is the concept itself able to be duplicated? Is your business currently profitable?Â Visit iFranchise.com for a comprehensive list on what makes a business franchise-able.
Work out the legalities: When it comes to turning your business into a franchise, it’s important to fill out a Franchise Disclosure Document. “You need a lawyer who specializes in this,â€ advises Seibert. “There are 23 different points of the disclosure and it has a prescribed format.â€
Be patient: Building your franchise can be a slow process. It can also cost between $50,000 and $150,000, says Seibert. Check with your state for registration requirements, and regulatory and legal rules.
Develop an operational manual: To get started, you’ll also need to develop an operations manual for quality control purposes, Seibert says. This manual will be used by franchisees as best practices, guides, and policies, and as a structured system to be used for reference.
Develop a marketing plan: “Develop a marketing plan that’s geared toward the franchisee,â€ Seibert advises.Â “Make recommendations as to what media you should be in. Include tradeshows, print mail, and public relations strategy.â€
Have an end in mind: Above all, it’s important to have a vision, says Seibert. Where do you ultimately see your company? From there, create a plan that will enable you to bring that vision to fruition.
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