Business format franchising is the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade as their own business under the brand of the franchisor, following a proven business model. The franchisee also receives a package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis (including a predetermined agreement length – with renewal options).
Franchising can not only strengthen the brand and reach of a company, but it can also act as a very good method of securing its future, but only if done well.
Franchising is the most powerful method of business expansion. Many business owners see franchising as an exciting and natural next step towards growing their business.Just have a glance through the franchise industry and you will be surprised to find that most of the top franchise companies have modest beginnings. Many of the brands that are popular all over the world started as a small family business and through franchising have turned out to be popular. You need to have knowledge about how to franchise in the right manner to ensure success to franchise your business. Thus, you can consider franchising your businessif you dream of making your business big and successful.
To franchise a business is not something that can be done without thought. To start with, the business needs to be proven – you need to show potential franchisees that the business works in the way in which they will need to run it. It also needs to be transferable, so that it can be run in multiple locations, using the same system, brand and quality. As a key point in this, the franchise also needs to be something that you can teach people to do. There is little point having a franchise that only one person in the world would be capable of running. You then need to make sure it is protected, by ensuring you have all the correct documents to secure your brand with any appropriate legal advice.
There are many business owners who get confused as how to franchise my business. Well, you need to go through a lot of preparationsbefore taking the decision to franchise your business. It is not just a decision that can be implied within a day. Before coming to a conclusion as how to franchise my business, give some time to research and analyze the market. Take help of a franchising consulting firm or some experts to help you make the right decision.
The very first thing that you need to understand is whether your business or company is good enough to undergo such a big a step. Secondly, in order to convert your business to a franchise successfully, you should determine the profitability of your current business. The business model should be one that can be copied easily by franchisees.
Franchising should be viewed as an evolutionary step in the expansion of your business. It should only come about after you have established your business and have obtained a level of measurable and sustainable success. That is your business must have a track record of consistently producing profits.
The competition in the franchising industry is quite high, so before deciding on how to franchise my business, learn all about the franchise industry and how it operates in your country and in your business category. This part is easy as there are so many websites that can provide you with valuable information about franchising.
Make contact with all the businesses that are franchising a similar concept as yours. Request their brochures, marketing material and meet their representatives. This will give you a deep insight in their processes, methods of communication and approach to the market place. Analyze their key strengths and weaknesses and evaluate how your franchise will sit in the marketplace.
Always consider that prospective franchisees do not possess the skill level and experience that you have – especially when it comes to operating the business that you created. To successfully franchise your business you must ensure that you have developed business systems, procedures and methods of operation that may be successfully taught to franchisees and consistently followed by franchisees in their day-to-day business operations.
If after taking the above steps you still believe that your business opportunity is viable for taking the franchise route to the market place then it is now time to get professional advice from a number of franchising experts.
You will need to create an operator’s manuals, brochures, online presentations and marketing plan. One of the most important steps to franchise your business is to prepare a franchise agreement. This is a contract between the franchisee and the franchiser which defines their relationship and inter se rights and obligations.
The franchise agreementmust ensure clear, unambiguous and water tight coverage of all critical issues, such as, roles and obligations of the parties, confidentiality and intellectual property protection; payment terms and taxes; duration, renewal and termination; agency issues; post termination issues; negative covenants; governing law and jurisdiction (especially in international franchise arrangements).
For the start-up franchisor – on the list of must do things to “franchise your business” – the planning and preparation of your FDD should be at the top. Since the FDD is a legal document that must combine and satisfy multiple federal and state regulatory requirements, it is critical that this document be prepared by an experienced franchise lawyer.
When it comes to franchising your business there are more factors and information that you will need to know. The foregoing “factors” or information should serve as the foundation and base to build from. But critical to every stage of the “franchising process” is a mindset that requires the constant assessment of your business, the gathering of information and a careful plan that is focused on creating a franchise system that is built for long term success.
Franchising a business can be an effective tool to ensure its growth and larger market share. Many businesses have gone through this path and become global leaders in their line of operation. Now, it’s your turn to expand your business successfully through franchising.