The question “Should I franchise my business?” usually comes around only after a business had achieved considerable success in their field. While turning a business into a franchise is definitely a great way to generate quick profits, it also involves a lot of detailed paperwork and other processes—from drawing up financial disclosure documents to drawing up training for franchisees.
Before starting the planning stage of franchising, it is important to know the pros and cons of franchising a business.
Consider the following when turning a business into a franchise:
- Know the business well
- Brush up on business-related legal issues
- Screen franchisees at all times
- Set necessary boundaries and restrictions
- Train and support franchisees
Know the business well
The cost to franchise a business goes beyond shelling out a significant amount of money to sustain the first few phases of franchising. It entails a lot of effort of the business owner, specifically when marketing the business to make it more appealing for potential franchisees. But how can business owners become excellent marketers for their business?
The answer lies in thoroughly knowing the inner workings of their business, from its general aspects down to the smallest details.
In reality, franchisees would most probably have zero knowledge of running a business in a way that generates profit. They would also need to be filled in on everything such as hiring staff, procuring supplies and managing finances. If business owners know their business well, they wouldn’t have a hard time training new franchisees.
Brush up on business-related legal issues
Before pushing through with their franchising strategy, business owners should first make sure to thoroughly review all business-related legal issues—more importantly, all issues concerning franchising. This can be anything from non-disclosure agreements, contracts, business permits to licenses to operate, among others.
It is also important for business owners to know their way around these documents as these document could potentially save the business from possible future failure.
However, if learning the ropes of these business-related legal issues seem a bit overwhelming, business owners can always choose to hire a reliable corporate attorney who is well-versed with these issues—easily walking the business owners throughout the legal processes.
A corporate attorney can also offer substantial legal advice for business owners when dealing with legal business issues.
Screen franchisees at all times
While it’s primarily a good sign if a business has an influx of interested individuals applying as franchisees, it doesn’t mean that everyone should become franchisees immediately. Once approved, franchisees would represent the business to its customers and to the entire industry.
It is important to have a proper screening process in place that ensures that every franchisee would take the business in the right direction.
Creating a proper screening system for franchisees takes a lot of hard work and trial and error. It is also imperative for business owners to personally interview each candidate in order to gauge whether or not a potential franchisee would be able to handle the franchise well.
Before embarking on a franchise, potential franchisees should know the amount of work involved.
Set necessary boundaries and restrictions
Business owners must be able to regularly monitor their franchisees after they have gone past the crucial first few stages. While franchisees operate as a separate business unit from the original business, business owners should keep a constant eye on the franchise in case of any untoward incidents.
Once the franchisee becomes more and more familiar with how the business works, the business owner can start to step back and let the franchisee take the lead. This enables the franchisee to be entitled to certain freedoms that allow them to manage their business unit better.
However, some restrictions and boundaries should put in place in the franchising contract to ensure that the business keeps functioning.
This can be anything from setting a minimum spend amount for print and online advertisements, undergoing scheduled employee training and reinvesting a certain amount of their gross profit into the market.
Train and support franchisees
Franchisees must feel that they are an integral part of the business as this would be very helpful when making the franchise units work. If business owners take the time to know their franchisees and support and help their business units grow from day one, both the franchise and the business as a whole grows.
While the franchisee learns the inner workings of running a business unit, business owners must be there to assist franchisees on all aspects of the business—from manning cashiers, checking accounts, procuring supplies and interacting with customers.
As franchisees are very eager to learn from business owners, this should be taken as an opportunity to help them grow their business unit in the long run.