How to franchise your business

Learn how to turn your business into a thriving franchise with this guide.

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28/07/2017

Once you've confirmed that your business can be successfully franchised, it's time to look at the process you’ll need to follow.

Before you start, check your business concept works, and that it can be easily replicated in different locations. Be sure you’re ready to change your business focus – you’ll no longer be the owner of one business but the owner of a franchising operation, responsible for the success of franchisees.

Get expert advice

It's essential to have an expert guiding you through the process if you’ve never franchised before. A franchise consultant who knows the ins and outs of your industry, and has the background and experience to provide you with practical advice to make sound and informed decisions, will save you time and money. They'll also be able to advise you on the best methods for packaging your business as a fantastic franchise opportunity that appeals to the right type of franchisee. They can help you recruit, screen and select highly-qualified people who share your mutual long-term goals.

British Franchise Association (BFA) consultant list is a good place to start when searching for someone to work alongside. You can also attend BFA seminars to learn more about franchising your business.

Other help

You'll probably also need to bring a lawyer and accountant on board to draw up your franchise agreement. The agreement should include:

• Clear terms and conditions so you can avoid conflict in the future
• Steps that covers everything to protect you and your franchisees interests
• Terms of ownership, fees and royalties, standards of operation, disputes procedures and security
• The details of franchisee training and support
• The conditions of terminating a franchise agreement

An accountant familiar with franchising can help you develop a financial model based on cash flow projections and your royalty structure.

Put yourself in the shoes of the franchisee

It’s relatively easy to research what other franchisors are doing, where you can adopt good practice. Apply for registration packs, information sheets and any financial data that will help you put together your own content.

Useful sites to search include www.whichfranchise.com, www.franchisedirect.co.uk, www.franchisesales.co.uk, and www.franchiseinfo.co.uk.

Strengthen your brand

Ideally you should already have a recognisable brand image and reputation, as it will make it easier to find franchisees to invest in your business. A brand is your customers’ perception of you and has to be continually strengthened and protected. Make use of various promotional tools to enhance this, such as advertising, word-of-mouth, competitions and loyalty schemes.

Customers have an expectation that your brand will provide them with the same services or products every time they shop with you. Take Subway as an example – they promote themselves with the slogan, ‘Eat Fresh.’ It’s therefore critical that all their franchise stores have fresh produce daily, to serve to their loyal customers.

Develop a franchise plan

Working with your franchise consultant, put together a plan for franchising your business. This is similar to a business plan. It should:

• Explain why the business concept is suitable for franchising, including a review of the industry your business operates in.
• Outline the intended growth over the next few years.
• Identify the strengths, weaknesses, opportunities and threats facing your franchise.
• Outline the management structure of the franchise, including the training and support systems.
• Identify the supply chain.
• Outline marketing strategies
• Provide financial forecasts and budgets.
• Describe the required characteristics of franchisees (such as business skills and suitable personality traits).
• Detail the fees and royalties franchisees will pay
• Set out the monitoring process to ensure franchisees supply uniform quality products and services.
• Set out objectives for franchisees, such as revenue targets, timelines, etc.

Finding the right franchisees

Remember that an applicant may have the money, but may not be suitable as a prospective franchisee. For example, people who are strongly entrepreneurial will likely chafe under the restrictions of a franchise system. On the other hand, you don't want a person with no business skills or experience at all, unless you have unlimited time and patience.

Two features in the franchise package you offer will add to your credibility:

• 1. A ‘cooling off’ period of say 14 days, so that any franchisees who find the franchise unsuitable can extricate themselves.
• 2. A disclosure document that offers the franchisee background information on yourself or your company, such as length of time in business, financial viability and track record.

Establishing new franchisees

You need to work out an induction and training process that will make the franchisee feel a valuable part of the franchise group. Be aware that they might need considerable hand holding at the start.

Initially, think about including existing franchisees in this training process. As you expand the group include existing franchisees. For example, the trainee could spend some time working alongside a successful operator. This could take a lot of the training and support pressure off you.

Many franchisors help their new franchisees to establish a basic client base. For example, if you advertise nationally, you can pass on the names of people or companies who respond to the appropriate franchisees.

Managing your franchise system

This involves:

• Putting in place systems to monitor the franchise
• Reviewing the performance and targets on a regular basis to take into account external factors
• Visiting all of your franchisees on a regular basis
• Being easily accessible for your franchisees. You might also think about establishing a franchisee board who could get together to discuss ideas and experience and have some input into the running of the franchise.

Finally, make sure you have financing in place

Summary

It's important to undertake the franchising process with professionals and experts who understand how the process works. This will save you a lot of headaches as you work through everything that needs to be done. You should have a commitment also to supporting your franchisees and to building a rapport with them, and you need good monitoring systems for checking on their performance to maintain consistency and quality standards.