If you want to expand your business without the cost of opening new locations, it may be time to turn it into a franchise. Although becoming a franchisor is a time-consuming process, your business can expand rapidly once you’ve laid the groundwork and found suitable franchisees. Here are the basic elements of going from a business owner to a franchisor.
Determining the Viability of Your Business as a Franchise
Before you start turning your business into a franchise, you should evaluate it to see if it has a proven successful concept. Without that, you’re unlikely to attract franchisees. Even if you do, they aren’t going to be successful. Ideally, you want your business open in multiple locations, each with a history of making a profit. If you only have one location open, why should a franchisee trust that the concept can work elsewhere? You also need a concept that franchisees can replicate on their own. You can and should provide franchisees with assistance, but you can’t be everywhere at once.
Setting Up the Franchise Arrangement
To set up your franchise arrangement, you’re going to need consultants for the franchising process and for marketing, an accountant, and a lawyer. Your franchise consultant helps you through the entire franchising process. This help is essential, especially when you’re starting out as a franchisor. Your marketing consultant assists you with building your brand, which can attract franchisees. Your accountant creates your franchise’s financial model with you. This financial model is an important part of your franchise agreement, as it includes projected profits and your royalties. Royalties are one of the most crucial parts of your franchise agreement, so make sure you find an amount that’s fair for both parties. Set it too high, and franchisees could be hard to come by, but set it too low, and you could miss out on a lot of money. Your lawyer prepares all the legal documents required to start your franchise, including the contract you’re going to sign with franchisees.
Attracting the Right Franchisees
The most efficient way to attract franchisees is to hire salespeople who are experienced in selling franchises. This isn’t necessary, and you may want to try selling franchises through word of mouth first, but salespeople can accelerate the process. It’s not easy to sell franchises even with an excellent proven concept. The potential franchisee is still taking the risk of starting a business, and it’s your business instead of their own, so you and your salespeople need to convince them it’s the right decision. Turning your business into a franchise doesn’t happen overnight. Going through the process of starting a franchise takes time and money. Even so, if you have a proven successful concept, you can expand your brand across the country and bring in a large amount in royalties every month.